The Evolution of the UK Channel ecosystem
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Transcript of The Evolution of the UK Channel ecosystem
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CHANNELBIZ LAUNCH
THURSDAY, 15 MARCH, 2012
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Who am I?
Why ChannelBiz?
There’s still money in the channel
But the channel has changed
There are big challenges for the channel
The vendors are moving everything to the cloud
Vendors need to pump more money into the channel
But companies have to get smaller, because small is beautiful
Smart technology means more points, and points mean prizes
Distribution, and lorries are far from dead
Vendors need distributors more than ever
Etailers are not smart enough
Channel Biz UK will focus on smart money, and smart starts
Our research shows that there are both opportunities and threats
Thierry Hamelin will now present our qualitative and quantitative results
Editor in chief -
ChannelBiz.co.uk
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EVOLUTION OF THE UK CHANNEL ECOSYSTEM - A NETMEDIAEUROPE RESEARCH STUDY -
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1. OVERVIEW
2. END-USERS SURVEY : ANALYSIS AND STATISTICS
3. CHANNEL SURVEY : ANALYSIS AND STATISTICS
4. CONCLUSION
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WHY THIS RESEARCH?
1/ Find out how the market trends impact on the channel ecosystem
How vendors shortlisting is influenced by social media ?
Are new channel competitors (MSPs, hosters) dangerous for legacy players?
What are the incoming evolutions of IT procurement (direct vs. indirect, E-Markets)?
How does the increasing adoption of cloud computing impact on the channel?
2/ Identify the stakes for the channel
What are the key challenges regarding the economic perspective and the rise of Cloud computing?
What does the channel think about cloud computing?
What does the channel expect from vendors and distributors to support the move to a cloud service provider model?
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OVERVIEW
Coverage Channel 2nd tier End-users
Country UK UK
Number of interviews 80 100
Contacts CEO, MD, GM, Business DM CIO, CTO, IT DM
Company profiles VARs, Pure resellers,
Managed service providers, System integrators, Hosters…
All sectors
Company size All All
Populations surveyed: two distribution levels
End-users
2nd tier channel players
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SAMPLE STRUCTURE
(CHANNEL)
Company size Job function
< 50 empl. 91%
>=50 empl.
9%
Pure reseller 32%
VAR 32%
Managed service
provider 19%
Consultant 5%
System integrator
4%
Other (Etailers, Retailers,
etc.) 9%
Main business model
CEO, MD, GM 53%
Business DM (Sales, Marketing)
38%
IT & Operations Manager
9%
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SAMPLE STRUCTURE
(END-USERS)
Company size Job function
Industry 22%
Public sector 12% Services
66%
< 50 empl. 91%
>=50 empl.
9% 50-99 empl. 12%
100-499 empl. 16%
>=500 empl. 20%
Business area
IT Manager 43%
IT Director, CIO, CTO
22%
IT Business DM 12%
IT Business Developper
9%
CEO, MD, GM 7%
IT Consultant
7%
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1. OVERVIEW
2. END-USERS SURVEY : ANALYSIS AND STATISTICS
3. CHANNEL SURVEY : ANALYSIS AND STATISTICS
4. CONCLUSION
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How do you gather information to create your shortlist of vendors for
IT product and solution purchases?
VENDORS SELECTION SOURCES
59%
48%
43%
42%
42%
34%
33%
19%
14%
7%
Vendors’ websites
Events, seminars, shows
Feedback from peers
IT media
Direct networking with vendors
Direct networking with resellers
Reseller web sites / e-mailing
Consultancies
Social media
Other
The two main sources for shortlisting are vendors’ websites and the participation to events, seminars or shows.
Feedback from peers and IT media are also widely used.
Social media is not perceived as a direct source for building the vendors shortlist, at least not consciously.
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What social media do you currently use for IT procurement ?
IT PROCUREMENT THROUGH SOCIAL MEDIA
47% 46%
34% 31%
19% 18%
12% 12%
10% 9%
3%
IT blogs, boards and forums
IT community websites
Webcasts
Google+
IT Social platforms
YouTube
Document sharing
Other
If Social media is not perceived as a direct influencer when it comes to create a shortlist of vendors, it indirectly guides decision making.
