In assessing the market in Singapore - through measuring innovation levels and appetite for change - a challenge to the status quo is taking place.
No longer are vendors, distributors and partners driving technology deployments and no longer is the channel controlling the conversation. In 2019, the customer is spearheading innovation efforts, triggered by a desire to remain competitive.
Such a change of pace - going against decades of supply chain protocols - places the channel at a crossroads. To quote Charles Dickens, it was the best of times, it was the worst of times.
On the one hand, customer demand is accelerating. Yet on the other hand, the channel is struggling to keep pace.
“I would start from the state of IT consumption models,” observed Vincent Lee, general manager of Singapore Channels at Dell EMC. “The way IT is being consumed today is very different from before and CIOs and CTOs now also carry different and heavier key performance indicators.
“These KPIs are often aligned to the business and profit, therefore making IT a profit driver and business enabler.”
In managing the overall Singapore landscape at Dell EMC, spanning partners and distributors - Lee said traditional brick and mortar of “reselling” has become foundational in the local market.
“We have seen very new IT models being offered in the market now,” Lee added. “This includes application driven, born-in-the-cloud, infrastructure, software or platform-as-a-service - the list goes on.
“With that, we’re seeing a new breed of solution providers in the market that cater to these needs through offering very niche skillsets to tackle and meet such requirements. Alongside this, we’re also seeing the entrance of cloud solution provides [CSPs], alongside big and small application developers.”
Speaking during Channel Asia Evolve, Lee acknowledged that changing customer requirements are placing new demands on the channel in Singapore, creating a need for partners to skill-up in the pursuit of growth.
“The sky’s the limit,” said Lee, when referencing the opportunities ahead for partners. “Many organisations are engaging in digital moves, refactoring products, processes and go-to-market strategies.
“Therefore, if a partner is correctly enabled and educated, they can effectively play a significant advisory role to these organisations moving forward. Armed with the full Dell Technologies portfolio, partners can anchor themselves firmly and transform customers from the edge, to the core, to the cloud."
As the channel changes, Lee said vendors must evolve alongside, outlining key priorities centred around helping partners transition to future business models and technologies.
“My key priority is to align, train and enable our partners with the proper skills needed in today’s landscape,” Lee added. “Enablement, product training will still carry on but we will be bringing more industry knowledge based sessions for our partners."
As executive analyst of Tech Research Asia, Mark Iles stressed that transition was “imperative” for a channel still bound by traditional practices in Singapore.
“This comes down to the overall hypothesis that customers are moving faster than the channel,” Iles advised. “In the past, it’s always been a case of partners bringing new technologies and ideas to customers, but now we’re seeing a reverse.
“Customers are switched on and they are appointing digital and security officers. They are focused on customer experience and they have accelerated away from the channel.”
For Iles, challenges now exist for a channel unable to engage with new decision makers as the technology budgets shifts increasingly towards the business.
“Business is not used to working in the same way as technology and they don’t necessarily know who these channel partners are,” Iles said. “They want outcome-based contracts and they want to be more nimble. Because of this, I’d argue that the market dynamics in Singapore today have shifted more than we have ever seen in the past. Therefore, the need for channel change is even greater.”
Yet Iles - in drawing on local channel research in partnership with Channel Asia - acknowledged that change is difficult for an ecosystem of partners born out of a reselling age. Transition is not as simple as flicking a switch, partner transformation requires a much deeper consideration.
“It’s hard to catch-up because to do so, partners must make a fundamental shift to their business,” Iles explained. “The problem is, partners have been operating in the same way for the past 20-25 years.
“The technology differed in terms of what came out in the market as we moved from PCs to servers, then virtualisation and cloud to enterprise software. There’s been various transitions and partners are used to changing technologies, but now they are required to change something much more profound.
“The market is asking them to change how they sell, how they market, how they position themselves, how they structure contracts and how they operate as a business.”
This critical aspect, according to Iles, is at the heart of such transformation in the channel with partners now required to adopt an internal - and honest - mindset to start the process of change.
“It’s very difficult because partners have to look inside their business and work out how to change it,” he said. “This isn’t just looking at the latest technologies and up-skilling staff, this is a change of how their business works and that is not easy.”
Delving deep into the local ecosystem, Iles warned against market complacency, advising partners to initiate transition plans even if revenue is climbing.
“Partners either don’t realise they have to change, and for the ones that realise, they don’t know how to,” Iles summarised. Either way, they are not transforming. If your revenue is climbing you probably don’t understand the need to transform, why would you?
“But if you change the focus to profitability, the difficulty of skilling up and the challenges associated to customer acquisitions, the problems become clear.”
