2020: A year of accelerated change in the channel

1. A solid year

No one wants to use the word “good” in association with a year that has claimed hundreds of thousands of lives globally and forced many businesses to close. But for the channel, with its position as a trusted advisor to customers, it did turn out to be a moment when they proved their value and were rewarded for it.

Steve Brazier, president and CEO of Canalys, used his keynote at the analyst firm’s Channels Forum event to talk about how this year had turned out. “Technology has won, the channel has won, distributors have won – it’s actually turned into a very good year and we couldn’t have predicted that,” he said. “The channel in Europe will also have the most profitable year ever.”

He was not alone in viewing the past few quarters as a time through which channel has been able to ride out the storm. Numerous CEOs spoke at other industry events about being in the right industry at the right time and how it would be tech that would help the world recover going into 2021 and beyond.

2. Vendor support

It might have turned out to be a positive year for many in the industry, but back in March there were plenty of unknowns and fears were high as the lockdowns started. At that point, the vendor community, by and large, stepped up and underlined that it understood the meaning of a partnership and introduced measures, ranging from financing, easier access to market development funds (MDF) and the suspension of partner programme tier requirements, all to make life easier for partners.

Pre-coronavirus, you would often find that vendors were criticised by partners for not doing enough. At this critical point in time, many understood that following that path would be seriously detrimental. “How can we help?” became the mantra, as vendors recognised that this was a serious moment.

“What is most important for you to know at this moment in time is that we are listening to feedback from you, our partners, and doing what we can to help,” stated Gavriella Schuster, corporate vice-president, commercial partner at Microsoft, back at the start of the pandemic. 

3. The PC is back

One of the most profound impacts of the lockdowns around the world was the overnight shift to home working. For the channel, it meant demand soaring for some products that have been struggling over recent years. The sales figures for laptops went off the charts, along with headsets, webcams and anything to do with remote collaboration tools. After years of being told that the PC is dead, it suddenly had the best time for a decade, and expectations are that it will continue going into next year.

Lenovo was one of those to benefit and its chairman and CEO, Yuanqing Yang, used recent results to talk of the ongoing prospects for the market: “As the world continues to adjust to the ‘new normal’, we are confident in the long-term growth potential of both devices and cloud infrastructure.” 

4. Going virtual

The channel is all about people, and in normal times the calendar is littered with trade shows, vendor partner events and the channel’s own marketing activity. All of that has gone virtual this year, with some surprising results. Attendance is up, interaction has held up and most people have rather enjoyed being able to get access to senior executives who might usually have been whisked past them in a hotel lobby in Vegas.

Vendors reported significantly higher attendances. Distributors also saw more resellers than they expected tuning in for marketing and tech events. Zoom, Teams, Webex and others all reported triple-digit growth, and those who had shied away from using those platforms soon found themselves taking part in wine tastings, quizzes and meetings, often interrupted by dogs, cats, children or Amazon delivery drivers.

Expectations are that, going forward, the virtual element might well remain a feature of events.

5. Partner programmes

One of the benefits of tools like Zoom was that it enabled channel mangers to keep talking to partners. Alex Walsh, manager of channels UK and Ireland at Veeam, echoed the views of many when he recently said: “The flexibility we get with working from home makes it a lot easier for me to speak to partners I wouldn’t typically get a chance to, so that’s been a real positive for me,” he said.

Being able to keep talking made it easier to carry on with rolling out partner programmes and enhancements. As a result, this year saw significant programmes unveiled by HP, with its Amplify offering, and Cisco, which described changes rolled out at its October partner event as the most significant changes to its partner programme for a decade.

“The new programme will allow our partners to bring together all of the disparate programmes and will allow partners to play in their areas of expertise, so they’ll be a gold standard integrator, managed service provider, developer and adviser. So you still have that high standard, but it just allows people to be more specific in the areas that are important now,” said Angela Whitty, UK and Ireland managing director of partner organisation at Cisco.

6. Consolidation

This could be a theme for any year, but throughout the pandemic, channel firms continued to be snapped up.

Ingram Micro will no doubt grab the most attention because of its recently announced $7.2bn sale to private equity player Platinum Equity. Other notable deals included Daisy Wholesale Solutions picking up Giacom, Computacenter expanding in the US with Pivot, Ricoh buying MTI Technology and Sabio making four deals, including most recently Anana.