IT blogs or forums, as well as community websites are widely used as information sources.
LinkedIn is well positioned with regards the use of social media tools, opposite to Facebook (which is only used by one out of ten ITDMs).
82% of ITDMs use social media as a source of information for IT technologies.
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IT PROCUREMENT THROUGH SOCIAL MEDIA
Yes 71%
No 21%
Don't know 9%
Do you think you will increasingly use social media
for IT procurement within the next 3 years?
Social media will be intensively used on a mid-term basis. Among non social media users, half of ITDMs plan to use it within the next 3 years.
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How do you usually acquire your IT products?
THE IT PRODUCTS PROCUREMENT CHANNEL
68%
54%
35%
27%
7%
6%
63%
51%
43%
26%
11%
5%
Reseller
Directly from the vendor
E-markets
Retailer
Hosting provider
Other
Currently
In 3 years
Resellers and direct channel will remain the main sources of IT products purchase.
Nonetheless, alternative channels such as E-markets and hosting providers gain additional points. Online shopping becomes more popular among ITDMs, due to the raise of consumerisation.
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SAAS ADOPTION RATES
Yes 39%
No 48%
No, but plan to use
it 13%
Do you currently use SaaS solutions?
Vendor 38%
Consulting 15%
Reseller, VAR 12%
Services company
12%
Hosting provider
8%
Peers 8%
Other 8%
Who did you solicit first to enquire about
SaaS solutions?
Four out of ten organisations have already adopted SaaS . On a short-term basis, 50% will use it.
The vendor is an integral part of the SaaS ecosystem as its marketing and branding are still direct influencers of the purchase process.
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1. OVERVIEW
2. END-USERS SURVEY : ANALYSIS AND STATISTICS
3. CHANNEL SURVEY : ANALYSIS AND STATISTICS
4. CONCLUSION
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What are the key challenges for your business within the next 3 years?
MID-TERM BUSINESS CHALLENGES
72% 42%
40% 32%
25% 23%
21% 19%
12% 11%
9% 7%
5% 2%
5%
Stay competitive
Develop new skills to enter new markets
Control costs
Increase sales force
Develop niche expertise
Develop E-commerce to better reach customers
Find new partner vendors
Finance development / investments
Switch from product to service led culture
Increase marketing budget
Provide consulting services
Switch to a recurring revenue service oriented model
Obtain more certifications
Provide training and certification degrees to customers
Other
Staying competitive and developing new skills are the main mid-term challenges for the channel players.
Controlling costs comes just behind, as it rhymes with business efficiency.
Switching to a Cloud related recurring revenue model seems to be underestimated (only 7% consider it as a challenge).
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PERCEPTION OF THE CLOUD COMPUTING
An opportunity
56% No impact 25%
Both an opportunity and a threat
11%
A threat 9%
How do you perceive cloud computing with regards your business?
Cloud computing is perceived in a positive manner.
A quarter of the channel is not currently impacted by the cloud. Most of them are VARs and resellers.
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TOP CLOUD OPPORTUNITIES Why do you perceive the cloud as an opportunity?
47%
34%
26%
18%
16%
13%
8%
5%
11%
Source of recurring revenue
Source of additional revenue
Develops new channel partnerships
Lower setup costs
Only few resellers provide appropriate cloud services (yourself included)
Allows selling more expensive software than in a traditional licensing model
Higher margins
Geographical proximity to customers is no longer an advantage
Other
The main cloud opportunities are profit oriented. On the other hand, the cloud doesn’t mean higher margins. This is one of the channel “cons” regarding cloud solutions. New partnerships arise from the necessity to reselling cloud solutions within the channel in order to benefit from the specialists’ expertise.
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… AND TOP CLOUD THREATS Why do you see the cloud as a threat?
