TMCnet News
The last few months were overshadowed by the looming Comprehensive Spending Review and the ongoing economic constraints but the channel had to continu...(Microscope (UK) Via Acquire Media NewsEdge) The last few months were overshadowed by the looming Comprehensive Spending Review and the ongoing economic constraints but the channel had to continue trading. Most of those selling hardware and software did find that things continued to improve but as usual there are a few clouds on the horizon. Nick Barron, sales director at Carrenza a cloud computing provider based in the UK, told MicroScope that for Carrenza it has been a great quarter. "We've seen a definite increase in demand for cloud computing, as our client base continually increases its knowledge of cloud services and the benefits they can bring. However, the fear of a double-dip recession is still very real and one of the main concerns for most businesses. At a time when spending budgets are still very tight the key thing for us is to make sure we are effectively communicating the value for money that our products and services offer to customers and prospects in order to give them the confidence to keep spending." VC-NET's executive chairman, Chris Wade, revealed its six-month pipeline is the largest it has ever been. "Companies are opting for long-term monthly-managed service solutions against a large capital one-off expense. We sold our first Video Managed Service in Q3 2010. Audio conferencing continues to enjoy double-digit growth." According to Philip Lieberman, president and CEO of Lieberman Software, the financial situation seems to have stabilised and a double dip recession seems unlikely. "We expect to have a better understanding of the future after the US Congressional elections in early November. If the Democrats sustain their majority, things should continue to improve. If the Republicans increase their numbers, we expect a downturn due to chaos introduced into the process." Getting an edge Extreme Networks' regional director for UK & Ireland Gary Newbold said Q3, Extreme Networks UK has been one of exceeding sales forecasts, with a record number of new UK customers. "We have succeeded by recognising that organisations are working tirelessly to try and give their businesses an edge in the face of fierce competition, but whilst they know they need to upgrade their infrastructure there is widespread belief that they can't make the necessary investment at this crucial time. Therefore, we have been proactive in working closely with our channel partners to dispel this myth and demonstrate that innovation and improvements need not stop because budgets are tight. "With our recent successes the message that a reliable, flexible and high performance IT network can be achieved at a lower overall total cost of ownership, certainly appears to be getting through." Ian McKay, director, EMEA channel & strategic alliances of NetIQ and Attachmate, told MicroScope that the last quarter has been challenging and exciting for IT. "Hard times lead to hard decisions and it has largely fallen to CIOs to find ways to do more with much less resources. NetIQ offers the channel something substantial to sell in this tough climate. Automation helps IT organisations make savings while improving the quality of services delivered. This is why we have expanded our channel this last quarter, growing on existing relationships and forging new partnerships in EMEA. "The response from the channel is great and we're recruiting new partners in our key EMEA regions. Under our new programme, they gain access to training, joint marketing and account management benefits." David Angwin, marketing director, EMEA, of Wyse, said sales were improving and the pipeline looks strong. "Our channel is taking advantage of how major desktop refresh programmes previously on hold are now being unfrozen and our zero client solutions for both Citrix and VMware VDI solutions are gaining strong traction with customers." Chris Walsh, sales director at Exclusive Networks, talked about a strong third quarter, with revenue coming in above target. "When we parted company with McAfee, questions were raised over how well this quarter would pan out, but it hasn't proven to be an issue for us. In fact, even if you discount the revenue which has come directly from the legacy McAfee business, we have still overachieved. "Our appliance-based project business is looking particularly strong with vendors such as SafeNet and Fortinet selling well. We have also been really pleased with the take-up of Exinda; this is where we've seen our biggest growth. With these results under our belt, we're optimistic about Q4." Delivering value Harvey Smith, regional sales director UK & Ireland channels, Hitachi Data Systems UK, said HDS is halfway through the financial year and has seen great results with over 100% year-on-year growth in its UK channel business - a fantastic success considering the economic situation. "This is down to a number of things from ever increasing demands for storage in the UK market, to customers and partners looking to derive more value from their purchases. In addition, we are continuing to empower our partner base so that there they are in a better position to drive more services business, making their relationship with us more profitable. "We have a very strong pipeline for the next quarter. Despite the fact that we are still not out of recession, our customers are spending money. But we feel that organisations are still cautious and take longer to justify investments. "Looking ahead, the channel will need to continue to address efficiency as this is what customers are after. It is no longer only about selling technology; resellers need to add value with a more consultative approach in order to differentiate themselves from the competition." David Ellis, director of new technology and services at Computerlinks, said