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​Is the Australian channel better together?

​Is the Australian channel better together?

As talk fills the industry with the need to partner up to increase profitability, ARN tests the theory.

“Collaboration with the right partner can result in a more efficient route to market and can often mitigate one’s exposure to risk,” he added.

“Easier access to technology and telecommunications has increased market competition, but there is greater opportunity to build new revenue streams, feeding the urgency to get to market early.”

Often, there exists a fine line between collaboration and competition in terms of potential customer or skills exposure.

For Brennan IT executive general manager, Simon Barlow, the channel has been working together for a number of years and collaboration between resellers has been apart of the company’s strategy for some time.

Yet the decision for Brennan to collaborate with the greater market is based on the proviso of the delivery of customer requirements, in line with NTT.

“There are occasions where we have won new business and will need to work with another reseller on the transition for our clients,” he added.

“It is important to form those relationships to ensure a smooth transition for the customer.”

Foreign concept

Despite also sitting at the larger end of town, competing daily against the big players in the Australian market, collaboration for Logicalis remains a foreign concept, “simply not an option” in the face of ongoing competition.

“The last two years I have seen more acquisitions of smaller partners by businesses such as Logicalis and Telstra, than I have in the previous ten years,” Logicalis CEO, Basil Reilly, observed.

Fresh from acquiring the managed services capabilities of Thomas Duryea Consulting, Reilly believes market growth can only be achieved through internal investments in skills and strategy, or through acquisition.

Basil Reilly (Logicalis)
Basil Reilly (Logicalis)

“We all compete against each other and with regards to our more direct competitors, we do not partner,” he added. “Rather, the trends I have seen are huge acquisitions and people going out of business.

“I have seen lots of partners going bankrupt because the margins in the traditional reseller system integrator business are disappearing and everybody is trying to develop new business models and find new business that have margin within them.”

Consequently, Reilly is looking to build new business models as the old ones disappear.

“We’ve now started Backup-as-a-Service and Infrastructure-as-a-Service and have gone from zero dollars to 20 million per year in a three-year period,” he explained.

“We’ve never heard of those businesses before, so we’ve had to invent them, spend millions of dollars to build them and then go out and sell them to customers.”

Grey area

As one of the country’s leading managed services providers, Brennan acknowledges the grey area of partner to partner, understanding the varied opinions of key players within the market.

“If you partner with a reseller with a very similar solution set or a similar market to one that you service, the line between who takes ownership of a customer can be blurred,” Barlow added.

“For example, who owns the relationship or the service? This in turn can affect the client relationship and cause bottlenecks in the service.”

In recognising particular issues that could go awry, Barlow said Brennan tries ensure a single point of accountability to combat the blurred line of partnering.

“The key at the end of the day is the end-to-end client service experience that is received,” he added.

For some partners, and in alluding to Reilly’s strategy at Logicalis, when building intellectual property and differentiating within the business, acquiring or building internal skills rather than collaborating can often be the answer.

Joseph Vijay (NTT)
Joseph Vijay (NTT)

According to Barlow, Brennan’s initial strategy is based upon the business’ existing capability, commoditisation and intellectual property.

Barlow said the business questions whether it needs the intellectual property internally in order to deliver on customer experience and questions the potential value-add to its IP by extending its in-house capabilities.

“If the product is a commodity, why not buy it at the best value in the market, integrate it into the wider service offering in order to get the right service at the right price for the customer?” he asked.

In line with Barlow, Vijay highlighted that at NTT, the decision to buy vs build a skill is made on a case by case basis.

“The choice to acquire or build a skill really depends on the opportunity but we are quite open to partnering with organisations with similar values if it means a better and more efficient outcome for us and our customer,” he added.

Teamwork

Despite maintaining a combative approach, O’Reilly admitted in some cases, Logicalis collaborates with smaller subcontractors or international partners, rather than with direct competitors across the trans-Tasman region.

“My competitors here would never collaborate with me because they want to take business off me and I want to take it off them,” he added.

“I can’t see having the conversation with them, I can’t go near them. They are my competitors. It would be like asking Telstra how its collaboration with Optus is going. They would think you had lost your mind.”

Rather, O’Reilly said he would rather leverage the overseas market.

“We work with technology providers from Israel or Ireland or wherever we are trying to bring in new technologies and start new businesses in Australia like Seccuna or Improvata,” he added.

“We have brought them into Australia and are using their technologies to offer new services to customers.”


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