July 2017

Clear intent Cisco’s UK channel boss Angela Whitty lays out the partner opportunity around ‘intent-based’ network launch 16

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Editorial Editor Doug Woodburn 9517 [email protected] Deputy editor HannahTrevor Treharne Breeze 90349510 [email protected]@incisivemedia.com Reporter Tom Wright 9097 [email protected]

Channelnomics.eu ContentReporter editor Josh Budd Sam 9154Trendall 9813 [email protected]@incisivemedia.com Who’s tanking in the rankings? Reporter Josh Budd 9154 [email protected] “For the loser now will be later We provide a summary of some Senior production editor Amy Micklewright to win; For the times they are of the Vendor Report’s key findings, Production executive Hyrie Mehmet 9779 Production editor Amy Micklewright a-changin’.” including how Microsoft, Cisco and ProductionAdvertising executive sales Hyrie Mehmet 9779 The lyrics of Bob Dylan’s anthem Apple fared, on p20. GroupCommercial production director editor Matt Dan Dalton Parker 9796 of change could not be more apt for One criteria on which channel [email protected] the latest CRN Vendor Report. partners may increasingly choose AdvertisingHead of global sales sales Nina Patel 9943 Many of the losers from the last their vendors in the future is [email protected] director Matt Dalton 9796 time we conducted this report, sustainability, as we explore in this [email protected] manager Naomi Cregan 9259 [email protected] of global sales Nina Patel 9943 which sees resellers rate their vendor week’s lead feature on p10. [email protected] director Jessica Feldman 9838 partners in four key areas of service, Millennials will apparently [email protected] manager Naomi Cregan 9259 have triumphed make up more [email protected] this time around. “Reseller allegiances, just than half of IT AccountIncisive directorBusiness Jessica Media Feldman London 9838 Reseller decision makers [email protected] publishing director Alan Loader allegiances, just like customer loyalty and within a decade, Managing director, Incisive Business IncisiveJonathon MediaWhiteley London like customer satisfaction, are fluid, and and they have Group publishing director Alan Loader loyalty and been found ManagingCirculation, director, back Incisiveissues Business& licensing satisfaction, are those vendors that have to care much JonathonAddress changes, Whiteley circulation, subscriptions fluid, and those boosted their support for more about and back issues 0845 1551846, email vendors that environmental Circulation, back issues & licensing [email protected] have boosted partners have zoomed up and social Address changes, circulation, subscriptions andTo subscribe back issues to CRN 0845 visit: 1551846, www.wdis.co.uk/crn email their support for the rankings” sustainability. [email protected] is available for international licensing. partners have Could this mean ToContact subscribe [email protected] to CRN visit: www.wdis.co.uk/crn zoomed up the rankings. that leading on a sustainable IT pitch CRN is available for international licensing. The storage vendor which topped will finally translate into cold, hard ContactCRN is published [email protected] monthly by Incisive Business one of the two main ranking tables sales for resellers? Some believe so. Media Limited, Haymarket House, 28-29 Haymarket, this year placed a distant 22nd the In this month’s Big Interview on CRNLondon, is published SW1Y 4RX. monthly by Incisive Business Media© 2017 Limited, Incisive Haymarket Business House,Media Ltd28-29 Haymarket, last time the research was conducted p16, Cisco’s Angela Whitty sets out London,Printed and SW1Y mailed 4RX. by Henry Stone Printers. in 2014, a testament to the hard the partner opportunity around the ©ISSN 2017 1744-3156. Incisive Business Media (IP) Ltd work they have put in over the vendor’s new intuitive networking intervening three years. vision, and also tackles questions Printed byon Headleypaper from Brothers sustainable Ltd. Mailed sources by inHeadley By the same token, several vendors about whether Cisco is complacent. BrothersScandinavia. Ltd. ISSN 1744-3156. that came out of the 2014 report Almost every reseller I speak to is PrintedFor custom on paper editorial from reprints sustainable contact sources Wrights in Reprints Scandinavia.at +1 877 652 5295 (international toll-free) Email: shining finished well down the in the process of ramping up their [email protected] custom editorial reprints contact Wrights Reprints pecking order this year. investment in AWS, so do not miss at +1 877 652 5295 (international toll-free) Email: In an era where everyone is our interview with AWS’ UK boss, [email protected] is distributed free to individuals who meet the obsessed with net promoter scores, Gavin Jackson, on p15 – he has CRNpublisher’s is distributed terms. Paidfree tosubscriptions individuals whoUK £120, meet the customer satisfaction is king. But some interesting things to say about publisher’sEurope $150, terms. Rest Paid of World subscriptions £280 UK £120, arguably, channel satisfaction should the channel. Europe $150, Rest of World £280 All images are from www.istockphoto.com, unless be regarded as just an important a As ever, we welcome your feedback statedunless stated metric, given the enormous influence so get in touch via ChannelWeb or on reseller, MSP and consultancy Twitter @CRN_UK. partners have over where end users direct their IT budgets. ■ Doug Woodburn is editor of CRN.

JULY 2017 CHANNELWEB.CO.UK 3

Contents

THINGS WE LEARNED THIS MONTH 7 A bite-sized round-up of the biggest stories, facts and figures and more from the past month in the channel

FEATURE 13 ‘We set up, and the UK voted to leave the EU’ ‘All we know is Brexit’, says Irish distributor Data Solutions’ boss Michael O’Hara, but business is still going well SPOTLIGHT 10 Next-generation IT Sustainability policy is key to attracting millennial talent to the channel FEATURE 15 Changing channel The increase in cloud adoption in the channel is changing the way AWS operates, says UK MD Gavin Jackson

FEATURE 20 The good, the bad and the ugly Resellers spared no feelings in the latest edition of the CRN Vendor Report, resulting INTERVIEW 16 FEATURE 18 in sobering reading for some firms Cisco’s UK boss Angela Whitty on Credit veteran Eddie Pacey looks at the firm’s ‘intent-based’ network the changing face of distribution FEATURE 23 DX prompts channel shift Fujitsu turns to the channel to fulfil increasing demand for digital transformation

FEATURE 24 You’re hired The Apprentice winner Lee McQueen and EMERGING TECH 26 CHANNELNOMICS 28 former Bytes managing director Darren Commvault CEO Bob Hammer Dell EMC partners gear up for the Spence have an exciting new proposition discusses the vendor’s quiet revival upcoming partner programme rejig for channel recruitment

A DAY IN THE LIFE OF... 33 INDUSTRY VOICE 31 Béatrice Butsana- How to create super-fans Sita, Capita Resellers could reap huge benefits The managing by refreshing their sales incentive director of Capita- programmes to create brand super-fans owned public sector network specialist Updata discusses her short attention span DAVE 34 and how she sees Power to the people business as a game Dave casts his eye over Elon Musk, of strategy celebrity lookalikes, and Facebook houses

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Five things we’ve learned this month

1. MICROSOFT IS BETTING ON HYBRID Although it is billed as the closest challenger to Amazon Web Services in the battle for public cloud dominance, Microsoft is actually placing its bets on hybrid IT. At the Microsoft Inspire partner conference in Washington DC, CEO Satya Nadella announced that the Azure on-premise stack will start shipping in September, available on hardware from Dell EMC, Hewlett Packard Enterprise and Lenovo. “It’s no longer the debate even of ‘is it private versus public?’” Nadella said. “In fact, it’s clear as day that what is needed is more distributed computing infrastructure – that true hybrid computing fabric.” Microsoft also continued its plans to put cloud front and centre of its business, announcing job cuts as it brings together its SMB and enterprise divisions. Microsoft partners saw the move as an attempt to improve the vendor’s support to partners, particularly those that deal with customers in the mid- market, while also placing greater importance on cloud solution providers. Alongside this, the firm announced its new Microsoft 365 platform for both SMBs and enterprises, which rolls up Office 365 with Windows 10 and various enterprise mobility and security products.

2. MSPs ARE BARKING UP THE WRONG TREE 3. THE COMPONENTS SHORTAGE CONTINUES At least, that’s according to managed service provider Anyone hoping that the components supply shortage (MSP) Managed 24-7 which claims that MSPs’ raison is nearing its end was dealt a blow by news of an d’être should be to improve workforce productivity, incident at a Taiwanese factory that produces memory rather than hit service-level agreements (SLAs). components. Research it commissioned found that the average UK Market watcher Trendforce reported that Inotera, also employee wastes 5.59 per cent of their total working known as Micron Technology Taiwan, has suspended time due to IT issues. one of its plants due to the malfunction of its nitrogen Managed 24-7 CEO John Pepper told CRN that the gas dispensing system. It expects the impact of the fault findings should prompt MSPs to re-evaluate their role. to see the production of DRAM components go down by “I don’t believe that three hours 59 minutes on a 5.5 per cent in July, triggering yet more price increases four-hour SLA, with a very expensive resource for memory products. sitting there, is success; it’s failure,” he said. Micron itself has since played down the report, “We’re moving into the world of workforce describing it as a “minor incident”, productivity analytics, [to determine] although this will be small comfort for what investments need to be made to vendors that have seen DRAM prices ensure [outages don’t] happen again.” double over the last year.

