Reseller News Roundtable - As storage trends shift, what's the partner power play?
- 15 December, 2015 08:16
Dell, EMC, Hewlett Packard Enterprise, NetApp, Westcon and partners discussed the changing role of storage in New Zealand.
Storage, and all it encompasses, is changing in New Zealand. From the rise of flash to the splashing of enterprise cash, the market of today is in a state of flux.
But if the world has indeed gone crazy, and if storage vendors are in fact the “cool guys in the room”, what next for the Kiwi channel partner?
“Resellers better be the glue,” says Richard Prowse, Business Manager of Storage Platforms, Hewlett Packard Enterprise, “and they better be strong glue because it’s critical as a brokerage.”
In short, a changing storage market demands a new partner power play - a strategy built on brokerage and wrapped in reseller value.
For Prowse, the successful storage partner of today expands value-added offerings, develops new revenue opportunities and broadens integration expertise.
Along the way, they access technology and training programs to serve specialised vertical markets, such as finance, healthcare or government.
The end game for this new approach is a partnership built on customer dependence, a dependence on the reseller to deliver as the first port of call in New Zealand.
In the words of Chris Martin and Coldplay, nobody said it was easy, but in speaking as a chief benefactor of a storage mind shift, Jon Waite, Chief Technology Officer, Computer Concepts Limited, recognises the ongoing value.
“No matter what the question is,” he explains, “if customers pick up the phone and ask you it first, that’s gold.”
Arriving at the state of reseller Nirvana however requires a tailored approach that ensures resellers are not simply wanted, rather needed as a critical enabler of business growth.
“The resellers who are succeeding are the resellers who are building a service,” observes Sam Taylor, Vendor Business Manager, Westcon. “They’re not just about buying some storage and passing it onto the customer, they’re building services to deliver value instead.
“Some in New Zealand are doing this through innovation within the cloud for example, but the key change shift has been around partners understanding what’s happening in the market, knowing what storage vendors are doing and how to find different ways to provide cost-effective services.”
Taylor believes that while innovation is rife in certain segments of the channel, with “lots of ideas coming to the table”, the key challenge for the reseller community remains centred around trying to find the ideas that work on both sides of the fence.
“From a distribution perspective, it comes back to flexibility,” Taylor adds. “And making sure that whatever partners stand up as-a-service, it can be transitioned as the market changes.”
Built around a pragmatic approach to business, partners that steer customers away from vendor lock-in and silos will be better placed to react to the ever-changing storage market, according to Taylor, without having to pay huge amounts of money to get off technologies that are fast approaching expiry.
“The market is filling up with new resellers who we’ve never seen before,” Taylor adds. “They tend to be cloud players who don’t need to invest too much and can just give it a go.
“They can wrap services around a solution and if it all goes wrong, they can simply turn it off and walk away and try something else.”
But for every market disrupter, remains a victim of disruption. That being the smaller resellers across the country, those running lifestyle businesses with a small customer base and a straightforward approach to the market.
“New Zealand is full of smaller resellers who just want to look after their three or four customers, and they frankly don’t care about changing,” adds James Arnold, Country Manager, Dell, in bringing in the wider reseller community across the country.
“That’s fine,” counters Taylor, “but what happens when those three customers do care? The moment they look at the market and decide to make some changes, then this reseller is in trouble and that’s an inevitability.”
In alluding back to Prowse’s earlier point, and the need to be the glue between the customer and vendor, Craig Murphy, HP Alliance Manager, Dimension Data, says the need to explore the services route for resellers is a reaction to the fluctuating storage market.
Dimension Data, as a global ICT giant operating in New Zealand, has in particular made a series of acquisitions around consultancy, which Murphy believes is indicative of the changing role of the partner.
“You absolutely still need the high-level pitch but now partners must be mindful of the nature of businesses and how they operate,” he adds. “From a reseller perspective, the CIO used to be the pinnacle of our call cycle, but this is changing.