No bookmaker would even consider taking a bet on consolidation continuing into next year, and with Ingram now fuelled by a fresh backer, the prospect for some action at a distribution level is also something that could happen in 2021.

7. Everything as a service

The idea of selling software or security as a service is quite well established, but this year saw that extended to cover everything else. Some of the vendors were making big commitments, like HPE, to make their entire portfolio available on an as-a-service basis in the next couple of years, and others in the channel also started to react.

Exclusive Networks and Nuvias were among the distributors that were keen to underline their ability to offer everything as a service (XaaS). “We work with many vendors and we see the dynamic again and again of the vendor evolving into subscription [sales],” said Julien Antoine, executive vice-president for strategy and operations at Exclusive Networks, as the distributor launched its X-OD platform. 

Karl Roe, vice-president of customer success and digital transformation at Nuvias, said: “This isn’t anything new, but what is new is the focus on what the customer requires. That has changed in our industry over the past few years, particularly in the last two years. It’s become much more of a focus that outcomes are super-important, rather than technology. The channel has to build solutions that are dependent on customer success.”  

There were, of course, opposing views. Computacenter CEO Mike Norris lit up the Canalys Channels Forum in October with his thoughts on the subject. “If I was a vendor, I would want a consumption model,” he said. “I see absolute logic in why I would want to sell as-a-service and not sell capital goods. I think vendors have to be careful because I don’t think customers want to buy that way if they can avoid it.” 

8. Digital transformation

The channel loves a good factoid, and the one from Microsoft CEO Satya Nadella about two years of digital transformation happening in two months was one that became widely quoted. There is no doubt that the pandemic provoked a shift in users towards the cloud, and across numerous areas, including cloud adoption, the move away from PSTN and attitudes to remote working, there were real changes.

Many in the channel describe the reaction of customers to the pandemic as initially one of scrambling to get set up remotely and keeping the lights on, but now there is an opportunity for more reflection. The expectation is that more strategic decisions are now being made around cloud use and business operations, and that those discussions will continue to filter into the year ahead. Expect plenty of talk about the hybrid office and more channel players emphasising their workplace management expertise.

9. Training

Coronavirus restrictions meant that physical training stopped and efforts had to move online. The videos and modules that were made available were lapped up by partners keen to use some of their time at home to expand and enhance their skills.

Speaking in June, Jose van Dijk, vice-president of partner operations for Cisco’s global partner organisation, revealed that it had seen significant increases in training consumption. “In April and May, we had 800 to 900 people joining each week,” she said. “If you look at the number of training hours consumed – in the month of May the consumption tripled from March – we have 35,000 learning hours, which is almost four years of training consumed in one month.”

That was echoed elsewhere. Cloud Distribution was among those that decided to increase its online support, and earlier this month cut the ribbon on a sales masterclass programme. John McGlinchey, executive vice-president, global certification, at CompTIA, said there had been a shift to virtual training and that was likely to stay as a feature of the industry.

“When everything shut down back in March, it was sheer panic across the industry in terms of education and certification, and immediately we had a lot of calls and a lot of concerned customers, partners and students,” he added. “I think what we’ll see as one of the lasting impacts from the pandemic is more IT workers will use a lot more virtual training long after Covid has gone.”

10. Going public

In uncertain times, all eyes fall on those that have to share their numbers to try to get an idea of what’s happening in the market. Throughout the pandemic, Computacenter and Softcat provided cheer for investors, and also for those hoping that the channel was weathering the storm. By the end of the year, they would be joined by Bytes Technology Group, which went public in December in an over-subscribed initial public offering.

There were reports that the impact of Covid-19 had not been uniform across the channel, with some of the smaller players finding life really tough, but the positivity coming out of the corporate-focused players did provide some much-needed cheer.

Speaking back in October, Softcat CEO Graeme Watt shared his optimism that the year ahead would see growth as customers returned to tech as a driver of positive change. “These companies need to spend on technology,” he said. “They need to be mobile-ready and we are seeing that in many companies already, and they need to be cloud-ready and they need all of their technologies to be secure, so it’s just a question of time. I think it is as good as ever and we are very excited about the opportunity.”