2018: the year in review
We round up the highs and lows from a busy year in the channel
In our end-of-year review last year, we wrote about how Canalys founder Steve Brazier had claimed that Q3 of 2017 was set to be the best quarter the western European tech industry had seen in a decade.
While Brazier's comments certainly carried through into the first half of this year, it is fair to say that 2018 is ending with slightly more unease than with which it started.
At the same conference this year, Brazier predicted that partners will see year-on-year growth of five per cent next year, down from 12 per cent in the previous year.
Brazier's comments came at a time when resellers were laying out equally cautious expectations. Bosses from the likes of Softcat, Computacenter and World Wide Technology all said next year will likely be less spectacular than 2018.
Security, security, security
In truth, when channel execs returned to their desks at the start of the year it was very much business as usual. The year started with a theme that ran throughout 2017: security breaches.
The Spectre and Meltdown vulnerabilities dominated tech headlines in early January, with the two flaws representing perhaps the most widespread security threat ever seen.
It was quickly established that the two related threats could affect virtually every device on the planet, with the world's biggest vendors, including Intel, AMD, Microsoft and Google, all scrambling to release updates.
Even now the true scale of the flaws is not yet known, with new attacks relating to the two families of vulnerabilities being discovered as recently as November.
From a channel perspective, UK newcomer PCM was catching attention after arriving in the market last year.
The firm's acquisition of Cisco Gold partner Provista was CRN's most-read story in January, closely followed by an interview with UK MD Donavan Hutchinson, who denied that the firm was building its UK arm in the same ilk as that of fallen giant Misco. PCM UK is now operating at run rate of £53.2m, according to Top VARs 2018.
The start of the year also saw the beginning of a saga at Dell that is yet to reach its conclusion. The privately held vendor said it was exploring a number of restructuring options, eventually settling on going public via a tracking stock related to its subsidiary VMware. However, activist investors had other ideas, and Dell is yet to complete any change in its ownership.
Mid-year success
In April the second-largest reseller in the industry saw a new man at the helm, with industry veteran Martin Hellawell moving upstairs at Softcat to be replaced by distributor stalwart Graeme Watt. Fitting for his 1 April start date, Watt embedded himself into the reseller's famous culture with a batch of April Fools' jokes - some of which were taken too literally by the workforce.
Softcat finished its financial year at the end of July, later revealing that it had become the second UK reseller to break the £1bn revenue barrier. Computacenter also reported a buoyant H1 around the same time, with the firm receiving the coveted Boring Award for consistent earnings-per-share growth.
The start of the summer coincided with a boom in M&A activity, with a host of firms large and small snapped up by other players and, in one case, a vendor. SoftwareONE's acquisition of Comparex has been the largest acquisition on a global scale, but HP's takeover of print partner Apogee was the biggest in the UK, valuing the firm at £380m.
German giant Cancom re-entered the market, snapping up £86m-revenue partner OCSL for £29m, while Computacenter made its long-awaited US acquisition. The Hatfield-based firm moved for reseller FusionStorm, in a deal that could rise to as much as $90m.
But the end of the summer brought about a slight change in mood, driven largely by factors outside the IT industry itself.
The uncertainty around Brexit only intensified, while the US trade war with China led to a number of the biggest vendors hiking prices.
As has been the case in the last few years, the channel has suffered a sizeable casualty in 2018.
After weeks of rumours, Beta Distribution appointed an administrator in mid-October, resulting in 69 job losses.
The distributor had been fighting a losing battle, with various credit insurers pulling support in the weeks leading up to its demise. Beta said that increased competition in the consumables market and currency exchange rates contributed to its downfall.
As we head into the new year, we asked a selection of channel bosses to pick out their highs and lows of 2018.
Article continues on next page
2018: the year in review
We round up the highs and lows from a busy year in the channel
Justin Harling - CEO, CAE
In terms of technology, what will 2018 be remembered for?
2018 seems to have been a more pragmatic year where the conversation in a number of areas seems to have got past some hype and moved into how technology can have a meaningful impact aligned to business. This applies to cloud being brought fully into the infrastructure stack, AI having a positive impact on security services, and blockchain being recognised for more than just Bitcoin.
What have been the biggest hits and misses of 2018?
It has been a breakout year for software defined, particularly the network. It has a long way to go but is now the primary option for building, scaling and managing networks. There have been some catastrophic misses when it comes to doing the basics right; massive security breaches and customer-affecting systems failures still plague some organisations and are avoidable with the right combination of technology, people and process.
Is there anything that has shocked you in 2018, and anything that pleasantly surprised you?
Just how incompetent and self-serving politicians can be and then how much businesses can be resilient to this in getting on with things despite the level of uncertainty.
Is there something that was hyped up at the start of the year, that didn't quite take off?