“Of course they are absolutely still valid, but partners should now also be mindful of marketing for example. The marketing department is driving the business to market and it provides partners with different routes to explore.
“There’s little value in isolating the IT guys as it’s crucial to be mindful of the wider business.”
Looking ahead, Murphy believes the 2016 storage partner will operate in a “hyper-competitive” market in New Zealand, a market competing for margins across industries and verticals - “everyone is competing harder and faster.”
“As a reseller,” Murphy adds, “it’s about working pragmatically working with the IT department, and looking towards the marketing team to drive an idea. And consultancy ties into this role.”
The art of consultancy isn’t new within the channel. Whether it be cloud, mobility or security as examples, the wider consensus remains that consultation will triumph over traditional methods, with storage no different in that respect.
But the art of “staying sticky”, as Arron Patterson, Chief Technology Officer, EMC puts it, is what will separate the leaders from the laggards throughout the channel market, as resellers continue to react and revaluate their position within the industry.
“Look across New Zealand, small businesses consisting of accountants, architects, farmers etc essentially have an unlimited choice for services to run their business,” Patterson adds. “Now, they can either spend every working hour of every working day analysing those options, or they can rely on a trusted business partner that understands their business and their niche.
“That’s how partners can stay sticky.”
With a raft of storage vendors flooding the market, from the traditional big players to the upcoming start-up style competitors, the average reseller is not short of storage choice.
That however, could be used as an advantage.
“It’s not an easy journey as a business to go from nothing to everything so resellers can play a vital role is advising customers on what technology best serves their business.”
But with distributors and vendors advising partners to head down the services path - and to add a consultancy string to their bow - where’s the reseller value? Is it more work and more risk, but for less money?
“It’s a different business model based around more reliable and consistent revenue,” Patterson qualifies.
For James Kennedy-Moffat, Sales Director, NetApp, the services avenue opens doors previously slammed shut by an old-school approach.
“One thing leads to another,” Kennedy-Moffat says. “Once resellers start understanding one end of the business, and the adjacencies, they have the knowledge to begin growing the organisation and understanding it more.
“Here lies an opportunity for partners to consume the business they are serving and to become a trusted advisor within it.”
Ten years ago, Andrew Diamond, Director of Storage and Data Management, Dell, remembers a time when customers walked into an IT shop and saved 20 percent on storage solutions. End of conversation.
Today however, if a partner talks to a customer they can add more value to the entire business, rather than just providing a small saving on a small piece of the jigsaw.
But with this new approach, as Murphy points out, comes reseller risk.
“The risk has shifted,” he adds. “Now customers want to consume a service but want partners to run that risk. They consume on a monthly basis and turn it off on a monthly basis.”
“But if you take more of the risk,” questions Kennedy-Moffat, “won’t you take more of the reward?’
Citing Dimension Data as an example, Kennedy-Moffat accepts that while the customer could have bought storage up front without any problems, by consuming it as a service, partners now have the opportunity to make more money.
Delving deeper into the make-up of the new-look storage partner, Prowse believes the New Zealand market is waiting for specialised partners to take the lead, through partnering with vertical specialists.
“There’s a huge amount of value in companies having a true understanding of finance, insurance or whatever the vertical might be,” he adds. “Take insurance as an example, there’s not a lot of consultancy firms outside of the Big Four that understand the industry inside and out, and how it operates.
“While it can be difficult for a reseller to gain vertical experience in New Zealand, there’s an opportunity to look at businesses and how they work, recognise the IP and the role of storage and begin to formulate ideas relevant to specific verticals.
“If a reseller can approach an insurance firm and say, ‘Hey, we could take your customer database and do this…’ - that’s value.”
Take Dell, EMC, Hewlett Packard Enterprise and NetApp as examples - are huge tech giants specialists within certain industry sectors?
“No is the honest answer,” Prowse adds. “We have knowledge but the sheer depth of knowledge required is far greater, and this represents a niche opportunity to specialise.
“If I was a reseller, I’d be the the guy they come to and that’ll always be the key point.