the distributor saw a very successful end to Q3. "It was very back-end loaded but that has become commonplace over the past few years and looks to be an on-going trend. There are still concerns among our customers that there could be a double dip to this recession, not to mention the impact that the proposed public sector cuts will have." Ellis adds, "However, the market segments that our partners play in have, to date, been relatively immune to the savage cuts seen in other areas - although there is, of course, continued margin pressure. With customers wanting to move IT buying from capex to opex budgets, we (and our partners) are seeing a rise in demand for services addressing this. "Being able to deliver the services demanded by our customers will ensure the best margins are made. Also, any technology that gives a true and measurable ROI, such as moving to virtualised environments, is also in hot demand, so it's time to move away from safe territory and embrace next generation technologies." Ann Keefe, regional director UK and Ireland, Kingston Technology, told MicroScope that it operates globally in both booming as well as sluggish markets. "Even across EMEA we see different economic trajectories. Our sales data so far does not show any double dip recession. "We benefit from several factors: firstly, our core proposition for many products is that we will help customers to reduce their TCO. Secondly, many customers who held back during the first dip of the recession and didn't buy new equipment back then now need to squeeze some extra performance out of their existing systems. Our upgrade products are worth a serious consideration rather than the big ticket new computing hardware. Thirdly, we know from several crisis periods in the past that when the going gets tough the tough get going. "When the economy stutters or the memory market is in turmoil, Kingston fares better than other memory vendors due to our sound business model. As a result we usually end up gaining market share. Kingston Technology will take it as it comes. "We have experienced growth in the number of memory units shipped throughout the last two quarters and are at similar levels to that of mid-2009. The higher average selling prices earlier this year have helped to push the revenue results to pre-recession levels. This might be difficult to keep up though as memory prices are sliding and might continue to do so until the end of the year. "There is a noticeable caution in the UK market with many companies and people flipping their coin twice before deciding to spend it. Falling price trends on both DRAM and NAND components might help to make the spending decisions more palatable, especially as our core proposition for many Kingston products is that we will help customers to reduce their TCO." Cloud consultancy Saaspoint's CEO John Appleby said Q3 was a quarter of good (not rapid, or stratospheric, or easy) steady progress. The quarter was profitable and sales cycles are definitely shortening. Companies have moved out of their "batten down the hatches" phase, into something more like an environment where the key phrase is "let's get on with it then!" The recession has given companies some very good habits. There is much more competition for every deal and rapid return-on-investment is a key attribute of every project. "While the pipeline is showing signs of strong growth for Q4 and into Q1, I fear a double dip. I'm not predicting one - I just fear one! What we saw in early 2009 was also strong pipeline growth - but it remained just that! Pipeline. Projects were waiting forever to start rather than going away. Sales cycles were lengthening exponentially. However, if we do see a double dip, I don't expect companies to react in quite the same way - they won't be bludgeoned into inaction by fear and shock. "Most of them have learned their lessons in the last 18 months, and they have realistic expectations. They have learned to stop wringing their hands and get on with running their business." Chris Smith, sales and marketing director at on365, told MicroScope that ahead of Q3 deals were taking a lot longer to complete and briefs tended to contain a tighter focus on quantifiable ROI. "However, despite the slow start to the year, the last quarter for us was extremely good as lots of deals that were dragging their heels have come through and the final quarter looks even better." Ian Wells, director of northern EMEA at Veeam, said it had a great Q3. "Despite the state of the economy, there is still a strong demand for our products: we exceeded our own expectations and, indeed, our business was up by 116% over Q3 2009, building on a successful Q2. We can point to a number of reasons for this. First, virtualisation is still a growing market. "More and more organisations are realising the benefits that a virtual infrastructure brings to their business and that the ability to manage this infrastructure is key. Essentially, as VMware and other vendors continue to succeed, so do we. Second, we have had more of our products certified as VMware ready, making it easier for resellers to offer them when upselling a VMware installation. We have also made virtualisation management more attractive for resellers' customers by launching Veam ONE, a single package containing all the tools needed to manage a virtual environment. "Looking forward to Q4, it is vital that we keep innovating in order to support both our growth and that of our partners. For example, we have already launched our new backup and recovery product, which really changes the game in terms of data protection. "Whereas businesses have traditionally had to settle for recovery failures and wait hours for recoveries to happen, with our innovations they no longer do. Essentially there are new solutions to age-old problems, which creates a whole new sales opportunity. While it is too early to tell what effects government