How channels win selling cloud

Again the transition in the industry is apparent in this week's news - on top of the publication of falling PC shipments in Europe comes the revelation from Europe's biggest software business, SAP that half its sales in two years' time will be cloud products. SAP has been one of the more conservative forces in the industry - its customers in manufacturing are as well. For cloud to win here really shows a dramatic change. And because this is all so new, there is no real long term history or usage to draw on, hence our other key report this week with an expert saying that it is essential for those selling private cloud to develop case studies and a narrative to go with their sales processes.

UK, LEAD PC SALES IMPROVEMENT IN CHANNEL

PC sales through Western European distributors were slightly better in the final quarter of 2015 according to data published by researcher CONTEXT. Unit sales for the quarter remained almost flat, falling at only -0.1%, compared to the previous year, compared to a -3% decline in Q3 2015. This contrasts with shipment figures produced a few days ago by IDC.

“The improvement was driven by consumer-targeted PCs, which returned to growth during the holiday season despite a strong prior-year comparison period”, said Marie-Christine Pygott, senior analyst at CONTEXT. “Consumer PCs were up by +3% year-on-year in Q4 2015 as sales of detachable and convertible mobile devices increased.”

Business-targeted PCs declined by -5% year-on-year in the final quarter of 2015. The decline came on the back of good growth in the same period in the previous year, when business sales were benefitting from the last XP migration projects and were also being pushed by the use of Microsoft’s Windows with Bing in the commercial space.

The final quarter of 2015 was characterized by strong efforts to clear excess PC channel inventory, and distributors in most countries commented on seeing stock levels go down to more acceptable levels over the quarter. In line with the progressive depletion of old PC stock in the channel, the transition to Windows 10 accelerated significantly during Q4 2015. While Windows 10 Home accounted for only 44% of Windows Home PC sales by Western European distributors in October, the figure went up to 69% in November and to 80% in the final month of the year.

Country break-down: Q4/2015 year-on-year

Germany -3.5%

UK 10.0%

Italy -3.3%

Spain 8.3%

France -9.2%

Netherlands 2.0%

Sweden -16.3%

Switzerland 5.9%

Austria -3.3%

Poland -5.3%

SOROS-BACKED DEVELOPER OPENS OFFICES IN , SPAIN

Ciklum, a global Software Engineering and Solutions business, has continued to expand its global delivery footprint in Poland and Spain with the opening of new offices in Gdansk, Wroclaw, and Malaga. These new locations will offer the incoming and existing clients the choice in terms of the development team location and currency preference, it says.

The reason for the entities in the new countries is to provide services to the EU in addition to the Eastern European delivery locations. Together with 14 operating offices in three continents, these will provide more mobility opportunities in case the client requires multiple locations for the teams, it says.

"It is an exciting period in our development and is in line with our strategy of continued expansion of our global delivery ability and fulfilment of services across borders. Ciklum has offices from the West Coast in the US to EMEA, and we are pleased to welcome our Polish and Spanish colleagues with these additions. We are now truly viewed as a Global Technology Partner in our market. I look forward to meeting more clients in these new locations, and the outlook for 2016 is extremely positive," says Craig Wilson, Chief Revenue Officer, Ciklum.

The year of 2015 brought milestone developments for Ciklum as a global company, with support from the George Soros's fund. It now has 2500+ developers located in the Delivery Centres working on Extended Software development, Quality Assurance, R&D, IoT, Big Data, Product development and Engineering Consulting.

USE PUBLICITY TO WIN IN CLOUD, SAYS EXPERT

The private cloud, though smaller than public cloud, is seen as better from a security point of view, and many enterprises are choosing it as a stepping stone or pilot. It will be those companies that can demonstrate success through marketing and case studies who will win, says one expert.

According to Technology Business Research, (TBR) and its 3Q15 Hosted Private Cloud Benchmark, even the largest enterprises with stringent governance policies are likely to adopt private cloud solutions as the first step to transitioning from traditional to truly hybrid IT environments, driving the total market opportunity to an estimated $44bn by 2020.

“The best way to win in this market in 2016 will be to promote relatable success stories and case studies that showcase the added efficiencies and cost savings associated with hosted cloud environments as well as the security benefits of deploying workloads in hosted private cloud environments,” said TBR Cloud Analyst Cassandra Mooshian.