4. VARS ARE LAWYERING UP OVER GDPR 5. AI ISN’T YET FULFILLING ITS PROMISE The debate over whether the GDPR (General Data Virtual personal assistants and AI may be all over TV Protection Regulation) regime will be a blessing or a advertising right now, but Gartner, for one, is sceptical, curse for the channel continues to heat up ahead of its arguing that they are failing to capture the imagination introduction on 25 May 2015. of end users. While Gartner believes GDPR will represent a $3.5bn The market watcher claims that the technologies will sales opportunity for security and storage resellers, some undoubtedly grow in adoption in the coming years, but resellers see it is as a minefield, and are taking legal will not have a “revolutionary” impact on the market advice over what they can and cannot say to customers. as a whole. “Our first look at it isn’t ‘where is all “Today, the user experience this extra technology we can sell?,” said with new technologies such Justin Harling, managing director of HPE as artificial intelligence and and Cisco partner CAE Technology. “Our virtual personal assistants is first conversation is ‘Christ, we’re going too often below the standard found in the to need to talk to the lawyers to figure rest of the device, and the cost to raise the out what we can and can’t do, what standard quickly is prohibitive, relative to advice we can give and what advice the benefits,” said Ranjit Atwal, research we can’t give’.” director at Gartner.

JULY 2017 CHANNELWEB.CO.UK 7 Things we’ve learned this month

Facts and figures Comment of the month “We are very proud to add Chimelong Safari Park, the world’s largest wild 6.5% animal theme park, to our customer list” Counterfeit goods as a percentage of total ICT Maxta’s channel sales director EMEA, Mark Johnson, trade worldwide used LinkedIn to trumpet the storage vendor adding (source: OECD) China’s Chimelong Safari Park as a client. Entatech’s administration in numbers 0/10 Vendors that will be The score for £9.7m reparability awarded carried Amount owed to by unsecured creditors to Microsoft’s Surface 25 successor brand GNR, Laptop by repairs down from 70 website iFixit.

Largest creditors £2,500,000

£2,000,000 Six £1,500,000 £6.3m 29 £2.5m £1,000,000 Consecutive years Estimated Jobs protected £1.2m of decline for the PC return for £500,000 £0.82m industry before sales £0.67m unsecured £0 bounce back in 2018 creditors (source: Gartner) HMRCMicrosoftGigabyte Fujitsu Services

NOTABLE AND QUOTABLE “Women are going to be very powerful in the 21st century. Because last century people compared about muscle [but] this century people compare about wisdom. Hire as many women possible. This is what we did, and this is the secret sauce.” Alibaba founder Jack Ma has urged firms to take a leaf from his book and have a gender-balanced workforce. Some 47 per cent of the Chinese internet giant’s overall staff – and 33 per cent of those in senior roles – are female, Ma revealed back in 2015.

“We have the same opportunity to democratise access to these tools to every small and medium- sized business [as we do to enterprises]. That, perhaps, has to be one of the biggest takeaways for people in this room because I know many of you are serving SMBs. In fact, your velocity of growth is going to be defined by how successfully you can help these small businesses become more productive, more creative.” In announcing the Microsoft 365 platform, CEO Satya Nadella stressed to partners at Microsoft Inspire that they to need have a specific emphasis on the SMB market, going so far as to say that it is their work with SMBs that will define their growth – not their work with large enterprise customers.

8 CHANNELWEB.CO.UK JULY 2017

Next-generation IT Tomorrow’s CIOs are predicted to be more socially and environmentally conscious than those who came before them. With millennials set to make up the majority of IT decision makers within a decade, resellers who lead on a sustainable agenda could be set to win big, Doug Woodburn finds

Leading on a sustainable IT agenda, while laudable, has not They really value it as part of being prideful of the place always translated into hard sales for resellers. they work, and, again, this is especially true of millennials.” IT directors may want in principle to source only the cleanest hardware with the most ethical supply chain, Everything as a service but in practice they often aren’t willing to pay the mark-up Brasher highlighted device-as-a-service (DaaS) as an easy this entails. sustainability win for resellers. However, sustainable IT looks set to finally become a “Getting on board with ‘everything-as-a-service’ is the winning pitch for resellers as a new generation of more biggest and most impactful thing you can do,” he said. environmentally and socially aware millennials begins to “It’s already the de facto standard in print, and that’s exert dominance over IT decision making. where computing will go, and like in print we’re seeing the That is the message of HP’s UK managing director George larger firms doing it first. But I think it will permeate across Brasher, who spoke to CRN following the vendor’s recent the whole system, from SMBs up to the largest globals.” Sustainability Summit. A second area Brasher said partners can focus on is At the event, HP pledged over the years leading up to 2025 ensuring they are offering products that are easy to repair, to reduce its supply chain-related greenhouse gas emissions an area where rivals including Apple have recently been by 10 per cent and involve at least 500,000 of its factory criticised (see opposite). workers in worker skills development. “One of our competitors has a detachable device and it’s Brasher claimed that HP is responding not only to global not repairable; the screen doesn’t come off,” he said. “mega-trends”, such as the growth of the global middle class “You have to get a blow dryer and blow it for 30 minutes and rise of the sharing economy, but also increased pull until you can pull off the screen and repair the device from customers. underneath, and in fact you break the screen when you do Born between the early 1980s and late 1990s, millennials it. With ours, you turn eight screws and four suction cups to are typically more socially and environmentally conscious take it off, and you can repair it in two minutes. You need to than those who came before them and, crucially, will soon think about what the impact is, as that will have a significant make up the majority of IT decision makers, Brasher said. impact on your service costs.” “I’ve been at HP for three years and the questions [about sustainability] have amplified over that time; we’re hearing Head to head more and more about it each day,” he added. HP isn’t alone in raising “Not only does it show up as part of tenders – whether noise levels around public or private – but also, we’re having specific sustainability, customers calling for it. In 10 years, millennials will make with arch up more than 50 per cent of the IT decision makers, and they really value [sustainable IT], so I think you’re only going to see its prevalence grow. “Second, we are seeing employees calling for it.

10 CHANNELWEB.CO.UK JULY 2017 Spotlight

rival Dell unveiling new sustainability targets in been recognised as a leader,” he said. “Look at any of its 2017 Corporate Social Responsibility Report. This those – out of the major channel manufacturers in includes the pledge that by 2020, Dell suppliers the UK – you’ll see we are at the top of the list.” representing 95 per cent of direct materials Although HP said its carbon footprint decreased by spend and key logistics suppliers will set specific one per cent in 2016, it admitted that a shift towards greenhouse gas emissions targets. more energy- and feature-intensive products saw its In the report Dell chief responsibility officer greenhouse gas emissions rise last year in the Trisa Thompson also name-checked millennials as area of printing. being part of the motivation, citing research But Brasher defended HP’s record. “You’ve suggesting that 62 per cent got to focus on the totality,” he said. of this demographic would take a “The direction of travel is we are pay cut to work for a socially continuing to drive it down. If you responsible company. look at some of our computing lines, HP and Dell, along with Lenovo, they are designed for repairability and have recently certified their PCs sustainability. If you compare it with with sustainability body TCO our next-biggest competitor, it’s a Development. HP last week lot harder to repair their products, announced the launch of ink whereas we get 10 for 10 on cartridges made with plastic “In 10 years, millennials will make iFixit. You’ve got to look at from bottles recycled in Haiti, the entire portfolio and we while Dell is currently building up more than 50 per cent of the IT are making collectively the a supply chain for ocean plastic. right decisions to drive down However, Brasher claimed decision makers, and they really value our impact.” that HP is among the leaders on [sustainable IT], so I think you’re only HP’s Instant Ink programme, the sustainability front. an ink-replacement scheme “You’ve always got to look going to see its prevalence grow” HP claims reduces material at third-party sources, whether George Brasher, HP consumption per printed that’s the FTSE4Good, or the page by 57 per cent, reached Dow Jones Sustainability Index, or being part of the Ellen one million subscribers before either Spotify or Netflix, MacArthur Foundation’s Circular Economy 100. We’ve he added. Apple, Microsoft and Samsung named and shamed Apple, Microsoft and Samsung have been slammed in a report HP saw its tablets score 10 out of 10 and seven out of 10, for having the least repairable IT products on the market. while the one HP laptop tested scored 10 out of 10. The report, published by Greenpeace and IT teardown Gary Cook, IT analyst at Greenpeace USA, said that the poor website iFixit, accuses the IT giants of making their products repairability of these products is increasing the number of difficult to take apart to replace components, creating devices thrown on the scrap-heap. environmental issues as broken devices are discarded. “Of all the models assessed, we found a few best-in- Assessing the trends across all products tested, the report class products which show that designing for repairability is states that devices are generally becoming more difficult to possible,” he said. “But a number of products from Apple, repair as cases are glued and soldered together. Samsung and Microsoft are increasingly being designed in ways It added that nearly 70 per cent of all devices tested had that make it difficult for users to fix, which shortens the lifespan batteries that were difficult or impossible to replace because of these devices and adds to growing stockpiles of e-waste. of the adhesives used to keep them in place. “Improving the repairability of electronic products is The report assessed 40 smartphones, tablets and laptops technically achievable and brands from 17 vendors released between 2015 and 2017. The should be prioritising this in products were rated out of 10 for repairablity. their product design. As a The two Apple iPhone handsets tested each scored seven first step, it’s critical out of 10, but two iPads scored two out of 10 and two that all brands follow MacBooks scored one out of 10. in the footsteps of Microsoft’s Surface Book and Surface Pro 5 both scored Dell, Fairphone, and one out of 10, while Samsung saw three smartphones and one HP and make repair tablet all score four out of 10 or lower. manuals and spare Dell fared better, with one laptop getting a perfect 10 out of parts publicly 10 and one scoring seven out of 10. available.”