IoT still seems to be in a hype cycle where the level of actual delivery against the amount of talk and marketing bluster is disproportionate.
How has 2018 been for you?
It has been another year of incredible change where the right balance of performance and investment means we are looking forward to 2019 with relish and optimism.
Which trends do you expect to take off in 2019?
Nothing revolutionary is expected in 2019, more of a continued evolution from the major trends present in 2018 - great for developing expertise in the business (bring on the dev ops team). By the end of the year the introduction of 5G could start to ramp up into 2020.
Article continues on next page
2018: the year in review
We round up the highs and lows from a busy year in the channel
Ian Turnbull - director, Pentesec
In terms of technology, what will 2018 be remembered for?
AI and machine learning. It was everywhere and was definitely the favourite marketing buzzword of 2018. We're now in a position where vendors need to offer more to really stand out.
What have been the biggest hits and misses of 2018?
While not much of a surprise to us, we observed the growing importance of SD-WAN to end users in 2018.
In terms of the biggest hit, I think it's incredible how well CrowdStrike have done this year: $200m in funding, a string of incredible test results and a rapidly growing team. They are definitely positioning themselves for a huge 2019.
Customers are more diligent when choosing technologies, and are looking to specialist partners. The rate of development has increased and many resellers are and will find it challenging to keep up with the rate of change.
Is there something that was hyped up at the start of the year, that didn't quite take off?
Much like in 2017 there has been a lot of hype and talk about IoT and how the industry will address the security issues that go with it, but I think as tech companies continue to take stock of the magnitude of the challenge, the solution to the problem will be pushed further out. We know in the background that many of the major security companies are working on it, so depending on the rate of IoT adoption this may be one to watch for 2020 - it's certainly something to prepare for.
How has 2018 been for you?
It has been an incredible year for Pentesec - we recently won the CRN Rising Star Award and are the current European Partner of the Year for Check Point. We have shown great growth in 2018, demand continues to be high, and we are seeing increased interest around emerging and alternative technology so I expect more of the same for 2019.
Which trends/technology do you expect to take off in 2019?
As the ICO starts to issue much larger fines to customers who have had breaches, I expect to see an adjustment in people's attitudes towards security, which could see user entity and behaviour analytics, deception technology or threat intelligence services become a lot more relevant to customers. At the very minimum I would expect to see cyber-education become a major focus for organisations as they strive to mitigate the risk of a data breach. I also expect to see more organisations turn towards automation and managed services, as the skills gap continues to grow.
Article continues on next page
2018: the year in review
We round up the highs and lows from a busy year in the channel
Alex Tatham - managing director, Westcoast
In terms of technology, what will 2018 be remembered for?
The enormous number of robotic process automation projects that have been going on, and AI. We have seen this across the channel and that will only accelerate. I think we are coming out of the hype curve there and seeing some really exciting projects.
What have been the biggest hits and misses of 2018?
The biggest hits have been Westcoast's growth and winning the CRN Distributor of the Year Award, and the outstanding landing of the Westcoast brand. That has been sensational for us.
The biggest miss has been the Brexit imbroglio, which has torn the country to shreds and is not an investment for the future. That is holding the country back and holding the channel back.
Is there anything that has shocked you in 2018, and anything you have been pleasantly surprised by?
Carillion going bust was a massive shock, especially in the way that it went insolvent so quickly.
I think the level of growth we have seen this year [was surprising], throughout the whole IT channel - you see it in the Top VARs report - in spite of Brexit.
Is there something that was hyped up at the start of the year, that didn't quite take off?
If I look at what has really done well this year, I would say the cloud and Microsoft have done tremendously well, but I don't think that was necessarily overhyped.
How has 2018 been for you?
We have hit all our targets, we have grown the business in double figures again and we have won Distributor of the Year, all of which I am absolutely thrilled about. We have grown our headcount and investors in new areas of the business, and it keeps growing.
Which trends/technology do you expect to take off in 2019?
I think you will see even more automation going through - people are looking at efficiencies and even better processes. Good processes is good sales.
Article continues on next page
2018: the year in review
We round up the highs and lows from a busy year in the channel
Mike Danson - CEO, Natilik
In terms of technology, what will 2018 be remembered for?
The movement to software subscription has been a big thing. If you think about even the core networking market for someone like Cisco, they have the ability to disaggregate the hardware from the software and turn the software into an annuity stream. That has been a big feature and we have won pretty much every deal we do in that networking space.
Has there been anything that has shocked you in 2018?
I'm not sure anything shocks me now! There are clearly people who are winning and losing in this transition.
In terms of the broader market transition from on-prem to cloud, I think there has been a realisation that that is not just a market that will appear and go quickly. There's a realisation that it's a long-term game. Some people thought that we could just move everything to the cloud really quickly, but I think they're waking up to the reality now.
How has 2018 been for you?