cuts and the wider economy might have on the quarter, we are anticipating continued growth based on the how well received the innovations in our backup and recovery products have been." Meeting demand Keith Downie, channel director at Alcatel-Lucent, told MicroScope that the channel remains under enormous pressure to maintain business as usual as it continues to weather the challenging market. "Whatever the future holds though, the ability to provide value-added offerings - such as Alcatel-Lucent's recent UK financial services offering - shows that vendors like us in particular are strongly committed to ensuring that our business partners are well-equipped to support their customers, helping them turn capex into a more predictable and managed opex model during these tough times." Steve Smith, managing director at Pentura, was realistic in describing it as a tough year for everyone and the recession has affected the reseller to some extent, but it has been adaptive enough to deal with it and flexible enough with its services to help its customers too. "The consultancy side of the business has exploded for us and we knew it would be something customers would demand fairly early on. This meant we were prepared for the change in customer demands when the recession hit, particularly as we could offer them services on a subscription basis. This has been very popular with customers as they can now focus on getting more out of the technology they already have. "We have also noticed a trend that some customers are moving away from the big four who charge substantial fees for less personal and tailored support, which is what customers are now demanding. Smaller consultancies have to provide a better level of service because one unhappy customer could potentially destroy their business, they can't afford to make mistakes and we pride ourselves on the fact we can react quickly to develop products and believe this is where we can outshine the larger organisations." According to Owen Cole, technical director, F5 Networks, there has been a certain amount of caution in the channel market in the last three months. "Whilst the recession did not hit many resellers as hard as they would expected, there is very much a 'wait and see' feeling in the market, particularly for resellers who deal with the public sector. Although we do know that there will be cuts in the wake of the spending review, no-one can tell the long-term impact on the technology market. "VARs simply don't know whether customer IT budgets will simply be slashed, or whether some savvy organisations will turn to IT to cut costs. However, it is likely that traditional hardware resellers will be hit hardest when adverse times hit - resellers who have shifted to a monthly recurring revenue model, and who have alternative revenue streams from management and maintenance, should be much more secure." Ian van Reenen, CTO at CentraStage, told us that CentraStage has had an encouraging Q3, although activity in each of our markets has been clearly influenced by the perceived impact of the spending review in each particular market segment. "In general we have seen a renewed interest from our customers in understanding the benefits and savings offered by a managed IT solution accompanied by a willingness to adopt technical solutions to overcome budgetary pressures. "Education remains a major focus for us and, while having been spared the deeper cuts, we have seen increased interest from the sector in the performance and efficiency gains experienced by our existing customers. "Our focus has been on training workshops and knowledge sharing to assist authorities in formulating new strategies in the light of the cuts announced. Particularly pleasing has been the confirmation of intended benefits experienced by our early adopters, putting them on the front foot with regard to the increased challenges now being faced. "Q3 saw a doubling in numbers of small business customers serviced through CentraStage Online, our SaaS cloud offering. Statistically we have seen an increase in usage of the platform to enable monitoring and remotely deploy software as opposed to the historical focus on desktop sharing and remote takeover. "This indicates a growing desire and necessity for small IT support businesses to automate their services in order to serve an increased customer base without increasing cost: a very positive indicator for our business but also indicative of the willingness to get on with business despite the tougher climate. "CentraStage expects a challenging but positive Q4 as customers both grapple with internal efficiencies and demand more from their providers. We believe that our 'do more with less' mantra positions us well to thrive in the current economic climate and we fully expect to meet our targets and experience healthy growth over the coming year." Switch to investment According to James Hall, marketing director at Teneo, Q3 has seen a definite move from pure cost cutting to investing in key technologies that will help growth or provide competitive advantage. "Customers are becoming more interested in technology solutions that can help them to become more productive, rather than delivering a pure 'we have no budget' message. Q3 suggests that fears of a double dip recession are going away. "What the government spending review will mean for Q4 and beyond we will get a feeling for in the next few weeks. Companies that rely heavily on public sector business could be in for a tough time. At Teneo our quarter turned out on track. We are, however, seeing decision making times getting a little longer. Luckily we have escaped the worst of the recession. "As a company that provides products and services that help customers reduce their overall IT costs our message has been well received in the last year. In fact we grew revenues by over 40%." (c) 2010 Reed Business Information - UK. All Rights Reserved. |