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‘We set up, and the UK voted for Brexit’ The boss of Irish distributor Data Solutions is adamant that the hyperconvergence market in which it specialises is under-addressed in the UK. He runs Doug Woodburn through the Nutanix and Cohesity partner’s expansion plans for this side of the Irish Sea

The boss of Data Solutions has described the Irish create opportunities that we can bring to them.” distributor’s first year in the UK as “challenging, but very The HCI market is growing exponentially, O’Hara added. enjoyable” as he admitted that last June’s Brexit vote has “Gartner reckons in five years’ time it will be the slowed decision-making among end users based here. mainstream system. Nutanix are the market leaders in Data Solutions launched a Reading office last February primary storage and then we’ve got Cohesity, who are after bagging the UK rights to Nutanix, and has since added considered the leader in hyperconvergence secondary Cohesity as a second vendor on this side of the Irish Sea. storage: we feel we have the two best vendors in that Group managing director Michael O’Hara told CRN space,” he said. this means it has on board the two leading vendors in “We’ve been going through a huge educational hyperconverged infrastructure (HCI), a market he said was experience in bringing on partners and educating them under-addressed in the UK before Data Solutions’ arrival. technically, but also around the Nutanix message. We Founded in 1991, Dublin-based Data Solutions is one are creating opportunities rather than just saying ‘it’s a of Ireland’s leading storage distributors, with 22 staff and plaque on the wall’. Because we are specialised, we have a revenues topping €30m (£26.5m). read on pretty much all the deals we are working on.” The firm is confident its UK business will help drive its Data Solutions is not the first Irish distributor to expand sales to €80m within three years, but O’Hara admitted not into the UK market, with Commtech making the leap in everything has gone its way here in the first 18 months, 2012. CMS Distribution is another VAD with roots in both with the Brexit vote slowing decision making. the UK and Ireland. “We’re not where we initially set our target, but we O’Hara argued that the mentality of Irish firms may give are growing nicely and this year we will recover a lot of them an edge over competitors in the UK. that,” he said. “I’m only speaking from a Data Solutions point of view, “We set up, and the UK voted for Brexit. All we know is but the Irish market is small so you’re very hands-on Brexit. Business is very strong in the UK, even in the Brexit with the opportunities that come up,” he said. “I’m not market, but what we’ve seen is a little bit of uncertainty. being derogatory to UK distributors, but it’s difficult to be We are seeing the deals we are working on taking longer touchy-feely on all the deals out there. But what we bring than expected to close, but they are not going away.” is the focus. We’re not trying to be another Tech Data; we Data Solutions has two UK-based staff, with initial UK are sticking to the knitting of the stuff we are good at. The managing director Shaun Fane no longer with the firm, feedback from partners is that they like that approach, but O’Hara said headcount is slated to increase to 10 over and were maybe not getting that as much as they would the next two years in line with its growing order book. like from the current players. Most UK functions are backed off to Dublin, including “We have set ourselves marketing, an area O’Hara claimed Data Solutions boasts the goal of tripling a strong differentiator over other HCI distributors. our business in the “Our focus in the UK is on HCI, and we feel that market next three years, has not been very well addressed in the UK,” he said. which is not a silly “In the UK, there are some really good partners that thing to suggest. have a strong marketing pedigree. But a lot of partners Growth will come are very good from a sales and technical point of view, predominantly but aren’t really the best at getting their message out to from the UK the customers. They are not great at marketing. That’s the and we feel very value we bring. We’ve found a lot of partners stick with us bullish that we because we continually do demand generation activities to will achieve it.”

“Our focus in the UK is on HCI, and we feel that market has not been very well addressed in the UK” Michael O’Hara, Data Solutions

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Changing channel Amazon Web Services’ UK managing director Gavin Jackson tells Tom Wright how the public cloud leader is adapting to the channel’s growing cloud adoption

Amazon Web Services (AWS) is no stranger to an indirect While Jackson echoed Computacenter’s view that public sales model, but even by its UK managing director’s cloud has “crossed that chasm”, he said that AWS’ channel admission it has built its business on ambitious start-ups model remains very much focused on adding value, rather looking to cut out middlemen and expand quickly. than traditional resell. But AWS, along with fellow market leaders Microsoft and “It’s still a value business, so partners that are doing the Google, has gone to great lengths over recent months to most work with AWS in their customers are still building convince the tech industry that larger and slower-moving value on top of AWS,” he said. enterprises in highly regulated markets now have enough “Computacenter specifically are building managed confidence to take their first steps into public cloud. services capabilities and migration services, which are two Organisations of this size are often catered for by the hot buttons to push with customers right now. They want larger systems integrators but if the likes of AWS want to to move fast in the cloud. continue their rapid growth down into the mid-market, a “A lot of the engineering muscle that lives within mid- different type of partner is needed. market customers and smaller customers doesn’t actually As corporate and mid-market companies take notice exist and so they’re all looking for partnerships to help of cloud, the channel is being summoned to boost its build the next generation of applications.” public cloud capabilities, according to AWS UK managing Chris Bunch, head of Europe at AWS partner director Gavin Jackson, who said that his company is Cloudreach, said resellers looking to grow their AWS expanding its channel account management team to business should be prepared to accept a different encourage partners to build out their AWS practices. relationship compared with the ones they’re used to with While AWS has always had an indirect sales model, their traditional partners. Jackson said more business is likely to go through the “Amazon at their core are very customer focused,” he channel as more traditional firms look towards the cloud. said. “They will always do what is right for the customer “Right from the very first day of AWS an indirect route and so will we. to market has always been part of our plans; we just “At times that will mean if you’re a new partner and simply grew up on younger start-up companies which you’re used to SAP paying you a 40 per cent margin for had the engineering muscle to figure it out themselves,” selling some licences – that world is gone. he said. “In this case they just wanted even our own “If you can build and deliver successfully for the field team to get out of the way and let them use the customers, Amazon will reward you handsomely. Are we technology. chasing a relatively thin rebate on Amazon resale? No. “But your more-established companies that have been It’s of no interest to us. There’s no value in that and that around a lot longer and still have technical debts from business model is dead or dying. If you come and talk to more old-guard technology still want to break out of that [AWS] it’s a very small number, but if you’re building your cycle the same way enterprises do. business around that, you’re insane.” “That part [of the market] has been for the longest time To drive partners towards great value-add, AWS is somewhat neglected by partner ecosystems that went expanding its internal channel accounts team to help upmarket. Computacenter is squarely focused on filling partners increase their capabilities with AWS, rather than that gap – and there are others as well.” seeking new partners to keep up with market demand. Jackson said AWS’ most recent figures showed business “Recruiting partners is never really the issue; we have through reseller and systems integrator partners had tens of thousands of partners,” he said. grown by 110 per cent year on year. “We already have pretty mature partner programmes, He explained that this but the big shift will be the number of people we have figure, along with the fact [who can] talk to our partner channel to educate them on that AWS has over 100,000 those programmes, rather than a programme shift itself. customers in the UK, shows “A partner can build a very profitable business with that the channel is already AWS if they believe that that is what the customer wants creating “fantastic growth” to do. Recruitment is not an issue, but building those in serving the mid-market competencies, very much like Computacenter has just with public cloud. done, is really the goal.” “[The mid-market] has been for the longest time somewhat neglected by partner ecosystems that went upmarket” Gavin Jackson, AWS

JULY 2017 CHANNELWEB.CO.UK 15 Using your intuition Cisco’s newly unveiled intuitive, ‘intent-based’ network is its most significant launch in more than a decade, and will have a ripple effect through the industry, according to its CEO Chuck Robbins. Doug Woodburn sat down with Cisco’s UK and Ireland channel boss, Angela Whitty, to discuss where the intuitive networking concept – and Cisco’s wider push into software – will leave partners, and how Cisco is tackling claims that it is arrogant

Chuck Robbins says intuitive networking represents a 9000 family and a new architecture that builds on the “change in how [we] think of the network”. How will it methodology of DNA. Even the silicon in the products affect the role your partners play and their ability to is all new as well. But also the commercial models: make money with Cisco? everything is going towards licensing and annuity-based If you think about how the network has evolved, it’s now models and recurring revenue. It is a complete change and all around a network that can learn and adapt, moving a completely different way of doing business; it will be from manual to more automated processes. But that revolutionary. doesn’t mean a move away from skills. The skills of our partner base become more important, and if you look Chuck Robbins has been talking about Cisco’s shift to a at the commercials around the new products that have software-led business model for a couple of years. How been launched – the Catalyst 9000 switches – they are far through that journey is Cisco now? moving to more of a subscription model. That’s where we Substantially. On our last earnings call, about 30 per cent see all of our partners are looking to move anyway. of our revenues were recurring revenues, with a view to We’ve put a lot of thought into how we help our having 50 per cent of our revenues in a three- to five- partners shift from the hardware-centric selling model year period coming from our software business. So we of the past to the more customer-outcome, business- are well down that journey, and that’s probably reflected outcome-led sales motions that you need for focusing somewhat in our share price [which is currently close to a on the new way of doing business. We’ve put lots of 17-year high]. incentives and programmes in place. We have a voucher scheme that gives them an incentive on a per-customer Some partners have expressed fears that the rise of basis, and we are doing a lot around enablement through AWS and Microsoft Azure is beginning to erode Cisco’s roadshows, webinars and free mentoring schemes. channel margins. Do you plan to compete head to head The partners who are more proactively moving from with them in the cloud, and more generally how can you that hardware-centric approach into the more business- protect channel margins in the cloud era? outcome-led selling are seeing their revenue growing I don’t think going head to head is something that Cisco twofold, and in some instances more. would want to do. There has always been talk about wholesale adoption of cloud across the piece, but we Is Intuitive Networking just a repackaging of lots of things haven’t seen that happen the way it was predicted. Most Cisco has already launched? customers will have more of a hybrid approach so it’s Absolutely not. We’ve got new hardware in the Catalyst probably in everyone’s interests – and this is Cisco’s approach – that we actually work with cloud providers rather than treating them as direct competition. If you think about the hybrid approach, it will mean you will have workflows that are in the private and public cloud, and ultimately at some point you need to bring them together. Therefore the infrastructure and the networking – and maintaining the infrastructure and network and complex services that go around it – remain key. That’s the fundamental role our partners play to our customers. So I understand the fear, but I don’t believe it’s something that will be realised; I think the role the partners play in the whole hybrid model will stop that from happening. The perception of Cisco among smaller partners particularly is that you can be remote and arrogant, both towards them and with their customers. What is your response when people say that? It’s always upsetting to hear that. I would encourage