According to Iles, revenue growth and a general buoyancy in the market is hiding some such challenges in channel.
“The best time to cut costs is when your revenue is climbing, not when it’s starting to flatten out,” he advised. “In general, most partners currently have costs in their business that are unsustainable in the medium to long-term. I don’t think I’ve met a partner yet which doesn’t have some degree of fat within the business.
“Traditional businesses are predominantly people-orientated businesses. Most costs come from the business because people costs are climbing and that’s the same in Asia. Yes, the cost of labour is lower in some markers but in more mature countries such as Singapore, the cost of labour is becoming more impactful. You can’t always afford to still have people answering the phone for support, for example.”
On the whole, Iles said the channel is still selling the same as it was 20 years ago, creating a divide between customer expectations and partner delivery.
The trend from an end-user standpoint in Singapore, according to Iles, is that partners must now have a “very specific view”, whether that be through technology or by industry.
“You might know how to deploy business processes for insurance companies, so demonstrate your expertise through a specific case study,” he said. “It’s not enough to just say, ‘we know how to do cloud migration’ which is incredibly generic. We’re seeing solutions become much more focused creating a need for the channel to become more specific.”
Such a shift in market metrics is challenging the long-time partners labels of the channel, such as value-added reseller, system integrator and managed service provider, among others.
“System integrator doesn’t mean anything at a customer-level,” Iles added. “Customers want to know whether a partner can do X, Y or Z. They are focused on customer experience and they want to talk with partners that can show specific expertise. This will change how a partner sells, the type of people they have selling and how they go to market.
“Traditionally, partners are very heavily sales orientated. Usually the owner of the business is strong at sales and the company progresses from there.”
For Iles, this is especially the case in Singapore, a market in which the network is power and connections are mission-critical to success.
“Scaling this is hard,” he said. “This is why companies struggle because they are hiring additional sales people to try and get in-front of the right type of customer - this is challenging. Telesales isn’t as effective anymore and customers today are very well-educated. In most cases, they have already made a decision before speaking to a sales person so the channel must adopt a more focused approach.”
Consequently, Iles said success can be found in transitioning sales stuff to consultants, capable of “delivering insights” and adding a deeper level of value to the customer.
“There’s value in approaching a customer and saying, ‘look, are you seeing this trend? We work with a similar business in this area and here’s the trends we are seeing. We have some ideas about how technology can play a part in helping you achieve your goals and we’d like to discuss that with you’,” Iles outlined. “This is a very different type of engagement and conversation than the age-old approach of, ‘how much storage would you like?’”
Set up for success
In looking ahead, Lee said that despite such challenges, partners are well positioned to transform amid an evolving customer landscape.
“Fundamentally, the conversation with IT stakeholders and customers has changed drastically from before,” Lee added. “Partners will have to be very well-informed or even more knowledgeable than their customers in order to play that trusted advisor role.”
In response, Lee said Dell Technologies understands that it takes “more than infrastructure” to anchor customers down in today’s climate, hence why the vendor is “rebranding and restructuring” through a newly released Dell Technologies Partner Program.
“With this move, we’re encouraging our partners to fully utilise the full power and advantage of the Dell Technologies portfolio, which spans from cutting-edge infrastructure, cloud orchestration and application modernisation,” Lee said. “This puts partners in a very favourable position as they engage their customers in transformational projects.”
Central to such growth will be the supply chain, and the evolved role of distribution in adding value to partners.
“Financial support and logistics are now a given for our channel partners and vendors,” added Mark Tan, managing director of Innovix Distribution. “As the technologies and demand from the market evolves, we continue to stay ahead of the curve by increasing our investment in the channel.”
Specifically, Tan said the distributor enables the channel through Innovix Cloud in the form of cloud service provision and Innovix MarketPlace which is a B2B digital procurement engine. This is in addition to a Security Operations Centre providing cyber security services for the channel and professional services.
“We continue to work with our current and new technology vendors to bring new products and services to the market,” Tan said. “We have also been collaborating with our channel partners to bring their unique offerings to the market.
“I see even more business opportunities than a decade ago, they just come in a different form. Look at the lowest hanging fruit which is storage - partners can differentiate through specialisation beyond data.
“Explore opportunities pertaining to your customers’ cyber security posture. Every organisation is at risks, which are business opportunities to all of us. Equally important, be clear about your financial strength and weaknesses, this determines your path you steer into.”
Channel Asia Evolve, in association with Dell Technologies and Innovix Distribution, focused on the key facets of growing a business, delving deep into how partners can reshape operating models, disrupt selling processes and building brand awareness.