Although small compared to the expansive public cloud market, the hosted private cloud market is growing. As the market lacks one clear leader, time and space remain for small vendors to catch up to front-runner IBM. The private cloud market is unique, with independent software vendors, systems integrators, born-on-the-cloud vendors and hosting companies all investing to gain market share, it says.

The benchmark and TBR’s 2H15 Private Cloud Customer Research, which highlights hosted private cloud and self-built private cloud adoption, found 71% of private cloud users view private cloud as superior to public cloud based on security. A shift in customers’ investments over the past six months from development (PaaS) to production (IaaS and SaaS), noticeably impacted the market; although, IaaS remains the largest segment in the private cloud market as enterprise value dedicated cloud instances.

 If you have not yet entered, there is still just time to get your case studies and entries into the European IT & Software Excellence Awards, but the deadline is fast approaching. Free to enter, they give a real boost to publicity and an opportunity to engage with the wider European market. With a huge gala dinner and presentations, they give a massive opportunity for publicity across dozens of categories and show what ISVs, solution providers, VARs, distributors, suppliers and IT support businesses can do. Do not miss this opportunity; deadline is February 12. Register and enter here

EMEA PC SHIPMENTS DOWN 18% IN Q4

PC shipments in EMEA reached 20.8 million units in the fourth quarter of 2015 — an 18.2% decrease year on year, according to IDC. After a strong shipment push of devices under Microsoft’s Bing promotion from summer 2014 to January 2015, the focus for hardware manufacturers and their channel partners has been to deplete stock, leading to an 18% contraction for 2015 with 76.3 million PCs shipped in EMEA.

In 2014 PC shipments were driven in commercial by the end of Windows XP support as well as the need to renew the first Windows 7 portables four years after their deployment, while in the consumer segment Bing successfully targeted the needs of price sensitive users. The strengthening of the dollar also led partners to gamble on cheap products in the fourth quarter of 2014. But 2015 turned into a very costly year for all of them as inventory clearing not only took eleven months but also strong promotions and price reductions. Year on year comparisons were therefore unfavourable during 2015 and the introduction of new technologies such as Windows 10 or new CPUs failed to reverse the trend. But it is not all bad news— as there are some signs of stabilisation and 2015 results will support a more positive comparison in 2016.

"The market contraction was to be expected," said Chrystelle Labesque, associate director, IDC EMEA Personal Computing. The combination of various economic and political factors led all three sub-regions to contract in 2015Q4. Western Europe declined by 13.1%, while in line with expectations, Central and Eastern Europe (CEE) contracted 24.7%. In Western Europe, the U.K. consumer market reported the best result, while in the commercial segment some public spending in particular in Austria and Italy supported shipment volumes. A sharp decline in oil prices together with currency and political instabilities affected the CEMA region in particular, while the slowdown in the Chinese economy is worsening the business outlook in export-oriented Western European countries. Looking at the full 2015 performance, Western Europe was down by 13.8% over 2014, and market consolidation becomes more obvious as the top 3 players (HP, Lenovo, Dell) accounted for 54% of the market in 2015 vs 50% in 2014. "2015 was clearly a very difficult year for the PC market. Demand remained weak across all four quarters with double-digit contractions in CEE and MEA," said Stefania Lorenz, associate VP, IDC CEMA. "The CEE region contracted by 26.4% year-on-year in 2015. The region was negatively affected by the devaluations of local currencies and high PC inventory levels left from 2014. The worst impact on purchasing power was felt in the Eastern part of the region: Russia, , Kazakhstan as well as the Rest of CEE subregion. Other factors that prevented the market from rebounding in the commercial space included government budget freezes."

"In Q4 2015 the PC market in the CEE region was in line with the forecast at -24.7% year-on-year," said Nikolina Jurisic, product manager, IDC CEMA. "Viewing the country mix, the "star" was Hungary, with a positive result of 11.5% growth year-on-year thanks to last minute deals in the public sector. The other countries in the CEE region reported PC market declines. In many cases the unfavourable comparison with Q414 (and the Bing push) resulted in a sharper decline for Poland, Czech Republic, Bulgaria, and Croatia.

VEEAM INDICATES MOMENTUM TOWARDS $1BN GOAL IN TWO YEARS

Privately-held Veeam has reported Q4 2015 results which indicate a 22% overall growth year-on- year, with a total of nearly $500 million in total bookings revenue. This sort of growth means it is expected that the company will pass the half-billion dollar revenue mark in 2016 and expect momentum to continue, carrying Veeam toward its goal of $1 billion in annual revenue by 2018.