16 CHANNELWEB.CO.UK JULY 2017 The Big Interview

people who feel that way to reach out to me personally, and over again in multiple countries. But that doesn’t and we will do what we can to support them. We have a mean that they take precedence over our regional or even base of around 4,000 partners within the UK, of all sizes. local Gold partners. My team and I take a lot of feedback from distribution channels, and where they identify partners who can grow What are your priorities for the second half of 2017? their Cisco business, or have some opportunities where We will build out our coverage model in the UK. The idea they need support, we try to get to as many as possible. would be to get away from the perception that we are We are still in the planning phase at the moment but keeping the smaller partners at arm’s length. I absolutely we are looking at some simple things to implement next understand that where an owner-managed business is [fiscal] year to make sure that we touch – whether that be investing in Cisco, they would like to see Cisco’s skin in through virtual resources or some field-based resources – the game, and we’re going to be doing everything we can as many partners as possible. We’ve done some of it but I to increase our reach so we are touching as many partners think we still have a long way to go. as possible in one way or another. Your UCS business has shrunk in recent quarters. How much of a worry is that, and are you committed to it? The UCS business has a massive install base – about 60,000 customers worldwide. And it is a business we continue to invest in and grow, with the most recent introductions around Hyperflex. Hyperflex went from a standing start to being the number-one platform within a relatively short space of time, and I’ve not heard any comments internally around concerns. You recently launched your ‘Global Gold’ accreditation with five partners. It has some pretty significant thresholds. Are any other partners working towards it? I’ve heard that there are a couple more partners who are thinking about making that investment as well. The programme was brought in to allow partners who have that global coverage to offer a consistent global service to their customers, rather than asking them to invest over

Reseller reaction Cisco claims its new intent-based networking solutions represent the “culmination of Cisco’s vision to create an intuitive system that anticipates actions, stops security threats in their tracks, and continues to evolve and learn”. The launch broke down into three key areas: the launch of DNA Centre, a centralised dashboard for managing a network; a new series of IoT-ready Cisco Catalyst switches; and improved security capabilities. paying lip service to But are partners on board with the launch, and how do they software-defined.” view Cisco generally? Paul Shannon, CEO of Cisco Gold partner Justin Harling, managing director at Cisco Gold partner CAE, ANS Group, said Cisco has traditionally been the said he saw the launch as a “combination of a number of “strongest margin provider for the partner community” but said strands which have been worked on for a period of time”. that status is potentially under threat due to the rise of born-in- “You’ve seen elements of what’s been announced in product the-cloud vendors such as AWS. lines previously – what we haven’t seen before is product lines “AWS and Azure are massively encroaching on what Cisco brought together and packaged so neatly, but this is what Cisco would classify as their market space. With that, we are seeing does so well. margins dropping in the hardware space, even with Cisco,” he “As a technology [SDN] is talked about more, it gets said. “What can they do to protect partners? They could end up incorporated into existing infrastructure and you’re seeing that with partners that have been Cisco partners for a long time will here, but the difference is that we really don’t think this is Cisco reviewing the viability based on the margins that are available.”

JULY 2017 CHANNELWEB.CO.UK 17 Feature

A time of reflection Credit management veteran Eddie Pacey predicts that the current IT distribution model is unlikely to exist in 15 years’ time

I was fortunate to experience 35 years in distribution distributor, Ideal’s gross margin yield of credit management across three industry sectors. These around 16 per cent was well ahead of more were in the audiovisual and entertainment industry with broadline players such as Frontline or the Rank Organisation, engineering and machine tools Ingram, which were generating with B Elliott plc, and a long stretch of 18 years in IT with 11 per cent and nine per cent Ideal Hardware and then Bell Microproducts Inc. respectively. In the early seventies to mid-eighties, Rank Audio Visual A decade later and those was a large distributor of audiovisual and photographic gross margins declined equipment, theatre seating/lighting and 8mm, 16mm and considerably. Ideal was 35mm film. It progressed to the distribution and hire of down to around 12 prerecorded video cassettes. Very profitable in the late per cent, Computer sixties and early seventies, margin pressure, an inflated 2000 (as it had view of its relevance and an unwillingness to change or become) eight note manufacturer/vendor temperament meant final per cent and Ingram closure of the business in 1986. Brands such as Akai, was barely above six Pentax and others had taken a direct route and the J per cent. Arthur Rank connection was not enough to hold major In 2010, by which film/video production company interest. time Ideal had been A similar story followed in engineering in the early acquired by Bell and Bell eighties to nineties. A decline in UK manufacturing in the by Avnet Inc, gross margin sixties led to greater reliance on distribution of Japanese had dropped to around eight and Korean machine tools and associated spares. Margin per cent. Computer 2000 dipped pressure came to play with cheaper Italian, Finnish and below six per cent and Ingram UK Spanish manufacturers entering the fray, forcing Japanese hovered just above four per cent. and Korean manufacturers to adopt more direct models. Now, Avnet TS is part of Tech An attempt to re-create a measure of UK manufacture Data where margin hovers failed miserably and a business that at one time employed dangerously just above five more than 4,000 in the after-war years, and was publicly per cent and Ingram UK quoted, moved, finally, to insolvency in the early nineties. (acquired by China’s HNA Group) operates at Failure to prepare just over four per Seeing and experiencing these changes naturally cent. Westcoast, a raises awareness of the fragile and volatile nature of new entry into the £1bn-plus UK sales club operates at distribution. It’s not just the pace of change driven in a gross margin of just above two per cent. These are not many cases by technological developments or market distribution margins, they are extremely painful squeezed forces but the very nature of big businesses frequently wholesale margins where value-add services, or pure failing to anticipate their effect; it’s easy to fall back services, are too small to matter and too costly to expand. into the comfort zone of ‘we’re too big and relevant to In all four top distributors, pure services-driven sales be affected or troubled’ or ‘we’re flexible and can easily that exclude product or software supply account for accommodate new and emerging partners/competitors considerably less than 10 per cent of consolidated net and their technology’. sales over the last three years and is unlikely to increase; Many will have experienced working for a large ostensibly, it’s not what a distributor is supposed to organisation occupying premises fully utilised, then provide, it’s been forced to do so. noting wide-open, unoccupied spaces appearing as In a recent article, Barrie Desmond of Exclusive divisions or areas of activity are forced to shut down. Networks accurately described the nature of channel These are all signs of problems ahead. players as an “ecosystem”, where each contributes and Yet those early years were highly profitable. Distribution generates the required return. He went on to describe the gross margins of 15 to 35 per cent were common; even squeeze being felt all around that is tugging and pulling wholesalers were able to eke out five to 15 per cent. this ecosystem apart. In September 1992, I joined a highly profitable Consolidation, across all channel players, accelerated and successful UK storage distribution business, Ideal considerably from the mid-nineties and shows no sign Hardware Ltd. This was a time of pulsating growth in IT of abatement. This has crystalised wafer-thin margin; a distribution and being predominantly a specialist storage result of excessive dependence on higher volumes passing

