Growing channel sales
The ongoing weakness in the PC market has been felt in the distribution and reseller channels across the Middle East putting the spotlight on how partners are coping with the current business climate.
IT sales are the lifeblood of any channel partner organisations and as a consequence, the work of the men and women entrusted with growing the company’s business through increased products and services sales can sometimes be demanding and pressurised.
For years, conventional wisdom suggested that channel partners should avoid focusing on IT hardware sales because it’s a low-margin, commoditised business.
Many partners, accordingly, transitioned into break and fix services, consulting services, managed services, professional services and, most recently, cloud services. And while services offer the potential for higher margins and monthly recurring revenue versus one-time transactions, IT hardware especially in the Middle East channel, remains an element of a typical reseller’s business.
Despite growing services revenues many in the channel continue to view traditional hardware or IT equipment sales as a key source of income.
But why is the channel reluctant to embrace services and solutions-selling?
Ayman Al-Bayaa, CEO at Dubai-based systems integrator STME, said while the services route has more potential for partners to earn higher margins and monthly recurring revenue versus one-time hardware transactions, most resellers find it challenging to transition their IT sales approach from traditional product reselling to a consultative sales strategy.
Al-Bayaa said if partners are to succeed in growing their sales in the market, they need to always look at the long term prospects and not quick gains. “There is need for partners to look at their short term chase of quick money from hardware sales to transforming those into long term engagements with customers that lead to them developing a services led business,” he said.
At another systems integration company NewRAS Technologies DMCC, Haseeb Soleja, managing director, said undoubtedly the shrinking IT budgets of most organisations have been affecting the growth of sales for many channel partners. “In the technology business, one tends to become a victim of their own creation by offering a host of product offerings and services under one umbrella. Growing a business under such circumstances can become a challenge especially under the prevailing market conditions,” he said.
He added that due to IT budget constraints, a lot of clients ask for extended credit of 60 to 90 days whereas the standard credit line from major IT distributors in the region is 30 days and this is for the run rate business and not project business. “In big project-based business, getting the final payment which varies from 20% to 50% becomes a challenge if there are hiccups during the course of implementation,” he noted.
Savitha Bhaskar, COO, at specialist security solutions provider Condo Protego, agreed and said in the current financial and business climate, key issues affecting most Middle East channel partners when it comes to growing their sales are credit issues, cash flow and skills issues on both the channel and customer side.
Bhaskar is of the view that over the next five years, as customers look to reduce their operating expenditure and keep a closer eye on the bottom line, advanced technology trends such as converged infrastructure and SDN are set to see stronger adoption in the Middle East leading partners that have invested in these areas to witness phenomenal growth in sales.
As a result, Bhaskar added, the technological skills challenge will take on heightened urgency, with partners needing to acquire the right skills, and help their customers. “But now is the key time to invest in technology so that when the financial situation rebounds, they will be more competitive,” she said.
The relationship a channel partner has with a distributor or vendor contributes to how much they are going to grow or develop their business in the market. Whereas in the past, solution providers were more likely to accept the vendor’s layout of the relationship, more sophisticated solution providers today are closely examining their vendors in regard to their own profitability and looking for ways to assert more control over these relationships, resulting in more balanced channel relationships overall.
Maya Zakhour, channel director, Middle East at security firm Fortinet, said partners should focus on providing end-to-end solution to a customer and try to become the trusted advisor to their business. “To achieve this, partners need enablement and it’s important that they understand how to position, implement and support each product from a vendor’s portfolio,” she said.
Zakhour emphasised that to grow sales with existing and new customers, partners need to develop and identify the correct vendor and distribution partners and aligning with those that fit their own business goals. “There is need to offer differentiated offerings in the market, and this can only come about by identifying with vendors that fit with a partners’ business objectives,” she said.
At specialist networking solutions vendor, D-link, the company believes value-adding and not just pitching a brand and its products is what is needed in the channel. “Far too often, resellers get into the comfort zone and rely only on the brand or hardware product they sell,” said Sakkeer Hussain, sales and marketing director at D-Link MEA. “From a D-Link perspective, we urge our channel partners to be offering value-added services, such as pre- and post-sales services, scoping and designing of solutions, consultancy, proof of concept (PoC) and offering professional services.