Channel success hinges on connecting with change

A Comms Dealer round table discussion held in association with Entanet teased out the determining factors that are shaping the comms market, sending out a clear message about the changes that are taking place and their implications for the channel.

Close analysis of the round table discussions on changes and trends in the comms industry clearly shows that the ‘platform' is now king, and those who remain stoic and loyal to legacy models will most certainly struggle to find their place in a market where traditional modes of operation are being turned on their heads. Historically, the core was ‘tin' but now the platform has become a critical business driver, enabling strong integration across a diverse range of applications. This change is levelling the market and a further flattening effect can be seen across many other areas of the industry, such as the democratisation of IT, BYOD, virtualisation, the move from capex to opex, strategically aligned channel relationships, the death of brand stewardship and the need for sales consultancy. Connectivity is also king, driving and enabling this process by underpinning the platform. How we manage this change is the big industry talking point, and was the focus of debate here.

One of the most powerful changes is virtualisation, a term that signifies the cloud as a homogeneous entity where services and applications lack the identity of a brand. This acts as a leveller in the new world and brings a need to develop new identities and new USPs based on value add and consultancy. Where once brands and badges prevailed, stand outs of a different nature have become the order of the day.

Adam Cathcart, Head of Mobile and Partner Management at Outsourcery, explained how the dynamics of channel partnerships have changed for the company, levelling what was once a traditional hierarchy with the firm's operatives now walking shoulder-to-shoulder alongside partners: "The big challenge for partners is that they need the consultancy sell," he said. "But many haven't got the people to do that. We now have more pre-sales and project managers than account managers, purely to support our partners. We'll provide pre-sales support and give them the ability to hold a consultancy sale with the customer that genuinely brings about other opportunities. If you become the consultant for the customer everyone wins."

Although it may take time to master the consultancy sell, the cloud and its associated business models have already succeeded in levelling out revenues in the move from a single event capex sale that drops instant cash to the linear opex model where revenue is accrued chronologically over a period of time. However, this levelling trend also represents an uphill struggle, prompting widespread head scratching and tough decision making.

"I'm a traditional tin man but we had to drive change from capex to opex," said Carl Davis, Managing Director at Swift Managed Services. "The cloud is forming a major part of our business. Customers think it's better value for money and they are comfortable with putting their data and corporate presence ‘out there' knowing it's backed-up and protected. We operate a blended model to mitigate the risk."

Karl Prust, Managing Director of Vivaciti, wrangled with the issue of connecting with change, but with a level head he understands that remaining static is not an option. "We've always been based on capex," he said. "It's been hard to sit back and say we have to make this change. It was a difficult decision because working on a monthly revenue stream places us at more risk. If a customer goes bust I lose the upfront cash."

Another key building block in the platform is the democratisation and consumerisation of IT, a phenomena that is promoting and driving diversity and mobility. The BYOD trend is a fashion driven statement driving strategy around cloud and security. Users are choosing which social device they want to use in the work environment, raising the question of trust in their comms provider's ability to make it work. The need for a consultative trusted advisor is forcing comms and IT companies to up their game. Customers now trust the device, the software behind it, the cloud and security, and this trust must also be placed in a consultant profile.

Elsa Chen, General Manager, Entanet, noted: "In the past we used fantastic computers at work and wanted one for home, now that's completely the other way round. We have an iPad at home and want to introduce this to the office and business environment. This changes how the business understands the customer."

Cathcart added: "BYOD is huge for us at the moment. It literally is a case of having what you prefer to use. One of the key trends we see is mobile management. Companies are not spending so much on devices now, but they are investing in ways to manage them and keep the security element in place."

Tom Sykes, Managing Director, Rockford IT, focuses on a central infrastructure that will secure any device while remaining flexible. "Build it with that vision in mind," he said. "We don't care about what desktop or device you use, just bolt it to the infrastructure. We focus on using portals. This is gaining traction as it gets around security problems."

The comms and IT industry is fast moving and consequently strategic thinking is lacking on many levels within organisations, according to Matthew Wring, Managing Director, Efar. "We as an industry need to start thinking about how we better manage integration in the future, how we strategically describe and understand what is being marketed to us," he said.

"We only save money with IT if it's done in a decent strategic plan. One of the biggest challenges we have is a lack of qualified technical staff, people who can integrate this technology effectively. We often find that in the businesses we work with, their problems are even worse than ours. The skills gap is a massive issue, but this lack of IT staff drives our industry."

Justin Thorogood, Director at Comtact, points to two schools of thought on how the skills gap can play into the hands of resellers. He said: "We can either operate as an extension of the customer's strategic resource, getting the mindshare of stake holders, taking their strategy and painting a vision of where they want to go, flavoured slightly with our imprint. Or, take care of the BAU, look after hardware, connectivity, lines minutes etc and allow the customer to focus on the strategic element. BAU can be profitable if presented in the right way."

Rob Sims, COO at Nexus Telecommunications, underlined that the move from tin and its associated links to brand and capex is driving momentum towards a broader based pool of forward looking solution potential. He commented: "We are seeing a realisation that businesses have to change as the world around them changes. We've moved from how cheap can I buy a phone to what will this solution do for my business. This brings a totally different mindset and different sales approach. From a channel perspective, we need to ask how we can help with the whole comms stack."

Brand stewardship is less important in a world where the badges that once signified a reseller's place in the market no longer apply, loosening traditional channel models. "An allegiance to a vendor used to define what people did very strongly, but you seldom see that now," said Paul Cunningham, Round Table Chairman and owner of consulting firm Monkeybridge. "It's much more flexible. The intangible solution often makes the vendor irrelevant. Yes, it's an important element, but not manifested to the end customer as often as it used to be."

Channel partnerships have also levelled, now based on a strategic alignment rather than traditional hierarchy. "There must be a good cultural fit," commented David Heyes, COO at TFM Networks. "The relationship must share similar goals. There is a notion that partnership is about being equally selfish. This makes sense to some extent, but you're not aligned. That's the biggest issue. Once you've got that cultural fit you have a good operational partnership."

Entanet is working on the ground with partners to nurture a consultative approach. "We question what the IT manager wants, ask why they want it and by when," explained Chen. "The answer to these three key questions may be surprising to us. This process requires great confidence from the supplier in a competitive market, but the effort is worthwhile because the customer will come back for more. That is where the bigger picture is, and this is what we are doing to help partners change their sales process to be far more consultative."

Connectivity is driving and enabling this whole process, underpinning the platform and underlining the important role of resellers as trusted advisors. Darren Farnden, Head of Marketing, Entanet, noted: "It is important, especially if customers are going down a new route such as hosted applications, that they don't see the connectivity as a commoditised and incidental piece of the jigsaw. Don't ever underestimate the importance of the connectivity part of a solution. It's too easy to focus on the sexy components and not keep reminding the customer that all this won't work unless you get the connectivity right."

According to Stephen Barclay, Head of Sales, Entanet, it's the channel's job to educate end users about the true value of connectivity. "Some say we should commoditise connectivity," he commented. "This is shocking. Why, in our own industry, do we want to drive down prices? Why aren't we defending our position in the marketplace based on the value we bring to the end user? Even a small business migrating to the cloud will save money at a sensible price. Pricing has to be reasonable so we can maintain and develop the knowledge, and bring people into this industry."

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