18 CHANNELWEB.CO.UK JULY 2017 Feature

£1bn: Tech Data, Exertis, Westcoast, Westcon and Ingram. Below this top five, however, nothing remains of those eight mid-sized VADs evident in 2010. Indeed, below the sixth (Arrow ECS), and excluding the recent failure of Entatech, there are only four distributors with sales between £100m and £200m and only two of them offer the kind of double-figure gross margin that remains attractive. What’s more interesting is the comparative ratio of how this UK market pie is apportioned within distribution across these two periods. In 2010, the average gross margin achieved across the top 30 distributors was 7.73 per cent. The lowest was 2.65 per cent and the highest 36.6 per cent. In 2017, the average gross margin achieved across the top 30 distributors dropped to 6.76 per cent. The lowest is now 2.36 per cent and the highest 30.4 per cent. In 2010, across the top 30 list, the top 10 were responsible for 74 per cent of total sales at an average gross margin of 6.08 per cent and an operating margin of 1.26 per cent. The top five accounted for 58 per cent of through fewer vendors, distributors and resellers. Vendor total sales at an average gross margin of 5.6 per cent and fascination with complex, irrational, punitive and often operating margin of 1.02 per cent. unpredictable pricing and support mechanisms driven by In 2017, the top 10 (of 30) were responsible for 90 volume, simply add fuel to the fire. per cent of total sales at an average gross margin of 6.1 The channel, dare I say it, has become lazy and per cent and an operating margin of 0.72 per cent. The bloated. Resellers often rely on both distributors top five now account for 79 per cent of total sales at an and manufacturers for lead generation, training, and average gross margin of 5.38 per cent and an operating marketing support. Distributors have been forced to margin of 0.45 per cent. One of the top five posted a not only swallow declining profit but increased cost in significant loss in this review, distorting somewhat provision of services that should be the responsibility of operating profit margin; discounting this, average the vendor and reseller. The distributor, therefore, wears a operating profit had still dipped well below one per cent. ligature around the neck and is slowly being strangled by In the last 10 years or so, this process of consolidation the demand of those above and below in the supply chain. has not been limited to the top and middle end. Distributors at the lower end of sales volumes (below Growth through acquisition £100m) working with second- and third-tier vendors at far The late nineties brought us the first significant more favourable gross margins have also seen the need distribution failures when Merisel struggled and to bulk up through acquisition. The well of acquisition merged with CHS Electronics only for the latter to fail targets has almost dried up. ignominiously in 1999. We have recently witnessed a The question is, how narrow will this supply chain couple of smaller failures in Steljes and Entatech. get and how much lower will gross margin go? Fewer It became painfully obvious in an increasingly saturated and bigger vendors, distributors and VARs are likely to market in the late nineties, which limited organic growth constrict this playing field and make it more lucrative rates of preceding decades, that the only way to grow and and open to alternative channel supply. Operating at increase market share was to acquire. The natural and pressured gross profit margin when sales stutter or decline lucrative target was always going to while demand is for more services be the specialist VAD that carried Gross margin across the top 30 at higher cost, leaves no room for not only sufficient sales volume but, distributors complacency. more crucially, higher gross margin. 40 There may be life in IT distribution 2010 36.6% In 2010, I compiled and monitored 2017 but if the channel does not shake off a list of 62 UK distributors. At the 35 its bloated, complex and business-as- 30.4% time, there was just one distributor 30 usual approach to the challenges it with sales in excess of £1bn, and that 25 faces, the current model is unlikely was Computer 2000. Below the top to exist in 15 years’ time. An four were eight mid-sized VADs with 20 efficient, lean, unburdened profitable annual sales ranging between £200m 15 distributor, free of the shackles and and £600m. barnacles of unwarranted demand is 10 In 2017, that list changed 7.73% 6.76% surely more relevant, even in today’s 5 quite dramatically to just 35 UK 2.65% 2.36% globalised marketplace where reach distributors. There are now five 0 nationally and internationally no distributors with sales in excess of Lowest Average Highest longer depends on physical presence.

JULY 2017 CHANNELWEB.CO.UK 19 Feature

The good, the bad and the ugly

CRN’s Vendor Report ranks 38 top IT vendors on four key service categories based on blunt feedback from 200 resellers. No ammo was spared. Doug Woodburn looks at who emerged from the hail of bullets intact, and who was shot full of holes

When 200 resellers were asked to give both barrels to communications and infrastructure vendors, and 12 were their vendor partners for the latest CRN Vendor Report, they ranked in both areas. certainly didn’t fire any blanks. This year, respondents were also invited to grade their Some 38 IT manufacturers were rated by respondents vendors’ MSP programmes, although this did not count on four key service categories, namely product quality, towards the overall services score. after-sales and technical support, channel management, and lead generation. Improving guns Respondents were also invited to give frank, So who emerged from the hail of bullets intact, and who confidential background comments on what they love, was shot full of holes? and what they loathe, about their core vendor partners, Who placed where has to remain a closely guarded and the results were a mix of the good, the bad, and the secret – for now, at least, although we have summarised downright ugly. opposite how Microsoft, Cisco and Apple fared. But one Comments were often honest and blunt. One vendor’s surprising feature of the research we can share is that channel management was branded an “unmitigated many of the table toppers from the last time we conducted mess”, while another was shot down for being this research three years ago crashed and burned this time “disorganised and rude”. Some were savaged for having around, and vice versa. products that were “glitchy”, or prone to breaking. One security vendor that was savaged in 2014 placed Meanwhile, one household name was described as being in the top half of the pack this time around. Three years “lazy” and “difficult to deal with”. ago, it was found to have interfering and inefficient staff, In contrast, other vendors drew high praise for their and a product range weakened by confused management knowledgeable channel staff, ability to generate leads for interfaces and flaky updates. partners and well-built, trustworthy technology. Today, in contrast, it is generally engaged and Technology vendors are obsessed with customer responsive, and has a straightforward, easy-to-manage satisfaction these days, and rightly so. product that is equal to the modern threat environment, In the digital era, any vendor that isn’t attuned to the report found. what their end customers think of them – and their Having ranked 46th out of 50 vendors in 2014, another competitors – is at a serious disadvantage. security vendor – known for its heritage in web filtering But what good is a loyal customer base if the – finished in the top 10 players this time around. Three influencers who sell and service the vast majority of years ago it was slammed for its low-quality products technology don’t like dealing with you? and shambolic tech support, but this year earned The report aims to address this by shedding light on above-average scores on channel management and lead an important – and sometimes overlooked – aspect of generation. brand strength and loyalty, in the form of how vendors Meanwhile, a storage vendor that ranked 22nd are perceived by their channel partners. Gaining the out of 50 in 2014 topped this year’s rankings in the trust of the resellers, MSPs and consultancies that often communications and infrastructure category, thanks to determine where IT budgets are directed remains vital. its first-class products, tech support, account management Vendors, of course, regularly conduct their own and training. partner satisfaction audits. But such proprietary surveys Such turnaround stories are a testament to the work risks generating warped results, and certainly lack a some vendors have evidently put into their channel comparative aspect. strategy in the intervening three years. Respondents – who were a mix of technical, sales and Others – including a couple of big names – have managerial staff at resellers, MSPs, solutions integrators moved quite dramatically down the pecking order, which and other firms in the channel – were asked to grade any only goes to show that reseller allegiances are fluid. vendor they had worked with in the last year from A to D Vendors that have coasted have been punished. on each of the four categories. These marks were converted Achieving excellent customer satisfaction is one thing, into points and averaged to arrive at the rankings. but if that is not matched by the experiences of those who This year’s report looked at vendors through the sell and service the technology, vendors could soon find prism of two distinct markets: communications they are run out of town in a shower of bullets. and infrastructure; and security. Of the 38 vendors featured, 13 were ranked for their performance in ■ This is a paid-for report. If you are interestied in receiving a the security market, 13 more for their performance as copy, please email [email protected]

20 CHANNELWEB.CO.UK JULY 2017 Feature

Can you match the feedback to the vendor? The Good “They are always happy to immerse us in their tech and strategic road maps.” “They have excellently built, value-for-money systems, at an unbeatable price.” “They are proactive with customers, though their range of products is a bit limited.”

The Bad “Their notebooks stand out negatively due to their physical build. They break easily and have to be repaired frequently.” “[They] don’t seem to have moved with the times with regard to antivirus offerings.” “In terms of their interest in our organisation, we have seen diddly.”

The Ugly “Lazy, and difficult to deal with.” “[Their channel management] is an unmitigated mess and I refuse to sell their products because of sharp practice.” “Disorganised and sometimes rude.”

The channel’s biggest and most The networking giant has built its The fruity vendor finished well down influential vendor came out relatively reputation in the channel on having the the pecking order in the Vendor Report, well in the research. Although Microsoft best technology and the highest margins although its products were lauded for ranked mid-table in most categories, its for partners. And it fared reasonably remaining well engineered, desirable Surface range, Office 365 and Dynamics well in this year’s research, ranking just and owner friendly. In the minus column, 365 all had an excellent reputation and inside the top 10 as both a security however, its technology had become it seems to have a far better relationship vendor and a communications and noticeably more expensive for anyone with the channel than it did three years infrastructure vendor. Its products had who is paying in British pounds, with ago, the report concluded. “Under chief an excellent reputation among most resellers also still finding Apple executive Satya Nadella, Microsoft has respondents for design and durability, indifferent to their needs and interests become a broader, more cohesive, more and after-sales and technical support and its hardware an unprofitable service-oriented and more intelligent was almost equally good. Channel sale. Some felt that the next Apple business – and in so doing, has assured management, however, was found to wonder-device was already a year or its future,” the report stated. be more variable. two overdue.