We are growing in each of our chosen technology areas, and we are growing our recurring revenue base both through managed service contracts and software subscription wins.
So the growth is coming from security, networking, collaboration and contact centre - and it is increasingly coming in recurring revenue.
We are trying to grow our recurring revenue base and we have certainly seen some big managed services wins, which have been really good.
Is there something that was hyped up at the start of the year, that didn't quite take off?
From a macro perspective, people thought that Brexit was really going to hurt the economy and I would say that hasn't manifested. We, and a large part of our peer group, continue to have very strong performing businesses. At the start of the year I thought Brexit might be a problem in terms of people wanting to spend in the market, but we've continued on while our politicians try to sort their sh*t out!
So I'm pleasantly surprised that Brexit hasn't caused an issue yet, but I think we're getting to the point where we will see where it is going to go, but the worst hasn't transpired yet.
Article continues on next page
2018: the year in review
We round up the highs and lows from a busy year in the channel
Dave Stevinson - managing director, QBS Software
In terms of technology, what will 2018 be remembered for?
It has to be the price crash on cryptocurrencies, in particular Bitcoin, followed by a steady decline throughout the year.
What have been the biggest hits and misses of 2018?
The biggest hit has been the rise in demand for EIM (enterprise information management) and the biggest miss has been virtual reality - yet again.
Is there anything that has shocked you in 2018, and anything you have been pleasantly surprised by?
I was shocked by the surge in demand for cybersecurity and pleased by the recognition of the recovery by Microsoft by both the channel and the mainstream press.
Is there something that was hyped up at the start of the year, that didn't quite take off?
GDPR was hyped and never really took off, but there have been pockets of success with the leading EIM publishers such as Opentext really benefitting in the enterprise space.
How has 2018 been for you?
At QBS we have had a very strong year from a financial perspective with impressive business performance. The highlight was being recognised by the London Stock Exchange as one of 1,000 companies to inspire Britain.
Which trends do you expect to take off in 2019?
Without a shadow of doubt robotic process automation will be the macro trend, although I have been personally evangelising the technology for many years. Publishers to watch are UiPath, Automation Anywhere and BluePrism.
2018: the year in review
We round up the highs and lows from a busy year in the channel
Dean Gardner - chief technologist, Softcat
In terms of technology, what will 2018 be remembered for?
The year that hybrid cloud starting to really take off.
Is there anything that has shocked you in 2018, and anything you have been pleasantly surprised by?
AWS announcing with VMware that they will be coming back into the customer datacentre with outposts.
Is there something that was hyped up at the start of the year, that didn't quite take off?
Machine learning and AI has not started, but there is a lot of marketing spin. This will take off as more services are developed and opportunities realised.
How has 2018 been for you?
Excellent. Our customers are looking at more complexity with IT solutions and we are perfectly positioned to support and provide guidance in multi-cloud world.
Which trends/technology do you expect to take off in 2019?
The acceleration of database transformation with migrations away from monolithic to micro-segmented architectures in public cloud.
2018: the year in review
We round up the highs and lows from a busy year in the channel
Paul Stringfellow - technical director, Gardner Systems
In terms of technology, what will 2018 be remembered for?
The year that our approach to data started to grow up - mainly driven by GDPR, which made businesses start to take the way they use, store, secure and manage their data more seriously and start to make sure data is core to their IT and business thinking.
What have been the biggest hits and misses of 2018?
Probably two sides of the same coin, GDPR did indeed create an important and much-needed focus on the way we manage our data. However, on the flip side, once the GPDR deadline passed, it was as though many felt that it was a one-off tick-box exercise and have lowered their focus on crucial issues around data management, security and compliance and have missed a big opportunity to put platforms and processes in place that would deliver significant business benefit.
Is there anything that has shocked you in 2018, and anything you have been pleasantly surprised by?
I have been shocked by how lax people still are around their security: companies still struggling to give appropriate focus; not educating themselves and understanding the threat; at a board level still too many companies don't believe there to be a threat to their IT and data security and refuse to back security programmes. An attitude of "but it will never happen to us" still seems to prevail.
A really positive industry shift is the continued development of a more co-operative working relationship between tech vendors, certainly of the ones I deal with. There is a lot less "competition bashing" and much more embracing of the opportunity presented by enabling multiple technologies for customers.
Is there something that was hyped up at the start of the year, that didn't quite take off?
The problem with hype is that it's not so much it doesn't take off, but it stops being a focus. My vote is probably GDPR - lots of this hype was driven by either reporting or opportunistic sales - the world expected a raft of cases and big fines, and because we haven't seen them the hype has died away. However, GDPR is a reality and it should be, as we see continued stories of massive data breaches. Ensuring we secure our data so we can use it with confidence should be key to a business strategy. So while GDPR didn't "take off" in the way many thought it would, its impacts are going to remain.