A bright future?

The channel's major stakeholders discuss the coming twelve months

Tags: Fujitsu Technology Solutions - UAEKingston TechnologyMicrosoft CorporationSymantec CorporationTripp Lite
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A bright future? Samer Abu Ltaif of Microsoft Gulf
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By  Aaron Greenwood Published  January 11, 2011

Embracing new technologies such as cloud computing and pursuing customer-centric business models are looming as key objectives for the channel sector’s major stakeholders over the next 12 months.

After another relatively tumultuous 12 months for the regional IT channel in 2010, there is emerging confidence that 2011 will prove a turning point for an industry still struggling to shake off the worst effects of the global recession.

Not surprisingly, key stakeholders argue success or failure over the next 12 months will rely largely on the ability of vendors, distributors and their reseller partners to embrace new ways of working, offer value-add services to clients and promote the adoption of emerging technologies in a bid to drive growth and propel the industry forward.

Interestingly, while consolidation was a key buzzword in the industry in 2010, the next 12 months is shaping up as a period of greater potential for those willing to take a more forward-thinking approach to the market, particularly in regard to new technologies.

At an enterprise level, cloud computing and other forms of remote data management remain the industry’s great hopes in this regard. “One of the most positive aspects gained from the [economic] crisis is that lessons were learned and solutions have been developed and implemented,” says Vipin Sharma, vice president for EMEA sales at Tripp Lite. “New technologies have become incredibly important in this environment.
The advent of on-demand modular infrastructure, remote monitoring and management, cloud computing and virtualisation will pave the way for more specialised products and services [not only in 2011] but in the long-term.”

Guru Prasad, general manager of strategic alliances and partnerships at FVC, says technologies that are closely coupled with services will generate greater margins than pure hardware or software sales.

“Projects which involve ongoing service engagement such as compliance management, framework development and performance enhancement initiatives will generate greater margins while ensuring ‘mindshare’ with customers,” he argues.

Samer Abu Ltaif, general manager of Microsoft Gulf, says that although customer adoption of cloud computing is still in its “incubation” phase, resellers in the Middle East need to prepare for this shift gaining momentum in 2011.

“This transformation will help the IT channel to focus on value added services and solution-oriented offerings that will eventually balance out with the traditional transactional business that the IT channel has played on probably since the formation of the industry,” he says.

Ramzi Itani, regional channel and alliance director for the MENA region at Symantec, believes there is still some confusion among partners about the nature and potential of cloud computing services, in particular.

“With many IT vendors increasingly embracing cloud computing, it is important that channel partners are also equipped to follow this path,” he says. “There is some confusion within the channel regarding the technologies involved. However, most players do recognise the huge potential it offers. It is absolutely essential for channel partners to understand the cloud and what operational benefits it can offer customers.”

Hussein Shehab, channel director for sales and operations in the Middle East at Fujitsu Technology Solutions, warns that failure ‘to embrace the cloud’ could have dire commercial consequences for the channel.

“Cloud computing is poised to transform the IT industry and it will also alter financial models [within the sector]. Being able to offer these technologies will ensure resellers secure their long-term financial positions,” he says.

“Ultimately, most channel partners will be able to generate their margins through SaaS (Software as a Service) applications. Using SaaS will not only drive costs down — for example, through lower maintenance costs or the implementation of green IT initiatives — but will also open up other opportunities to provide related consulting, professional and systems integration services,” adds Shehab.

The focus on emerging technologies will be key to driving margins and increasing revenues, claims Shirley O’Sullivan, director of channel marketing for EMEA at Riverbed.

“Maturing product categories place pressure on margins and result in less value-added opportunities,” she says. “Resellers should broaden their focus to include technologies where new value-added services are required. The shift in margin from hardware to software, and increasingly to services, emphasises the need for resellers to maximise utilisation of their service staff, and deliver repeatable delivery processes within their operations.”

O’Sullivan believes a multi-pronged approach to providing added-value services is hugely important in this environment. “Channel players should offer services to help encourage customers to adopt emerging technologies,” she argues. “They should also work with vendors to understand the broader application of their solutions. Most vendors now operate technology alliance partnership programmes to assist with this process.”

A higher level of financial diligence will also prove to be the order of the day for resellers with serious growth intentions this year, according to Abu Ltaif at Microsoft.
“Financial transparency and internal compliance governance are critical elements in today’s challenged economic situation,” he says. “Financial institutions and independent investors are keener to invest finance in companies that have greater financial transparency. This is an aspect of business conduct that was always overlooked in the channel due to the economic boom. This trend is changing and the IT channel will need to adapt to those new financial trends.”

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