The cynical analysis by tradition tends to be gloomy. But I’m not a cynic, and therefore, I try to look at things on the brighter side of the spectrum. If the saying: “The beginning that never knows the end” is true, it’s equally true that every end also marks a new beginning.
The first 2 quarters of the fiscal 07-08 have ended about a fortnight ago, and we in the IT industry are in the midst of yet another new quarter. Therefore, it’s imperative at this juncture to assess where the channel stands.
To do this, the channel fraternity has to take a holistic approach. The crux of the channel business is related to profitability, but it isn’t always that the channel looks only at the monetary value while interacting with clients. The resellers and System Integrators (SIs) also take on themselves a major task of influencing the customers in showing them directions.
To gear themselves up to the challenges in giving directions to clients, the channel first needs to understand market dynamics, the clients’ requirements, and then set its own directions.
Therefore, as I pen these few lines, I take upon myself the responsibility of listing down a few basic tips on how to push your sales and a few trends to look at besides the technology involvement — something that often get lost in the scamper after mere margins and profitability.
The basic tips to boost sale would include (a) partnering with new vendors, (b) focusing on vendor loyalty, (c) enhancing skills, and (d) having certain systems in place.
One way that can tackle the competition is to partner with new and emerging vendors, like many solution providers have done in the past (finding that doing so augments growth and increases margins). It’s also observed that adding new vendors provides building blocks to larger new solutions.
With the trend revealing that vendors are trimming their channels and often replacing or dropping resellers, it’s imperative that the channel also gets its business more aligned with the specific vendor policies if it’s to win its loyalty.
Enhancing skills is always important, as it gives a stepping stone to achieve the mandatory differentiation factor. This could be in terms of service levels, product portfolio, or even people management.
Similarly, it’s crucial to have your entire business processes in place — be it related to supply chain, technical know-how, or meeting clients’ demands for services and support. The trends that the channels will have to look at in the new quarter would include VAR consolidation, retail revolution, services on demand, and partner outsourcing.
Of these, partner outsourcing is fast becoming a trend. Many a time solution providers are successfully outsourcing their work to VARs and SIs that can provide a good range of hardware infrastructure and then also maintain it. I’m also convinced that Web based solutions such as email messaging, newsletter, etc. being outsourced to partners is expected to rise in the coming years.
The next big dive for the IT channel is retail. Major IT vendors spreading across PCs to software are working out retail channel strategy to match up to the boom.
Services and managed services would be the other trends that partners will have to look at with further determination. But the solution providers that jump into this will have to have unique offerings and expertise to ensure better cash flow.
The rise in the consolidation among VARs is also going to increase. Private equity funding driving VAR consolidation is already a trend. And we see that Indian VARs are beautifully working hard to grow organically and increase customer base.
Now, coming to the technologies: one can suggest that partners will soon have to look for greater involvement in Wi-Fi, Linux, RFID, virtualization, and thin client. Importantly, of these, partners are already deep into exploiting the Linux open-source facilities — especially in the context of anti-piracy raids.
To sum up, one is aware that in the IT market, changes are rampant — and many a time sudden. Therefore, we know many unforeseen changes also become the crucial factors that hinder the growth avenues for the channel. Distributors and resellers observe that they’re already finding it difficult to scale up because of critical management issues and high attrition rate. So everybody better keep a watch!