Which vendors have been ranked? Amazon Web Services, Apple, AVG Technologies, Barracuda Networks, Brocade Communications Systems, Check Point, Cisco Systems, Citrix Systems, D-Link, Dell, Dell EMC, F5 Networks, Forcepoint, Fujitsu, Hitachi Data Systems, Hewlett Packard Enterprise, HP Inc, Huawei, IBM, Juniper Networks, Kaspersky Lab, Lenovo, LogRhythm, McAfee, Microsoft, Mimecast, NetApp, Oracle, Pure Storage, Salesforce, Samsung, SolarWinds, Sophos, Symantec, Trend Micro, Veeam Software, VMware, Webroot

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DX prompts channel shift Fujitsu wants to increase the amount of its product business that is generated by partners from 50 to 90 per cent of total sales, arguing that its channel arm is best placed to fulfil demand for digital transformation. Doug Woodburn reports Digital transformation (DX) will quell end users’ appetite work with resellers, Paul McLean, enterprise manager for to deal directly with big vendors, Fujitsu’s UK product boss indirect channels at Fujitsu, said. argued as he explained why the vendor is shifting more The vendor is also in the process of “de-stacking” a business towards the channel. number of accounts it currently fulfils directly and James Johnston told CRN that Fujitsu’s channel dishing them out to the channel, McLean added. organisation and resellers – rather than Fujitsu by This will be done based on partners’ vertical expertise, itself – are best placed to fulfil the kind of shadow IT he indicated. purchases that accompany a DX mindset. “It’s really important that we are working with the For this reason, Fujitsu has made its compensation partners that have the best capabilities and track record scheme for direct sales reps more channel-centric, is in the particular verticals that we work within at Fujitsu,” “de-stacking” a raft of accounts from its direct team and McLean said. handing them to partners, and is moving resources from Fujitsu’s UK channel team has grown from 25 to 33 staff its direct to indirect teams. this year, McLean said, adding that the channel business is Johnston, who is head of UK&I product business at also now aligned more closely with the technical account Fujitsu, said the ultimate goal is to boost the percentage managers across Fujitsu’s key accounts. of its UK product business that goes through the channel “We have some leadership scenarios, particularly from 50 to 90 per cent of total sales. with our PRIMEFLEX hyperconverged solution, and it’s “Because of DX, we are now seeing more and more really important that we are driving stronger technical organisations purchasing shadow IT. We are seeing engagement in the channel,” he said. lots of examples where the business lines are investing “We’ve seen some de-investment in the channel at in IT infrastructure in order to change their business many of our competitors, but I’ve seen a 30 per cent rise models, and we see the channel organisation as perfectly in my headcount who will be indirect-facing.” positioned to give that level of agility and also partner with software organisations as well,” Johnston said. Storage growth “So we are seeing a great number of smaller deals now, Although a question mark hangs over the future of as opposed to the big, multinational outsourcing contracts Fujitsu’s declining PC business – with Fujitsu president of old. This is where we see the channel really helping us Tatsuya Tanaka indicating last month that talks over a reinforce our market position. possible deal with Lenovo are at an advanced stage – “When I came in [in the vendor is seeing good growth in other areas of its August 2016], I think we portfolio, McLean said. Channel storage revenues doubled were doing about 50 per in the UK last year, with storage channel assembly cent of business through growing 150 per cent, he indicated. the channel. My ambition Some 600 deals have been registered under a new is to get towards distribution-led deal registration scheme launched in the 90 per cent January, with 30 per cent of those being new customers, threshold. That’s McLean added. a bold ambition. But “This quarter included a new £3m deal into a partner as we see the change of ours, into a competitive account, which is our biggest in landscape in the enterprise win in the channel for the past 18 months,” marketplace, we’re he said. “That really shows us we are getting that traction going to see fewer with our partners.” organisations requiring Fujitsu moved from five to four UK distributors last direct fulfilment of product. summer and is currently reviewing whether or not to They want solutions, and I remove another from the line-up, McLean confirmed. want an ecosystem of partners “We are having ongoing conversations with our that can augment our proposition.” distribution partners,” he said. “We’ve worked closely with them to ensure the four we have today are very De-stacking accounts much focused around the different markets, which Fujitsu recently changed its enables them to retain margins to invest in Fujitsu. compensation schemes across its Our largest distributor has seen a strong increase in end-user business to drive a strong profitability from selling Fujitsu product, which was a desire for its direct-selling reps to major element in driving a consolidation in distribution.”

JULY 2017 CHANNELWEB.CO.UK 23 Feature

You’re hired ‘The Apprentice’ winner Lee McQueen and former Bytes Documents Solutions MD Darren Spence tell Tom Wright how they’re aiming to change channel recruitment for the better

Channel firms have never been shy about pinching top an industry we’re hiring them, bringing them into the sales talent from competitors by offering them a raise and business and then realising six months in that maybe they a competitive commission plan. don’t have the abilities to do the job.” But while this method may still be an essential part McQueen, who had a spell at Capita before his success of the channel’s recruitment model, a growing number on The Apprentice, explained that candidates selected by of channel firms are canning the expensive process of Raw Talent are not assessed based on their CV, but on a buying from the market in favour of growing their series of “real-life” tests that will demonstrate whether own sales team. they can function in the day-to-day sales world. The process of plucking a graduate on an He said that the current model of bringing entry-level wage and training them from in a sales coach for a crash course as new scratch may prove to be cheaper in the salespeople start their roles has become long term, and also gives organisations dated as the industry focuses more on the opportunity to mould that consultative selling. salesperson into their own style. “People aren’t just focused on the On top of this is the fast-changing money piece, they’re actually focused landscape of technology, with on knowledge and becoming subject customers now demanding more matter experts within their field,” he solutions and consulting, rather said. “They’re not just salespeople, they’re than products from a catalogue – consultants and to be a consultant you according to former The Apprentice have to know your market, so that training element winner Lee McQueen and ex-Bytes MD needs to be real and we have to put them in Darren Spence. real-life scenarios. McQueen and Spence (pictured below) say that “We’re trying to educate some of the channel that between them they will revolutionise the way channel there is an alternative to a guy coming in and training in firms recruit and train their staff, eradicating poor front of a class of 10 new hires. It’s about getting people candidate placement and lazy training courses. driven to learn about that particular business. McQueen won The Apprentice in 2008, before setting Once candidates have been placed, Sales Gym 360 will up recruitment agency The Raw Talent Academy in offer nine training modules that will be completed over 2011 to help inexperienced candidates develop in sales six to nine months. Organisations can choose the modules industries, while Spence set up sales training firm Sales they consider appropriate for each employee. Gym 360 in 2015 with 20 years’ experience in the channel Spence said that the recent acceleration in new behind him. technology has made it more important for channel The new partnership will see Raw Talent source and firms to train their own staff, rather than look to poach place sales candidates at channel firms, and Sales Gym from competitors. 360 provide training programmes to fill in the gaps in “Because the world is moving into cloud and the candidates’ skill sets. whole landscape is different, you can’t find people with McQueen told CRN that the channel is currently guilty 10 years’ experience selling cloud technology,” he said. of bringing people into the industry without testing that “They just don’t exist. they’re adequate for the job, or providing them with the “As a consequence of that, this whole idea of share right level of training needed. shifting, taking from one company and putting them “Specifically within the channel, businesses are into another, is almost pointless because it’s struggling,” he said. “Raw Talent is about taking completely new technology. people who don’t necessarily have the sales “The knowledge part of the sales piece isn’t there experience and developing them into so the idea of growing your own salespeople is superstars. becoming more popular and I’ve seen firms taking “The shortage of staff is rife across the on waves of graduates and people new to sales. board because people are not hiring “Some have been successful and some based on attributes, behaviours and haven’t. But Lee has a great competencies – they’re hiring based on recruitment company and Sales whether people have referrals. Gym 360 has developed a “They’re not testing the training programme that helps candidates before they get people who are new to sales into the business, so as get up to speed faster.”

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Call our specialist sales teams North 01282 776776 South 01256 707070 store.exertis.co.uk High voltage

Commvault CEO Bob Hammer sends shockwaves through emerging storage vendors as he opens up to Tom Wright about the vendor’s revival behind the scenes

The storage market, like most segments of IT, is one single share during his tenure. bursting at the seams with venture-capital funding, new Particularly around 2011 and 2012, Commvault was vendors, acquisitions and consolidation. one of a handful of hot properties in the storage space. In just the last few years we’ve seen the emergence of Competitors 3PAR, Isilion Systems and Compellent market-leading vendors such as Nutanix, the splitting of Technologies were acquired by HP, IBM and Dell HP, and the acquisition of EMC. respectively, creating M&A buzz around Commvault itself. But in among all these changes and more, Commvault Since then, Commvault has gone from being a sought- has remained relatively steady. after storage player to the legacy vendor that everybody Over the last 10 years since going public, its revenue likes to kick. growth has run like clockwork from $151m (£117m) to In recent months new kids on the block SimpliVity, $650m, with the exception of a blip in fiscal year 2016. Rubrik and Cohesity have all taken cheap shots at CEO Bob Hammer has been ever-present throughout Commvault for what they branded bloated, convoluted this growth. Installed in 1998, Hammer has overseen and old technology. all but two of Commvault’s years as an independent But with a new set of hyperconverged products having company, since breaking away from AT&T in 1996. He is been launched and more coming later this year, CEO the vendor’s largest shareholder, boasting of not selling a Hammer has swiped at the newcomers, accusing them of

