Mark Iles (Tech Research Asia)
Building out managed services capabilities in response to evolving customer buying patterns ranks as a leading priority for channel partners across Southeast Asia, as the ecosystem embraces subscription-based selling.
According to EDGE Research -- commissioned by Channel Asia and delivered in partnership with Tech Research Asia -- growing annuity revenue currently stands tall as the no.1 strategic objective for value-added resellers, system integrators and solution providers in the region.
Within this context, 61 per cent of partners ASEAN-wide are undergoing a “significant change” in how business operations are run, with 71 per cent developing a new strategic plan as a direct result of COVID-19.
“Partners in ASEAN understand the need for urgent change,” observed Mark Iles, executive analyst of Tech Research Asia. “Building annuity revenues is a positive step forward and means partners don’t have to press the reset button every year and take revenue back to zero.”
Ran in conjunction with Channel Asia and Tech Research Asia, the in-depth research surveyed more than 100 partners based in ASEAN, spanning the key markets of Singapore, Malaysia, Indonesia, Philippines, Thailand and Vietnam.
Findings offer the clearest and most objective indication yet that technology providers are finally overhauling business models to maximise OPEX investments, following years of market intention rather than decisive action.
Beyond growing annuity revenue, key focus areas in order of importance include attracting new customers, enhancing end-user experience levels and building new revenue streams and products.
“Value-add is a moving target,” Iles cautioned. “But increased focus on customer experience is a welcome addition to partner priority lists, especially given the need for reinvention in a digital and remote world. Likewise, customers are seeking new solutions and different ways of innovating meaning partners have to respond with new products and offerings.”
Specific to technology, partners continue to prioritise cloud migration (both public and private), digital transformation and security as core solution focus areas, followed by delivering hybrid and multi-cloud services.
“2021 is the first time we’ve seen cloud migration as the no.1 priority for partners in ASEAN,” Iles noted.
Despite being traditionally slow to adopt cloud, Iles outlined a $37 billion regional market opportunity in relation to core infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) by 2023, at a compound annual growth rate of 32 per cent year-on-year. Meanwhile, SaaS represents $20 billion of potential within the next 18-24 months at an annual growth rate of 29 per cent.
“Both offer solid core services opportunities in both migration and ongoing management,” Iles said. “For every workload that moves to the cloud, 27 per cent has services attached for a partner which represents a great opportunity for the channel.”
Delving deeper, 71 per cent of partners currently claim “strong expertise” in building and operating application infrastructure across Southeast Asia. On the flip side, 22 per cent acknowledge a lack of application development expertise but are actively building capacity.
“ASEAN is starting to grow into applications both at infrastructure and modernisation levels,” Iles added.
Disruptive outsourcing
In drawing on more than 25 years of channel experience across IT, software and telecommunications, Iles outlined the rise of “disruptive outsourcing” in ASEAN, emphasising that as customer demands change, partners must respond at pace.
“For too long partners have viewed outsourcing as a cheap help desk offering tier-1 and tier-2 support with relatively low-cost people carrying out low-cost work,” Iles advised. “An opportunity now exists to disrupt that approach and innovate -- remove people from the equation and leverage automation, smart technology and processes to run support without additional resource.”
With the majority of partners hiring more headcount in 2021, recruitment continues to be focused on bringing on-board solution consultants (74 per cent), field sales (71 per cent) and support staff (52 per cent).
“I question field sales, this number is too high,” Iles stated. “Partners often think that changing sales teams, account managers and commercial leaders as the solution but often that’s not the case.
“Instead, partners should assess whether they have the correct solutions and the correct way of targeting customers and prospecting by industry. Rifle shoot the customer and know exactly who you are going after and your win-rate will double rather than employing more sales people to knock on more doors.”
And in a further unvarnished assessment of partner hiring plans, Iles stressed that in the context of revised customer priorities, now is not the time for technology providers to hire more support staff.
“Not one partner in ASEAN is reducing support staff numbers,” he said. “Why not? I would argue that partners should be reducing support desk resource while adding more customers by using automation and smart technologies.”
For Iles, outsourcing in the modern era is shaped by the deployment of emerging technologies to drive innovation, supported by an accelerated go-to-market strategy and enhanced user experience levels.
“Partners are still focused on SLAs and ticket logs -- as a market we have the wrong lens on what we think customers value,” Iles cautioned. “Most partners are simply carrying too much cost in their business.”
