Partnering past the big boys

Partnering past the big boys

When people look back on 1999, no one will be in a position to say it was a dull year for the Australian channel. The rapid rate of consolidation, which has already dominated the news this year, isn't showing any sign of abating.

In fact ARN, with its finger firmly on the pulse, has delivered news of significant channel acquisitions in almost every single issue this year.

Firstly the big international distributors barged their way into the channel, with Ingram Micro swallowing up ER and ITG. Then it was CHS' turn, with CHA declaring it would sign on the dotted line with the world's second biggest distributor. That deal is likely to be officially inked in the next couple of weeks and Prion will almost certainly follow. Those may not be the last as CHS is running up to five separate operations in some countries.

By the end of the year, the channel will have Tech Pac, CHS, CHA and perhaps Express Data - if the channel can continue to ramp up its operation - in a league of their own in the Australian distribution ranks.

The retail market has seen similar consolidation. This week's front page sees the Strathfield Group declaring it will occupy some of the same ground as Harvey Norman and Dick Smith. Again, we're going to see three or four very large players dominate the market.

It has been predicted that the same thing would happen in the integration market. Interestingly, that has not yet happened. In fact, we have seen exactly the opposite. Second-tier integrators and enterprise resellers are banding together to give themselves national boasting rights, and that is creating a situation where there is no clear tier one. Really, today anyone with revenues above $50 million and a national network of offices, especially with a strong services capacity, could describe themselves as tier one, just as PowerLAN did last week (see page 1).

Raise the bar

No doubt that's going to change. Already this year CNI has declared it intends to raise the bar in terms of what it means to be a tier-one integrator. Anyone that wants to play in this game needs to be prepared for one hell of a battle because there are some big, mean players out there with a hell of a lot of money behind them.

It must be daunting to be facing these big players, and for some like Force Technology, they will get out or refocus. But let's face it, this is a rapidly growing market and there is ample opportunity, particularly for the reseller and integrator community. Find some kind of niche - that may be as simple as the fact that you "own" a brigade of loyal customers that you have serviced so well for many years - then find partners that can help you deliver more of a total solution. That's the one thing the big guy has over you and it's a very real customer need, but if you partner well and do what you do better than anyone else, you have all the ingredients for success.

Also note that the two big mergers/acquisitions in the last two weeks - PowerLAN/INS and Leading Solution/Kasys - have arisen from very successful partnership arrangements.

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