Veeam is dependent on continuing increases in virtualisation, particularly with VMware which has seen its growth fall back as it reaches high levels of penetration in the enterprise market and competition from cloud. Recent results from 451 Research, which reported public cloud storage spend will double in two years, while legacy storage spend will fall by 17%.

The UK & Ireland also indicated strong growth once again, with an overall 17% increase in total bookings revenue year-on-year (Q4-2015 vs Q4-2014) and a 35% increase in Enterprise specific revenue (2015 vs 2014). The UK & Ireland now has a total of 13,032 customers, and 2,440 ProPartners, it says.

OUTSOURCING RECOVERS IN Q4, BUT VALUES ARE DOWN

Outsourcing bounced back in EMEA with a strong fourth quarter. Outsourcing activity in the region grew 44% compared to the third quarter and ACV exceeded €3 billion in the fourth quarter of 2015 for only the third time ever. But contract values continue to decline.

The EMEA results echoed the strong global market performance, which posted the highest quarterly level in 4 years, says researcher Information Services Group with global annual contract value (ACV) rising 17% in the fourth quarter, to $3.1bn, fuelled by the signing of five mega-relationships.

It was only the third time ever that the EMEA region surpassed €3 billion in ACV in a quarter, and the first time since the third quarter of 2012. For the full year, EMEA was unable to counter the effects of a sluggish first half. Regional ACV declined 8%, to €9.4bn, while the number of awards fell 7%, to 601. This decline can be attributed to a sharp reduction in ITO (IT outsourcing) activity and values, as the number of large infrastructure awards dropped sharply and contract values were lower across the board. In stark contrast, BPO (Business Processes) ACV in 2015 surged 24% for the year, with contract awards up 11%, led by industry-specific, Contact Centres and Facilities Management work.

“It is encouraging to see such a strong finish to the year in EMEA. Enterprises in the region are actively seeking ways to revamp their processes around cloud, digitalisation and robotics, resulting in a shift to smaller deals, which also allow for flexibility and cost variability,” said John Keppel, partner and president, ISG EMEA & Asia. “This new approach to outsourcing looks set to continue; globally, we see more enterprises are sourcing than ever before and they’re paying less for services, which encourages them to outsource even more.”

By market, the UK, while making some gains on its third-quarter results, fell short of 2014 full-year values as ACV sank 19% in 2015. However, in keeping with the trend toward more awards of lesser value, the 234 contracts for the year was a record high.

DACH had its best year ever, matching its 2011 performance, as ACV surged 69%. However, the sub-region bucked the trend seen elsewhere by posting its lowest contract count since 2007. Its strong ACV increase was aided by mega relationship awards, including Siemens’ large contract renewal with Atos.

France struggled in comparison with its stellar performance in 2014, when it reached record highs in both contracting and ACV. Values fell by 70% during 2015, while contract volume dropped by 40%. This sharp decline may mark a return to normal activity levels after a standout year of intense activity, rather than a longer-term weakening trend. Both the Nordics and Benelux saw ACV gains in the fourth quarter but an overall decline in both ACV and deal counts for the year compared with 2014. By sector, Telecom followed the broad trend of increased contract activity at lower values, as the number of contract awards reached record numbers despite a slight decline in ACV. Travel and transport also achieved new highs in contract numbers, while values decreased.

The region’s powerhouse sectors, Financial Services and Manufacturing, finished close to their 2014 figures. Financial services ended the year with a relatively flat performance while Manufacturing bounced back to post an 8 percent gain in ACV over last year, although its deal count plunged by 26 percent.

Keppel concluded, “The return of mega relationships in the fourth quarter gave EMEA the boost it needed to reach the landmark figure of €3 billion. After a slow start, the final few months of the year have helped put outsourcing in a good place as we exit 2015 and enter 2016.”

NETSUITE NAMES NEW EUROPEAN PARTNERS

NetSuite has a number of new partners including Audaxis (Belgium), Balkan Services (Bulgaria), Extra SRL (Italy), Mepco (Finland) and Solmate (Netherlands), who have joined the NetSuite Solution Provider Program to capitalise on the demand for cloud ERP software among businesses of all sizes in Europe. The new NetSuite partners say they are broadening their portfolios beyond supporting traditional on premise ERP solutions from such vendors as SAP, Microsoft Dynamics and Sage as client organisations look to eliminate the inflexibility, on-going maintenance and high costs of in-house on premise systems by turning to the cloud. “There is strong demand across Europe and the Middle East for cloud-based ERP systems that give organisations the ability to scale and grow quickly,” said John Campbell, EMEA Channel Director at NetSuite. “All five of these partners bring with them deep expertise in their market and understand the benefits they can bring to customers with NetSuite. In return, our partners provide us with the diversity needed to reach new and emerging markets.”