“The better performing partners in New Zealand have those relationships and know what they are doing within specific verticals.
“Because if a reseller is that glue, it’s going to be difficult to remove them from the equation because no other competitor will have the same IP, connections and understanding.”
Moving away from simply selling widgets, in New Zealand, Arnold believes senior leaders can “wrap their arms around the entire country, understand it and manage it” - allowing partners to be braver because of the market size.
“Generically speaking, as a vendor we understand technology and what’s happening around the world, and we’re bitterly trying to innovate and bring businesses to the future,” Arnold adds.
“Hopefully we’re all building products that are open, flexible and don’t lock customers in, and that’s the role of the vendor in theory.
“For resellers however, they can add value by understanding specific verticals or geographic locations and recognising customer requirements, before linking back to the vendor.”
But as Taylor points it, the future path of storage is creating complexities for partners up and down the country - who struggle to assess where the market is heading and the areas of opportunity.
“Most partners are working from a three to five year outlook,” he adds. “But things are changing and disruption keeps happening so by the time you reach three years from now, the market will have changed and the offering you provide must be flexible to accommodate this.”
Across New Zealand, IT professionals are no longer spending 10-20 years at the same organisation, they’re spending 3-6 years and instead, floating around the local market.
“The job of the reseller is to keep track of the movements and know who builds what and where they are now,” Patterson adds. “New Zealand is perfect for this and it’s another way of resellers pulling together a team of experts to solve a customer problem.”
But as vendors across the board continue to wax lyrical about the reseller of the future, and the recipe for success, flipping the conversation entirely - what does the channel need to prosper?
“From a partner perspective,” Waite adds. “If I approach a storage vendor to buy storage, I’ll operate to deliver that service for three to five years.
“But in 18 months my customer will no doubt want to change with the market and I’ll encounter a legacy platform that I have to run for another few years minimum.
“It’s about getting the balance right when it coms to phasing out technology and looking at the next greatest thing, which is why flexibility is key.
“One of our biggest challenges centres around the cost of decommissioning storage. It never gets talked about. Everything is great when a partner purchase technology and everything is great during its lifespan, but the real challenge lies in getting off the technology afterwards.
“For CCL, when we take on storage we know how and when it is going to be disposed and the whole lifecycle of the product. The channel has to be smarter about that.”
Waite says one of CCL’s biggest challenges when first building data centres almost a decade ago, was the customer need to see those flashing lights, understand the box they were put on and basically, the vendor supplying the technology.
Fast forward to 2016 however, and that dynamic has shifted.
“Customers now want to buy a business service outcome,” Waite says. “Whether that is EMC, Dell, Hewlett Packard Enterprise of NetApp, they are not exposed to the work behind the scenes and are in fact devolving ownership of who provides the platform.
“Instead, they are buying a service. So when I’m buying storage from a vendor, I’d love them to offer an as-a-service consumption model so I have no investment on my data centre floors - those are the areas customers are pushing back on, and service providers want this as well.”
Going one further, when Murphy picks up the phone at Dimension Data and talks to a vendor, he simply requires a shortcut.
“When we phone vendors, we expect immediate traction,” he adds. “When we phone it’s a client issue and they require X, Y or Z straight away without waiting, and that’s a crucial aspect of the vendor-reseller relationship.”
In echoing the expectations levels from both CCL and Dimension Data, Taylor - in speaking from a distributor perspective - believes access to the right knowledge is another critical role the vendor has to play within the channel.
But with some large tech organisations, on the ground support can be a difficult and frustrating experience, which again plays on the value-add of the partner.
“If I call my local reseller, they do care and they will solve it,” Taylor says.
Capitalising on culture
As the storage market in New Zealand evolves, in line with global trends, subtle differences continue to carve open pockets of revenue growth for partners.
Diamond, having worked on both sides of the Tasman, appreciates that New Zealand is a market of innovators and a leading indicator of trends.
