With the introduction of GST which would streamline the tax system, channel partners will have another opportunity to grab as distributors may no longer need to have a warehouse in each of the states and businesses will need to have customised GST-compliant systems (e.g. ERP systems).
Businesses in the 21st century are operating in a completely new reality. The innovative technologies are rapidly changing the way enterprises function. The onset and convergence of enterprise mobility with Cloud Computing, Big Data Analytics and Social Media are adding new dimensions to the way businesses operate, however IT partners are little hesitant towards adapting IoT. Showing his concern over such partners, Jordan De Leon, Analyst, Canalys excerpts, “I would assume these partners are not growing because they see past the hype. The most important things for any channel partner are always predictable revenue, profitability, simplicity, and consistency.
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“We ran a survey in quarter 1 of this year on our channel community, and 74% of APAC partners expect to grow their revenue in 2016, compared to 2015.”
Jordan De Leon
Analyst
Canalys
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This applies to any technology they’re selling or any vendor they are working with. Until they are able to see that with IoT then, they will not see that as a growth engine for them. That said, partners in more advanced economies such as Australia and Singapore are seeing analytics as a part of IoT where they can increase their revenue.” Even BI & Analytics is one where the partners are not seen taking much interest which is profit maximiser, because it is not clear to them how they make a profit out of it. They may not have the talent, skill sets, etc. They may not have figured out how it fits within their business model.
A lot of partner businesses are into IT enterprise infrastructure solutions, and we believe the reason is that there is still demand for it. They still see opportunities from their customers. Jordan De Leon adds, “For niche areas, as I mentioned security would be one, but I would hardly call that a “niche” area as it is a big market. Another one is the hyper-converged technology, which remains a small, but growing opportunity.”
Channel partners know how to run their businesses, more than the vendors do so. The key thing is to always listen to their customers, know their customer’s business inside and out, know what their customers want, and deliver it. They need to be seen as a strategic advisor and not just a supplier of IT equipment. Cloud and mobility are other areas where partners should focus on but again there is a trade-off that they would lose good top line and bottom line initially while restructuring their internal resources. He says, “Any decision that involves changing their business model and perhaps changing the way they structure their business internally will involve risks. The greater risk for channel partners is whether their cloud providers would still be in business in the long-term. They need to make sure the cloud providers they partner with have a long-term vision, strategy, and commitment to the channel.”
For any partner before making investment in any technology and certification, must consider a lot of factors. According to Jordan De Leon, It will majorly depend on the customers and verticals they serve. They need to be strategic about certifications, and not simply obtain all certifications. They should consider the certifications that would provide the most value to their businesses. Even if they invest in all of these latest and greatest technology and the most advanced certifications, if these ultimately prove to be unable to provide value to the business, then that’s a wasted investment. Having said that, in terms of technology, Jordan De Leon thinks that security is an area they should consider investing in. It’s something that’s going to encompass all businesses, as more devices, things, every day appliances becomes more connected, security will be a bigger priority – and the channel will play a key role in that.
Channel outlook for APAC and India for 2016
The outlook for the APAC specifically is still positive despite the economic uncertainty. Canalys looks after a global online channel partner community, called Candefero. Canalys recently ran a survey in quarter 1 of this year on its channel community, and 74% of APAC partners expect to grow their revenue in 2016, compared to 2015. For profitability, 75% expect to grow their profit compared to 2015. However, partners are still facing challenges. The survey results showed that the three biggest challenges for APAC partners this year are: the currency fluctuation, access to skills, and reaching new customers.
For India specifically, the outlook is also good. The economy is growing and is one of the few bright spots in Asia. This means businesses will be inclined to spend more, and investment will continue to flow in. One of the biggest developments (should it be passed in parliament this year) would be the introduction of GST, which would streamline the tax system. This has many implications, but in the channel it may have the biggest impact on distribution. Distributors may no longer need to have a warehouse in each of the states, and inventory days will go down. Partners have told us that if GST is implemented, businesses will need to have GST-compliant systems (e.g. ERP systems). That’s another opportunity for channel partners as each of their customers will have unique requirements, and will require a fair degree of customization as they upgrade their systems to be compliant with GST.
Talking about India as a big market for enterprise infrastructure, Jordan De Leon opines, “We’re certainly seeing increase understanding and adoption of Cloud. With the government initiative on smart cities, there is also a big opportunity for the channel, but this will take time.”
At the end…
Adoption of the new technologies like Cloud Computing, Big Data Analytics and Social Media pose formidable new challenges to IT departments. Since the channel partner is actually doing more in this scenario, they should be ready and available with the right solutions, skills and services at the right time.
In order to become or remain competitive in the marketplace, partners must learn to overcome the challenges associated.