26 CHANNELWEB.CO.UK JULY 2017 Emerging Technology

doing nothing more than what Commvault already does. growth was negative, and we were spending money like “The Rubrik idea is a nice idea but it’s just a part of crazy, but we just stayed on course.” what we do and at the end of the day it’s a relatively small Commvault has now broken up the different elements part,” he said. “I can’t think of anything we can’t do – we of its platform and this year installed new user interfaces can do a lot more than they can do – and we are lower for each piece. cost and higher performance. Most recently, year-on-year software revenue growth “They have a good story and they’ve done a really shot up from minus nine per cent growth to 15 per cent effective job in telling that story, but from a Commvault growth. standpoint, that day is just about over. In-house expertise A bumpy road Commvault has launched a set of hyperconverged and Revenue at the firm was most recently up 9.3 per cent secondary storage products over recent months, with its year on year, recovering from its first year of negative full hyperconverged product portfolio set to be available growth since going public. with the hardware in an appliance by the end of the year. But the seemingly comfortable and modest growth Asked whether he has ever considered making an over the last few years has masked a difficult period acquisition to bolster the firm’s intellectual property and that has seen Commvault survive a tricky break-up with speed along this process, Hammer said there has not been Dell and overhaul its product portfolio to make it mid- a target capable of adding anything that could not be market friendly. developed in-house. Hammer explained that Commvault is now out of the “Why would we spend hundreds of millions of dollars woods after killing an OEM agreement with Dell that at when we have all this technology that we’ve developed one stage accounted for 25 per cent of its revenue. on our own?” he said. The partnership broke down around 2012 when Dell “In technology if you’re not way out in front then acquired Quest, leaving Commvault unable to provide the you’re in trouble. mid-market solution on which Dell had taken the lead, “We were doing all these things when these start-ups and sending Commvault’s share price on a spiral that took came in. It wasn’t that we tried to copy them, it was just it from a high of $88.86 to a low of $31.45. in our road map. When Rubrik talks about changing the “We were an enterprise-focused company but we made world, to us it is just an operation. a decision, rightly or wrongly, to get a big mid-market “The difference with Commvault is that we have scale partner and I knew a lot of the Dell management so I and we have money. We have no debt. We keep about chose Dell,” he said. half a billion dollars of cash on hand; that’s how we “Dell ended up being 25 per cent of our business. operate the company. We have zero debts. All this is We were focused on the enterprise and they had mid- technology that we have built.” market. A couple of things happened about four or five Hammer added that Commvault’s R&D track record has years ago and I said ‘this is a waste of time’, so we pulled led to a number of offers for the firm over the years but the Band-Aid off. Twenty-five per cent of our revenue that, again, the vendor feels that disappeared. it has a stronger future going “Now we’re in the mid-market and they were saying ‘we it alone. don’t want your big platform, give us something simple’. “Over the years yes We hadn’t broken up the platform into standalone [there have been takeover solutions so that’s when the company did one of those bids], but there is no (draws peak in the air to indicate shares climbing and falling). motivation [to sell],” Commvault then embarked on the process of breaking he said. up these products, drawing miffed looks from Wall Street “We’re a public as Hammer continued to put in money for R&D when company so if someone revenue was flat. came in with an offer “When the model was working you could get 20 per we’d have to listen, but if cent top lines and 30 per cent bottom lines, but that we can add shareholder model just disappeared, so I took our operating expenses value on our own – and increased them by 50 per cent. substantially more than an “We just kept investing and Wall Street was saying acquirer could offer – why ‘what are you doing?’ Revenue was flat, licence revenue would we do that?” “We were doing all these things when these start-ups came in. It wasn’t that we tried to copy them, it was just in our road map” Bob Hammer, Commvault JULY 2017 CHANNELWEB.CO.UK 27 Making the cut

With less than six months to go for Dell EMC partners to reach revenue and training targets under a new programme, global channel boss John Byrne tells Josh Budd how the channel is responding

As Dell EMC announced last December, partners entering “By giving them a year to get to these thresholds, we the new Dell EMC programme – which was launched in are trying to spike some M&A activity among the partner February – will be brought across based on their existing ecosystem. We saw some of that only a few weeks ago in tier with either firm. Partners have been given until the the Netherlands, you are seeing some in North America and end of 2017 to work towards new revenue and training there are some discussions happening here in the UK. I can thresholds in the new programme in order to maintain – guarantee you are going to see more coming,” he said. or improve – their standing with Dell EMC. “Partners realise that some of them are very good at With less than six months to go until partners are selling Dell products, others at [selling] EMC products, some revaluated under the new programme, Dell EMC’s global are good at services; professional as well as managed and channel boss John Byrne is certain there will be more M&A implementation. They want them to come together because between legacy Dell and EMC resellers, as channel firms they realise that in order to reach the threshold they want take last-minute action to boost their status in the combined next year, they have to do something pretty special.” company’s partner programme. According to Byrne, Dell EMC is eager to instigate Learning from mistakes M&A activity among its channel partners Reflecting on the mammoth task of integrating Dell and during the year-long window as a way for EMC’s partner communities leading up to the partner partners to expand their lines of programme’s launch in February, Byrne admitted that business with the firm. fitting the two channel businesses together took seven weeks longer than expected. “We made a couple of mistakes when we brought the companies together… There was a significant mismatch in the customer and partner accounts. That delayed us in

28 CHANNELWEB.CO.UK JULY 2017 Channelnomics.eu

terms of us wanting a single portal, single deal registration cuts, and is likely to remain largely unaffected by the firm’s and something that is fully automated. That delayed us by distribution review. about seven weeks,” said Byrne. “In the UK we are pretty clean. Especially when you look “EMC looked at their customer, no matter where they at Exertis and Hammer, two become one, then you have were in the world, as one customer. So as an example, Azlan, Tech Data and Avnet, so three become one, so we are Insight in the UK would be the same customer ID as Insight in a pretty good position right now,” she said. in North America and Insight in Singapore. Whereas Dell “It has become far easier for partners to navigate our has Insight UK as a different ID to Insight North America. portfolio, which is vast. It has been perfect timing.” So when we put the two companies together, there was a Dell EMC intends to maintain a mix of regional value- mapping issue.” added distributors as well as maintain relationships with the Yet despite the setback Byrne claims that Dell EMC’s three global names: Ingram, Tech Data and Arrow. Collins unified programme has got everything right, and partners had previously explained that the firm intends to adopt a are winning new business as a result. “two-plus-one” model, where each country will be catered The firm added an incumbency scheme for both its for by two global players plus a regional one. infrastructure solutions group (ISG) and client solutions Byrne said that he intends to keep the same combination group (CSG) as well as an exclusivity programme which on a global basis. gives partners a 1.25 revenue multiplier for selling “There will be some regional specialisation; in some exclusively with Dell EMC. countries there will be two-to-one, some will be three-to- “Everyone now realises the importance of the channel one, and some will be three-to-two. But nonetheless we are for Dell EMC. We are a $74bn (£57bn) organisation with looking at significant distribution rationalisation, and we 145,000 people and our channel now is globally $35bn. want the distributors with the capability. If you’re not a “If partners light this thing up, they are making between specialist, we want you to be selling more of our portfolio 1.5 and eight times what they made the year before,” he said. and we want to be taking share from HP, Lenovo and Cisco.” “We want them to bring net new business. That is why Byrne echoed Collins’ sentiments in claiming that the the programme pays an unbelievable amount of money for mega-merger between distribution titans Avnet and Tech net new business. That could mean bringing a brand new Data has helped Dell EMC with its distribution review. He logo to the company, a company we have never dealt with claims that since Dell’s marriage to EMC, the “big three” before, or a new line of business. We have had thousands of distributors have been “all in” with the united company. new customers brought in through channel partners just in “When we came together, for EMC, way over 60 per cent Q1. Thousands have been brought in but we want more.” of their distribution business was done with the big four, and now the big three, so Arrow, Ingram and Tech Data. If Distribution overhaul you look at VMware, which is also part of Dell Technologies, Byrne told partners at Dell EMC’s first-ever partner summit they are also heavily weighted towards the big three. At Dell in Austin last October that the firm was over-distributed. we weren’t; the big three were less of our business,” he said. EMEA channel boss Michael Collins later told Channelnomics “Those big disties didn’t really look at us as an enterprise in December that Dell EMC had asked its distributors to play and I think now there is no confusion; we are submit a request for proposal as part of the review process. absolutely an enterprise play, truly end to end. We are Byrne confirmed that the company has now cut 105 definitely going big with the big three, however we are also distributors globally, bringing Dell EMC’s distribution looking for regional specialists. count from 375 in October 2016 to a present-day 270. “Those big three are all in with us. If you speak to them The channel chief said that he intends to reduce the independently, our channel has been growing double digit, company’s distribution ranks even further and claimed that our distribution business has been going double digit since cuts were “ongoing” but could not put a number on how we became a private organisation. We have the widest many more will be removed. portfolio on the planet, our channel is growing fast and According to Sarah Shields, general manager of UK our share of wallet with partners is only in the low teens. channels at Dell EMC, the UK has seen very few distribution None of the other existing vendors are throwing those points on the board.”

