Selling Servers to SMBs

The server market is experiencing robust growth as SMBs show a healthy appetite for hardware and invest in traditional enterprise offerings such as server virtualisation. Channel Middle East surveyed a number of leading server vendors to find out what this all means for the Middle East channel.

  • E-Mail
By  Dawinderpal Sahota Published  March 27, 2007

|~|Wael-Abdoush-200.gif|~|Wael Abdoush, IBM|~|The server market is experiencing robust growth as SMBs show a healthy appetite for hardware and invest in traditional enterprise offerings such as server virtualisation. Channel Middle East surveyed a number of leading server vendors to find out what this all means for the Middle East channel.

They are: Aaron White (AW), sales manager SEE at Sun; Johan Degroote (JD), business development director EMEA at NEC; Rajesh Deepchandani (RD), large enterprise product marketing manager at Fujitsu Siemens; Ryan D’Souza (RDS), ISS product manager at HP Middle East; and Wael Abdoush (WA), Middle East systems and technology group manager at IBM (WA).

CME: Independent market research shows that the server market is experiencing huge growth across the EMEA region. How does this play out in the Middle East?

AW: We are reflective of the overall server growth. Sun, as a company, has outperformed the market in server growth and the latest Gartner figures show a 43.7% year-on-year growth during the fourth quarter. We’re very pleased that we’re in track with the overall company’s growth in this market space.

RDS: We’ve been experiencing double digit growth for quite some time now, quarter on quarter as well as year on year — so the Middle East is one of the fastest growing regions that we see.

WA: The server market across EMEA is booming and the Middle East is no exception. In 2006 we’ve seen a big growth in all server categories — over 30% — so we’re no exception.||**|||~|ryanD200.gif|~|Ryan D'Souza, HP|~|CME: How are you making it an attractive proposition for resellers to invest in your servers?

AW: Sun is one of the only firms which is gaining market share in the server market. Overall I think it’s an attractive prospect because we’re tackling the Unix side of the server market which is also more profitable for resellers. Not only are the products more exclusive, but it’s a full project, not just a one product hardware sell — we’re offering a project driven type of environment and business. So, for resellers, the project aspect of it, plus the fact that they’re dealing with a vendor whose market share is growing faster than anyone else’s makes it an attractive prospect. And we see demand from different resellers coming from other horizons. We get four, five, maybe 10 new applications per week from Sun’s partner community, which is a good sign.

RD: A lot of customers are deploying mid-market solutions such as CRM or ERP so there’s varying demand. We try to make sure that we’re addressing the right market with the right products and we work very closely with some of the software vendors. We make sure that the right products exist in the channel because there’s no point in having a specific server in the market with huge quantities if SMBs don’t need such a high capacity. We try to make sure the right customers get the right servers and we’re working with ISVs to ensure this.

JD: We try to be closer to the market and to the end-users than the other vendors by addressing their specific issues and separating ourselves from the box-dropping attitude. We have the advantage of being a European company so we have engineers in Europe, which is pretty close to the region, especially when you consider that most of our competitors are based in the US. On top of the basics that everybody does, we go that extra mile and we integrate software; we design solutions specifically for an SMB. So when we talk to an end-user we have a business discussion, not a box discussion.

RDS: We have a fairly comprehensive route-to-market model and there is our Preferred Partner programme. In addition to that, we try to sweeten the proposition by running local programmes to give resellers incentives and rebates based on performance or focus within a specific area, and these are incremental and make a good profit stream for resellers. There is also the brand strength of ProLiant servers — for quite some time we’ve had the number one positioned servers in the Middle East market. In the UAE specifically, we’ve had over 50% market share, which means one out of every two servers sold is a ProLiant. HP ensures that resellers are compensated adequately, both centrally and locally, to make this a profitable and healthy business for them.

WA: At IBM we work through a wide network of partners and resellers in the market. Resellers see a lot of value in working with us based on our market share and the technology, which is enabling them to sell a lot more in the market.

||**|||~|Johan_Degroote200.gif|~|Johan Degroote, NEC|~|CME: What kinds of skills do resellers need to possess to effectively sell your products?

AW: Sun is a pretty demanding company when it comes to skills. We have always tried to keep our channel community lean and mean, which means we have no quantitative goal to sign hundreds of partners all across each country. We try to keep the number of partners to the bearable minimum, which means that each partner must have his business space, focus, his own skills, and so on. But on the other side of the coin, we’re asking these partners to be above average when it comes to sales and pre-sales so we have very stringent accreditation rules and certification for individuals.

RD: We stress that partners need to bring value to customers. Box-moving is no longer the way forward. It hasn’t been the way forward for the past five to seven years already, so you’ve got to get a new skillset. Maybe that’s with a solution, portals, mid-market ERP, CRM, or offering different types of solutions. It’s important that the channel partner finds a niche in the market and develops strategies for it because customers are looking for value-added resellers.

