The role of the distribution is expected to assume increased levels of importance in a post-pandemic Australia, leading the channel charge to facilitate new ecosystems, deliver emerging technologies and modernise billing model frameworks.
That’s according to Phil Cameron, acknowledging a pendulum swing in supply chain engagement following 15 months of market uncertainty and hardship.
“Distribution will become a vehicle for change,” noted Cameron, speaking as managing director of Australia at Westcon-Comstor, during a wide-ranging interview with ARN. “We see ourselves as the connector of the channel -- our value lies in the education, enablement and enrichment of partners.”
On paper, connection is the raison d'etre of distribution, the very reason for being since the early days of the 1970s. Within the context of consistently operating at the epicentre of the industry, nothing has changed.
Yet staying true to such a mission statement -- which has survived decades of technological upheaval and change -- should be viewed as an advantage, an affirmed and dependable approach amid a market turned inside out, upside down and back-to-front by COVID-19.
The connective tissue between vendor, distributor and partner was arguably strongest during the height of the pandemic, as the supply chain collectively stepped up to help end-users survive the turbulence.
Yet this is not a party political broadcast, nor is this the time to make cliched declarations heralding a new era of Distribution -- forget 2.0, 3.0, 4.0 or whatever iteration the ecosystem has now reached. Post-pandemic, channel capital can only take distribution so far.
“The increased reliance on software-based solutions will force distribution to derive new sources of value to partners,” Cameron acknowledged. “This will continue to come in the form of technical help such as solutions lifecycle management and hybrid solution design, whilst continuing to up-skill our partners and extend their capabilities into these new technologies and routes to market.”
At the same time, the acceleration of Internet of Things (IoT) and edge technologies will create new opportunities in logistics and asset management.
“We also see the ongoing trend for distribution to manage complex physical supply chains for partners and vendors where we have the adaptability and extensive global and local supply expertise,” Cameron said.
New customer priorities post-pandemic
In assessing the state of the Australian market, key end-user objectives during the months ahead centre around surviving the current economic and social situation, in addition to retaining current customers while heightening engagement and experience levels.
According to EDGE Research findings -- commissioned annually by ARN and delivered in partnership with Tech Research Asia -- this translates into an increase in 32 per cent of IT budgets during 2021, with almost two-thirds (59 per cent) forecast to stay the same.
Specific to technology, key customer investment priorities centre around security, customer experience and digital transformation, followed by cloud migration and application modernisation.
Within this context, modernising infrastructure and applications rank as the leading priority for local businesses, ahead of keeping current IT running while strengthening security, governance, risk and compliance capabilities.
“As end-user needs grow more complex, our role as connecter of the channel increases in importance,” Cameron added. “Our solution architects are deeply skilled and play a crucial role in helping partners design complex solutions.”
As outlined by Cameron -- inducted into the ARN Hall of Fame in 2008 -- the market shift to software-as-a-service (SaaS), software and subscription is also expected to bring customer success to the fore.
“Organisations were already focused on digital transformation in an increasingly software-driven world pre-COVID but those efforts have accelerated,” he explained.
“This means accelerated cloud and SaaS adoption to simplify business operations and reduce costs in a remote, distanced workplace, and to satisfy customer demand for subscriptions and consumption billing models. We also believe that developers and influencers will play an increasingly important role as traditional vendors acquire and offer new cloud and SaaS-based offerings."
In response, Cameron cited growth in software and recurring business as key priorities in the short- to medium-term for Westcon-Comstor, mirroring revised partner and end-user objectives in the process.
“We understand the importance of offering flexible commercial models of procurement and consumption that meet the needs of customers,” he added. “Given the increased reliance on software-based solutions, the value that we create will derive from new sources such as solutions lifecycle management and hybrid solution design and support.”
Alongside embracing SaaS, Cameron also emphasised the importance of continuing to “accelerate partner satisfaction” levels, building off recent acknowledgment as Specialist Distributor of the Year, during the ARN Innovation Awards in 2020.
“Ultimately, this is achieved by further developing capabilities, solutions and platforms that partners will value and trust,” he outlined.
From a dollar investment perspective, Australian technology spending is on track to bounce back to growth in 2021, rising four per cent to $98 billion following a pandemic-induced decline.
As reported by ARN -- and according to Gartner findings -- investment in all technology segments is forecast to increase, notably enterprise software with the strongest rebound of 7.8 per cent. Rising to $21 billion -- and aligned to Westcon-Comstor’s approach -- this segment is expected to benefit from the expansion and improvements made to remote work support.
“Remote and hybrid work has necessitated a paradigm shift in how we approach our people and our go-to-market from a solution design perspective,” Cameron said. “The rise of remote working is allowing businesses to rethink their office locations, ultimately driving IT investments and the move to subscription models.”