“New Zealand has a higher per capita of people developing digital applications for conducting business, and there’s lots of potential for local resellers to get involved and provide the resources and technologies to service this,” he adds.
While the idea of Kiwi innovation and inventiveness is common knowledge across the world, for partners, Waite identifies areas where partners can utilise such a reputation for a local advantage.
“Whenever I travel overseas, it still amazes me the level of exposure New Zealand businesses receive on a global stage because of our reputation of taking technology on and trying new things,” Waite adds.
“If we fail it’s cheap and quick - and everyone gets that already. But technology aside, partners can exploit other areas as well, such as pushing change in licensing agreements, support agreements and other components.”
In keeping with the typical Kiwi trait of “having a crack at anything”, as Patterson observes, such a mindset and culture bodes well for the current state of play within the storage market, as organisations struggle to grapple with new technologies.
“There is a rising sense of panic,” Patterson adds. “Businesses don’t understand the storage technology within their business and to be honest, don’t always trust IT departments.
“The board usually brings in the technical team to explain technology and the impact on the business and they are no better off with that information.
“As a result, they’re desperately looking for partners who are able to understand the transformative nature of the technology being built, and how to apple that to a business problem.”
While Patterson is advocating simply “having a crack” for the sake of it, his central point is based around a partner’s ability to “switch between business and technology” - to “talk to IT in their language, then do the same in the boardroom.”
“If you sit within that space, you’ll have a future,” he predicts.
But change is difficult.
“We changed our approach to the market around nine years ago because we could see that our traditional business of selling equipment into customers was in decline,” Waite adds.
Yes, it’ll have a long tail, and yes it’s not over yet, but as Waite bluntly states - “it’s not the future”.
“We built a managed services portfolio instead and started very small, but with the long-term goal of becoming an independent trusted advisor.
“Businesses come to us with a technology problem, not an IT problem and we translate it back into what technology is required - which touches back to the overriding point of resellers being the glue.”
Alluding to Waite’s approach, Kennedy-Moffat believes that even though the infrastructure decision should be made last, many resellers put that decision first.
“Turn the conversation around and ask yourself, how is the business working?” he adds. “What is the service you’re trying to offer and the outcome and naturally, the infrastructure decision will follow.”
But with a change of approach comes cost and hardship however, with the big players such as CCL and Dimension Data - among others in New Zealand - actively recruiting new personnel with new skillets and requirements for the changing role.
“It’s hard to make the move because resellers need people that can do it,” Arnold adds. “Storage partners need people who understand business analytics and they need people who understand ‘the business’.
“Not all organisations can do this and it’s a difficult transition for many, but there are ones completing changing and making a success of it.”
As Waite admits, during the early years the transition from selling a product with an annual maintenance and a three-year lifespan into a service “hurt”, but once CCL came out of the other side cemented within that glue position - “that’s gold.”
“But let’s be clear,” adds Patterson, quick to reassure the vast majority of channel partners in New Zealand. “Today’s current business model is not going away within the next five minutes.”
Conscious of the need to be open and accurate with Kiwi resellers, Patterson says that while the future is clearly built around a need for greater partner consultancy and services, the end is not near for traditional market players.
A crucial interjection at a time of great change market change, Patterson’s view is backed by all vendors, who advise the channel to be sensible when making changes.
“Resellers don’t need to change overnight and nor should we encourage them to do so,” Kennedy-Moffat adds, “but that’s the future.”
As Arnold points out from Dell, all businesses are dramatically changing today, as they adapt to meet the new models going forward.
In providing an honest assessment of the Kiwi channel scene, Arnold accepts there are companies that will stay the same, and continue to have relative success in a declining market - “it’s not a case of if you don’t change tomorrow, then you’re dead.”
While the end is most certainly not near for the traditional resellers in New Zealand, in unveiling new market disruptors and the criteria for partner success across the country, the future path of storage has been outlined.
The question is however, will resellers disrupt, or be disrupted?
To read part one of the discussion - Reseller News Roundtable - Examining the storage state of play for Kiwi partners - click here