45%
36%
27%
18%
9%
High infrastructure investment costs
New competitors arise such as managed service providers and application hosting providers
Metered billing difficult to set up for bundled cloud services
Vendors bypass the channel to sell unsophisticated solutions
Other
By enabling end-users to offload infrastructure and maintenance, the cloud passes it on to the channel ecosystem.
At the same time, application hosting providers and MSPs are well placed because they have already adopted a recurring revenue oriented model and the cloud seems a natural evolution of their skills.
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WHAT TO EXPECT FROM VENDORS AND
DISTRIBUTORS WITH REGARDS THE CLOUD What do you expect from vendors and distributors to provide you
for your business transition to a cloud service provider model?
61%
57%
34%
5%
66%
61%
34%
11%
Training
New accreditation/ partner programs
Access to infrastructure
Other
From distributors
From vendors
Expectations are rather similar from vendors and distributors.
They are logically based on training but also new accreditation and partner programmes in order to better meet to customers’ needs.
Access to infrastructure in order to propose their own cloud solutions (Iaas, PaaS and services) comes after.
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59%
35%
33%
30%
28%
4%
Hosters / managed service providers
System integrators
Telecom carriers
Converged voice and comms solution providers
E-markets
Other
CHANNEL PLAYERS IN THE CLOUD In your opinion, what channel players are more suitable for selling cloud services?
The most suitable partners for selling cloud services are the hosters and managed service providers. Their core business is based on outsourcing and cloud technologies.
They are followed by the system integrators for their competencies in building specific cloud applications and for their cloud infrastructure.
As for E-markets, Amazon is a good example of cloud adoption.
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1. SUMMARY
2. CHANNEL SURVEY : ANALYSIS AND STATISTICS
3. END-USERS SURVEY : ANALYSIS AND STATISTICS
4. CONCLUSION
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END-USERS KEY INSIGHTS
Two out of three ITDMs plan to increasingly use social media for IT procurement within the next 3 years An opportunity for vendors to promote their solutions but don’t forget that social
media is not limited to LinkedIn, Twitter or Google+ ! Almost 50% of ITDMs use IT blogs, forums and IT community web sites
E-commerce players will continue to rise on a mid-term basis. 43% of organisations will make use of them (a gain of 8 points within the next 3 years) How far can Amazon or Ebay go? Will they be able to provide to small software
vendors the infrastructure to host and sell their software “as a service” ?
Vendors are still an integral part of the SaaS ecosystem, as 38% of ITDMs solicit them first to enquire about SaaS solutions
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CHANNEL KEY INSIGHTS
The main challenge for the channel players is related to competitiveness (72%) through nurturing new skills and entering new markets (42%)
Nonetheless they tend to underestimate the challenge of a cloud related recurring revenue model for their business (only 7% feel concerned about it).
The cloud is mainly perceived as a business opportunity in terms of recurring and additional revenue source.
However, it is not synonym to higher margins - (only 8% relate it to higher margins)
Channel players tend to always promote training and new partner programmes from vendors and distributors to support their move to a cloud service provider business model.
=> Access to infrastructure (allowing the channel to customize cloud offerings instead of only reselling SaaS) is not a priority, but it could rapidly become a stronger expectation.
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MID-TERM CHALLENGES FOR THE CHANNEL
GLOBAL CHALLENGES SPECIFIC CHALLENGES Succeed in building relevant influencer strategies in correlation with the increased role of social media within IT procurement
For Manufacturers > Rationalization of IT spending via virtualization > Reorientation of the offer due to increasing demand from the untraditional channel (SaaS / IaaS providers) and decreasing demand from customers
Move from traditional billing to a “pay as you go” financial model (related to cloud computing)
For software vendors Invest into a reliable and secure infrastructure (on premise or in partnership) to provide their software “as a service”
Acquire deeper expertise by creating a brand new market strategy involving business decision makers and not only ITDMs (due to the rise of cloud computing based on services)
For Distributors Find new sources of revenue to counteract the rise of dematerialization and the nebulous nature of business
For VARs and Resellers Many of them still lack cloud related skills. They have to hire cloud specialists and invest in certification.
For Pure Resellers They are in real danger because of shrinking margins and lack of value added business