■ Visit www.channelnomics.eu for daily analysis of the IT channel across Europe

JULY 2017 CHANNELWEB.CO.UK 29

Industry voice

How to create super-fans Love2shop Business Services’ Adam Whatling argues that resellers should look again at how they can improve their sales incentives to develop brand advocates

Reseller sales teams are bombarded with a much stronger focus on incentives related incentives. The problem is that many incentive to customer service. Computer resellers and programmes are stuck in a rut and are not vendors could follow suit and reward sales staff delivering the same return on investment as when CSI and NPS metrics rise. they did when originally launched. It is time ■ Segment your salesforce audience retail-style. for many channel partners to look again at Resellers can learn a lot from consumer their incentive scheme. retail marketers. Ask the audience what In recent years, sales incentives have focused kind of rewards they would like. Research on cash equivalents. During a time of austerity, demographics such as age and gender to help Adam Whatling reseller bosses and vendors have assumed that decide what kinds of incentives to offer. Find Global engagement salespeople will respond best to incentives that out what competitors are offering. But watch simply increase their income. That was not the out for falling into the trap of stereotyping, lead, Love2shop case then, and it is not now. The challenge is offering rewards that appeal mostly to one Business Services keeping any incentive programme fresh. group such as young, single males. It’s possible to transform a standard ■ Communicate your incentives better. I have seen salesperson into a super-fan for your brand. salespeople receive incentive rewards through Super-fans are the best advocates and their their standard reseller reward system and not loyalty will boost brand perception, increase even know to which promotion or product it business and drive revenue. A super-fan is applied. Don’t just broadcast at people, give made, not born – we have to move beyond just them the chance to suggest ways to innovate looking at sales targets and communicate the within the brand and grow the brand. values of the brand clearly to salespeople and ■ Use technology – don’t just use email or even reward them for living these values. It’s even snail mail to promote your scheme. And don’t better if you can match the incentives with the send out blanket communications; personalise values and goals of the brand. messages to the interests of target groups. Send targeted push notifications from your reward Back to the future and recognition or collaboration platform. Use The channel market is flooded with MasterCard social channels – closed groups on Facebook, and Visa award cards, because salespeople want Instagram and Twitter are good platforms for something that is as close to cash as possible. communicating about incentives. At least, that has been the accepted wisdom. In ■ Don’t follow the crowd – be different. Reconsider fact, we are looking again at some of the old, using old-school, big-ticket items. Don’t restrict but good, ways of incentivising sales staff. yourself to the same old 12-month campaign We are using big carrots, such as big-ticket with the same old incentives. Shake things up; holidays, to help resellers motivate people who use different tactical rewards at different times. have become jaded with small cash-equivalent Your budget for rewards and recognition incentives. That type of big-ticket incentive schemes has to work harder. Ring-fence 10 per died out a bit a few years ago, as sales managers cent of your budget for rewards and recognition were worried about incoming anti-bribery and schemes and use that to provide big-ticket corruption regulations. It’s now clear that those tactical rewards on top of the baseline sales concerns are unfounded when it comes to incentive scheme. Also set aside money for internal sales incentives. communications management and experiential There are some things you can do right now marketing promotions as this will drive to improve your sales incentive schemes: participation. The idea is to build a strong ■ Make sure KPIs are realistic. Usually the main ‘service-profit chain’ between profitability, KPIs relate to sales totals so it’s important customer loyalty, and employee satisfaction, to make sure these are structured so that loyalty, and productivity. salespeople get regular, achievable incentive The bottom line is, is your existing incentives rewards. Don’t just reward people who have programme working well or is it stuck in a rut? achieved the highest sales total, but think Resellers must look again at how they can add about rewarding those who have improved value to their sales incentives to develop the the most or sold specific solutions. Some super-fan advocates who will be key to retaining sectors, such as the automotive sector, have customers and growing the customer base.

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Call our specialist sales teams North 01282 776776 South 01256 707070 store.exertis.co.uk A Day in the Life

Béatrice Butsana-Sita, Capita How does the managing director of Capita-owned firm Updata spend her time?

How do you typically start a working day? to keep me abreast of the general health of the When I am not travelling outside London, I business P&L and balance sheet. I spend wake up around 7am and have breakfast quite a bit of time with sales, either with my husband and daughter. I drive meeting a customer or doing bid her to school, which is great as we reviews. I get quite a few internal and tend to listen to Kiss FM and sing external escalations, and I meet with along. Sometimes I ask her opinion partners and suppliers. In addition, about work-related things. She is internal stakeholder engagement 13 and some of her advice is really is needed within the company. I funny! I then head off to our offices am also quite keen on employee in Victoria Street. If I have to travel engagement, so I like to visit all somewhere outside London, I tend my centres regularly and meet to be up much earlier. the teams. How long is your commute and How do you unwind at the end of what do you do during it? the day? During my 20-minute commute, I go I like to go for a run, or to the gym. But through my emails while listening to music. then when I have done my exercise, I tend The music tends to relax me and put me in a to take a glass of red wine – apparently it is positive state of mind. good for your health! I try to have two alcohol-free evenings a week, but I often fail to reach that target. I What is your attitude to flexible working at your am still fairly busy in the evening. I may watch the news company? around 10pm. I am a terrible zapper – no one wants to I think it is great for society in general. We tend to work watch TV with me. Unless I have a business event in the long hours and being able to work from home has a evening, I fall easily asleep by 11pm. significant, positive impact on the work/life balance. However, I also think face-to-face contact with colleagues Where do you sit in the office? is extremely important. The solutions we provide to our Next to my PA. I can tell her everything there and then customers are complex, and require us to work as a team, and don’t waste time writing down stuff. to know each other, to understand how each person can contribute to the end game etc. To achieve this, I think it How many hours do you typically work in a day or is crucial to spend time with your colleagues in the work week? environment and socialise a bit so you create a bond. I like to believe I am efficient. I know it is a cliché, but women are really good at multi-tasking. However, I tend What would your colleagues say is your worst habit? to be quite intense during the working hours. I asked a colleague I have known forever and he said that I have a short attention span. My daughter says the same, Phone call, email, or face-to-face meeting? so it must be true. That’s why I don’t like conference calls All of them, but if I want to seal a deal, I like face to face. that go on too long! How good are you at replying to emails? If there was one thing you could change about your I always reply to ALL my emails personally. business, what would it be? I would like our business in general to have more Do you ever really have a proper day or week off with patience. We are so focused on short-term results that no contact with the office? we don’t always make the right decisions for long-term I try not to look at my phone when I am on holidays sustainable growth. A lot is driven by the fact that our abroad, but somehow I am uncomfortable about leaving company is quoted on the stock exchange. Even so, we my work phone at home. ought to be better at this. What’s the quotation that best sums up your What do you do on a typical day? approach to business? I manage my business end to end and I need to ensure I see business as a game with players, strategies to devise, we are on track against our business plan objectives for plots to make and uncover, allies to find, foes to defeat, the year. I speak almost every day to my finance director you win, lose – and it has to be fun.

JULY 2017 CHANNELWEB.CO.UK 33 Dave the Dealer

Power to the people Mars maniac Elon Musk makes big promises, dating a celebrity suddenly becomes easier, women are told to get their compassion out, and Facebook enables 24/7 working

It’s good to see some of the guys in Silicon Valley coming up Uncaring women finish last with something productive for a change. ‘Nice guys finish last’ is a fairly well-worn phrase. ‘Uncaring While environmentalists are still trying to prove that it women don’t get promoted’, however, is one that I’ve is possible to generate electricity from wind and sunshine, just coined. Tesla CEO and Elon Musk has hit the nail on the head and According to research carried out by a German business announced plans to build a big battery. school, women have to be both confident AND caring to Musk said the battery could power around 30,000 homes succeed at work. Just being confident and good at their job in Adelaide, Australia, and will be three times the size of is not enough. the world’s second-largest battery – stripping the title of A professor at the business school drilled down into the Battery King from the previous holder Duracell. findings and provided comprehensive insight, claiming Musk reassured the people of Adelaide that the that women can be negatively affected if they show signs battery would not pose an immediate threat to of being ambitious. “In other words, they are not liked,” life, saying: “There is certainly some risk because they found. this is the largest battery installation in the The business school claimed that men are more world by a significant margin.” fortunate, with a warm personality not at all necessary to He added, though, that if the battery progress up the ranks – self-confidence is fine on its own. isn’t installed and working 100 days from I must be the rare exception to the rule: a male boss who when the contract is signed, he will give it away is both ambitious and compassionate, as evidenced by the for free. I don’t know how Musk makes his money, free Chomps I handed out to all staff last Christmas. but he certainly doesn’t drive a hard bargain. Employers with benefits Partner commoditisation At Dodgi we’ve recently fought off a staff I’ve long said that dating should be more revolt over scrapping our free Nescafé Gold like the channel: transactional, outsourced and Tetley teabags policy. With margins and commoditised. constantly strained, we saw no other choice. Well, the good guys at Badoo have Facebook has taken a different approach obviously taken my advice, creating and hypothesised that they can tackle their a service that allows people to order struggling margins by not letting their lookalikes of their favourite celebrities. employees leave work. Hopeless romantics can type the name As part of plans to redevelop a site near of their celebrity crush into the Badoo its Menlo Park headquarters, Facebook is app, which will return a list of potential redeveloping a campus that will include partners who bear some resemblance to grocery stores, green spaces, a train station, that person. a shopping centre and 1,500 housing units. According to the app, the UK’s The residential housing will be for local most searched-for celebrity is Robert workers as well as Facebook staff – meaning Pattinson, followed by Cara Delevigne that employees can work 24/7. and Fearne Cotton. “Housing is critical to these efforts,” said Badoo CEO Andrey Andreev said the Facebook. “We hope to contribute significantly system will meet the needs of users to the housing supply by building 1,500 units looking for “new, simple and fun ways on the campus, 15 per cent of which will be to make better connections with a offered at below market rates.” potential match”, modestly leaving out In an attempt to mimic the efforts of millennial- the fact that it also eradicates the arduous dominated companies, Dodgi’s head of HR has taken process of deciding if you find someone a trip to Mountain Warehouse and purchased seven attractive. four-man tents, which we’ve set up on the mezzanine Badoo has not yet released information on floor. From a nourishment perspective, we have a how much the partners on the app will cost vending machine in the foyer and a Chicken Cottage to purchase or, more importantly, what the just around the corner. Dagenham’s Silicon Valley is in margins will be for partner resellers. the making. My searches for a Sue Barker lookalike within three miles of Dagenham have so ■ Dave Diamond-Geezer, director of Digital Online far proved unsuccessful. Deals and Global Integration (Dodgi) of Dagenham Ltd

34 CHANNELWEB.CO.UK JULY 2017 5-6 September 2017 The May Fair, EUROPEAN London CHANNEL LEADERSHIP FORUM

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