WA: Customers want to see the skills available in a reseller to be able to install the software, integrate the hardware, do the set up and have customisation skills because the majority of SMB clients don’t have the IT staff to do this. The reseller needs to have enough skills on the hardware and software side of it. This is exactly what the SMB customer is looking for.||**|||~|Deepchandani,-Rajesh200.gif|~|Rajesh Deepchandani, FSC|~|CME: What sort of training do you provide for your partners?

RDS: The hallmark of ProLiant servers is and always has been simplicity. So the deployment tools that are provided with the servers are very intuitive. The design principles that you need for the development of a server platform take into consideration that we have a very large stake in the SMB. Partners may not be very highly skilled to integrate solutions, so the start-up, out-of-the-box solution for setting up a server is something that is built into consideration when servers are designed. Simplicity is one of the key criteria within a ProLiant server. This essentially means that any reseller capable of installing an operating system on a desktop is also capable of driving an installation on a server-based system.

WA: We carry out roadshows and mass events but we also do specific training sessions and events for our partners on specific technologies — how to install, maintain, support and how to customise. We try to transfer skills in this way, as well as providing sales training.

JD: We have training schemes as everyone does, and it’s very hands-on as it is all done in our factories. It is very in-depth and interactive training. We also have highly skilled, pre-sales engineers who are constantly visiting the region, giving the partners updates and explaining new developments.

RD: Its not only about training — that’s just one element of the entire paradigm. As a hardware vendor, we can provide training based on our parts and our technologies and maybe to certain integrated solutions — what is important is that we bring in the other side of the channel; we also have our ISV channel. We’ll say to the reseller, “look this is the solution our ISV has” and what’s important is to bring them together. Then you get the best of both worlds: you have a partner who is focused on hardware as well as an ISV who’s got a solution and knows his application.

AW: For all the countries which are not covered by one of our subsidiaries, our partners should be service accredited. As a bare minimum we undertake four weeks of full-time service training in South Africa, which is quite a high requirement. You don’t sell low-end products in this way; we are in the high-end part of the spectrum. Our partners’ service technicians are probably spending six to eight weeks every year in training so it’s an intense schedule.||**|||~|White,-Aaron-200.gif|~|Aaron White, Sun|~|CME: Server virtualisation and consolidation are two things that are big in the enterprise segment. Are you seeing any demand for such offerings among SMBs?

JD: The virtualisation of servers is not really exploding among SMBs in this region, but the consolidation of servers has been happening much more in the SMB segment.

RD: Virtualisation is something we see a lot in the enterprise. Virtualisation and consolidation go together, it’s a marriage. When a customer has too many servers and is all over the place, he starts to look at virtualisation. If he sees that he’s only utilising his servers 20% to 25%, he starts to look at consolidation. Virtualisation leads to consolidation and consolidation leads to virtualisation — but this is in the enterprise. In the SME, they only have five to 10 servers, but some of them will still be under-utilised and that’s when it makes sense to virtualise, and it’s becoming easier for them because more software vendors are supporting this. However, you have to weigh up the cost versus benefit, and I can see virtualisation becoming more cost effective for SMEs over the next 12 to 18 months.

AW: Quite often SMBs need more flexibility than what they currently have. We’ve carried out roadshows across the region and specifically addressed the issue of virtualisation and the response has been outstanding. In a similar way to Western Europe, SMBs in the Middle East are starting to look at virtualisation as they see benefits way more than just what consolidation can offer; there is a low running cost as well as disaster recovery functionality and Sun is in a good position to take advantage of this opportunity.

RDS: Virtualisation is a term that has been banded around quite a bit. There is a lot of investment involved. It’s not just something you can pick off a price list. It requires a lot of consultancy, a study of the customer’s existing environment and a benchmark performance matrix — and that’s when you go into the design phase — rather than it being pre-designed. A traditional reseller who is used to just installing servers will have to work on skills and knowledge in order to make it onto the virtualisation arena. Having said that, some SMBs, with 20 or 30 servers, are seeing the benefits of virtualisation, but maybe not to the same extent as enterprises yet.

CME: A lot of resellers are claiming that the profit margins they are making off the server market are getting smaller. What is your response to that?

RDS: Resellers who tend to look at servers as a commodity would see corrosion, but that arises from a sales strategy that doesn’t try to change from just selling a box. HP provides much more value-add around the box that delivers true value to the customer as well. I’d recommend to channel partners that they understand what’s available in HP’s product portfolio — understand what the product is capable of. Look at niche components that attach themselves to the server because it’s these niche components that add value to the server.

JD: As any technology gets commoditised, the margin gets low and becomes under pressure. If vendors engage in over-distribution, everybody wants to get their hands on the product and with so many resellers purely box-moving, it becomes nothing more than a price war. Profit margins become thin which means that resellers have less income to invest in training and education. In the long term I don’t think these vendors contribute well to the transfer of knowledge into the region.
||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code