According to EDGE Research, 70 per cent of partners are expected to have at least 25 per cent of employees working from home in 2021, a figure expected to fluctuate depending on government lockdown measures.
“We are seeing successful partners helping their customers achieve their business outcomes, increased competitiveness and generate value,” Cameron added. “This year, more than ever before, we are seeing a huge focus on driving verticals and technology solutions to justify IT spend.
“Our own workforce pivoted early to the hybrid work environment and we see that beneficial mix of work-from-home and office / customer face-to-face productivity.”
As a result, security and collaboration solutions will continue to be in high-demand, added Cameron, running as mission-critical irrespective of environment, whether on-premises or via hybrid or public cloud platforms.
“Cloud spend is likely to increase as IT departments push to remain flexible and dynamic,” he said. “Traditional spending that we are used to may slow however investment and spend in new areas to capitalise on the dynamics within their industry and market is likely to increase.”
For example, Cameron acknowledged a potential deceleration in core infrastructure, counterbalanced with a spike in IoT investment.
“Regardless of overall end-user budgets, IT will continue to increase its share of overall capital and OPEX spend,” he documented. “Cyber threats continue to grow and adapt, and customers are under ongoing pressure to evolve to meet the expectations of their increasingly digital demanding customers.”
New channel expectations, enhanced capabilities
In light of streamlined customer priorities and expectations, the channel is aligning alongside amid plans to strengthen security, digital and customer experience portfolios, wrapped up in market-leading managed services packages.
According to EDGE Research, the concept of “disruptive outsourcing” is taking over the channel as technology providers incorporate emerging solutions to drive innovation, speed-to-market, user experience and improved performance.
“Adapting to the ever-increasing demands of the customer will continue to challenge the channel,” Cameron cautioned. “To keep pace with new customer expectations, organisations are looking for faster ways to unlock data, gain insights and keep their systems, people and processes secure and streamlined.
“We expect 2021 to be the year of ‘intelligence everywhere’, centred around the ability to unlock, analyse and act on data -- this will be critical for growth.”
Attracting new and retaining current end-users also ranks as leading partner priorities in Australia, in addition to doubling down on growing annuity revenue streams. For Cameron, such a shift in mindset has triggered a wave of interest in digital marketing -- previously viewed as a perennial weak spot for the channel.
“We’ve seen an increased demand for digital marketing, particularly for end-user demand generation,” he stated. “The value of marketing in distribution has never been higher and with customers being more selective than ever with their IT spend, the need for end-user demand generation is ever-increasing.”
As outlined by recent IDG Partner Marketing Research, the collective channel is expected to increase market development fund (MDF) investment by 68 per cent, motivated by a desire to enhance revenue generation (38 per cent) and attract new customers (28 per cent).
In a significant shift in market mentality, 83 per cent of vendors, distributors and partners now recognise the value of MDF, with thought leadership (78 per cent), branding (76 per cent) and social media (73 per cent) currently yielding the most success.
“Partners and vendors are looking to increase their share of wallet and grow their total addressable market, this can only be achieved by acquiring net new logos,” Cameron added. “We have a model around demand generation that partners are leveraging to drive pipeline growth and get in front of new customers in their vertical of choice, and their technology of choice.”
As partners sharpen technical and marketing swords, distribution is also emerging from the rubble of the pandemic with a renewed sense of purpose and approach.
Moving beyond the supply chain challenges which have combined to impact the entire industry, Westcon-Comstor continues to tighten relationships with key vendors to minimise the knock-on effect of production delays on partners. This has taken shape primarily in the form of more aggressive stocking positions and elevated inventory to avoid extended lead times.
Immediate response to one side however, Cameron said future ecosystem success depends on the channel’s ability to provide customers with “agility, scalability and resilience” in relation to infrastructure, applications and data.
“Hybrid solutions built by design, encompassing security, networking, collaboration and data centre will be at the forefront of what we do,” he advised. “Secure and optimised remote working capabilities and accelerating cloud adoption is paramount to enabling partners to adapt to the rapidly changing environment.
“Our role within these core technologies is the connector of the channel. We provide the enablement, education and extending their capabilities to ensure they are delivering high quality solutions that meet the needs of their customers.”
The collective sum of all parts is a distributor aligned to double-digit revenue growth trajectory ambitions in Australia, underpinned by seven strategic pillars, spanning partner orientation, vendor alignment, solutions portfolio and execution excellence. This is in addition to adopting a data-driven, digital-first and people-centric approach to business.
“People is one of our core strategic pillars -- our people are the lifeblood and they are at the centre of everything that we do,” Cameron added. “I’ve made it my mission to continue our high employee engagement. The by-product of this is that our retention rates are really strong which is critical to ensuring a stable business.”