The NetSuite Solution Provider Program aims to deliver benefits that begin during recruitment and range from business planning, sales, marketing and professional services enablement, to training and education.

RUSSIAN INTEGRATOR OPENS FIRST EU OFFICE

Bell Integrator, a Russian system integrator that offers consulting, technology and outsourcing services, has opened its first office in Europe, in the capital city of Latvia, Riga. This will be the company’s fourth foreign representative outside of its domestic market, but the first one in the European Union, it says. Bell currently operates its subsidiaries in the US, Mexico, and Kazakhstan.

With the new office in Riga, the company will be able to better serve its European customers thanks to geographic proximity and from the location within the European Union, it says. Also, Riga offers the availability of highly skilled resources, new market opportunities and new local customers with loyal attitude toward the Russian IT companies, it says. Additionally, Latvia offers relatively open migration policy which combined with the lack of language barriers adds to the attractiveness for both Russian and English speaking professionals, it says.

“Entering the European market, without exaggeration, is a strategically important step marking a new milestone for our company. This event opens up new horizons and will provide European customers with superior service,” comments Yuri Latin, CEO of Bell Integrator.

Bell, which employs around 2,000 people, is a specialist in “business critical solutions for complex IT problems” and provides lifecycle services for telecoms, finance, transportations and healthcare enterprises.

TD AZLAN TO DISTRIBUTE FULL DELL PORTFOLIO

Azlan, now with its new Tech Data logo (below), has been named a distributor for the full range of Dell Software solutions. Tech Data will be placing a strong emphasis on the company’s Back-Up, Recovery and Data Protection suite as it looks to extend the Dell's reach.

Mark Ceraolo, Server and Storage Business Development Manager for Azlan stated: “While Dell is one of the best-known brands in the IT industry, many resellers are not fully aware of the extensive capabilities of the company’s backup, recovery and data protection software and appliances. We are aiming to change that situation and make Dell a leading player in this fast-growing segment of the security market.”

Azlan already offers Dell enterprise solutions and is a long-standing Wyse and SonicWALL distributor, so adding Dell’s Data Protection, Systems Management and workspace solutions is a logical next step, he says. “For partners already selling Dell servers and storage, Dell Data Protection is an obvious and valuable add-on to their portfolio. Those resellers can now turn to Tech Data for the full end-to-end Dell proposition.”

WESTCON-COMSTOR ADDS ARBOR, BLUE JEANS IN EUROPE

Distributor Westcon-Comstor has been busy this year - it has added the Blue Jeans video conferencing service which offers video collaboration without dedicated conference rooms and hardware investments. End customers simply need a Blue Jeans account with a video-enabled device and Internet access to start collaborating via video.

It also expanded its deal with Arbor Networks, the security division of US-listed NETSCOUT. The two companies previously had an agreement to carry Arbor’s DDoS solutions in Latin America and the Middle East. This expansion further extends Arbor’s reach into the European enterprise market.

Arbor is using WestconGroup’s incubation program, a programmatic approach to geographic expansion that enables it to offer repeatable, efficient, cost-effective and scalable processes.

“Our experience working with WestconGroup in other regions has been fantastic. They know the customers, understand security and value what Arbor can bring to the table in terms of proven, market leading solutions,” said Jeremy Nichols, Arbor Networks Global Vice President of Channel Sales. “Arbor has been pervasively deployed in the European service provider market for more than a decade. Expanding our partnership with WestconGroup, and leveraging the incubation program, will allow us to drive continued growth in the European enterprise security market for network visibility, DDoS protection and advanced threat detection solutions.”

“Arbor is primed to accelerate its growth at a time when solution providers and their customers need the ability to research, detect and mitigate network-based threats on a global scale,” said WestconGroup’s Senior Vice President Central Region & EMEA Security Solutions Practice Willem JH de Haan.

Finally Westcon-Comstor has added RingCentral's cloud-based communications systems to its US portfolio and this may come across the Atlantic to Europe.