Why the channel can prepare for a positive 2024

Driving change

Kyocera group head of marketing Steve Pearce agrees that the Corporate Sustainability Reporting Directive in 2024 will drive good change. “Vendors and channel partners will be inspired by others’ actions and there will be a cultural shift as business leaders tackle environmental considerations alongside commercial goals,” he predicts. “Products will become more environmentally conscious, and there will be greater focus on the supply of goods from packaging materials, shipping emissions to circularity; end of life improvements in pursuit of zero-waste to landfill goals.”

Channel partners will join vendors on the road to net-zero, he says, adding that it’s something Kyocera is already seeing.

Charles Damerell, senior director for UK and Ireland at SolarWinds, expects the first quarter to be a mixed bag. “If 2023 taught us anything, it’s that the global economy is turbulent – and that won’t change in the coming months,” he says. “Nevertheless, he expects channel sales to start strongly “with the outlook for 2024 seeming more positive”. “For example, the continued embrace of hybrid working will provide countless opportunities for channel businesses, particularly those specialising in cloud technology and services,” says Damerell.

But economic conditions could slow things down. A change in interest rates “could prompt businesses to examine their IT expenditure after Q1”. “Some vendors may even consider selling their products and services directly to businesses if they fail to see the value add from channel partners, presenting a further competitive challenge,” he says. And while the global supply chain has settled recently, any small disruption could cause all kinds of problems.

Ruth Welter, vice-president for strategic alliances at Colt Technology Services, agrees that complex geopolitical and economic situations will persist and many industry sectors will “continue to feel the far-reaching ripples that stemmed from the slowdown across silicon valley in 2023”. But transformative business and technology changes currently occurring, such as network as a service, AI, edge computing, hybrid working and SASE, will fuel opportunities for partners.

Potential inhibitors are repeats of many of the issues that affected 2023, such as “concerns over the strength of the US dollar, rising interest rates, volatile markets, skills shortages and geopolitical uncertainty, all compounded in the UK by the business caution always felt ahead of a general election”. So will 2024 be good, bad or ugly? “Given the current business and economic climate, I’d say the industry should expect varying levels of all three in the early part of 2024,” she says.

Offering her perspective, Ann Keefe, regional director for UK and Ireland at Kingston Technology, says: “It’s not a question of glass half full, or half empty, it’s a bit of both in terms of opportunities and challenges for the channel.” Cyber security will remain a top priority for organisations, but they will also be focused on the digital workplace, edge computing, and the growth of AI and automation. “It’s likely that rising costs will impact consumer and business spending and there’s no reason to think that the current global supply chain disruptions will go away,” she adds.

Optimism

Darren Gross, senior director for EMEA channels at Tintri, says that “on the whole, we are very optimistic on the prospects of 2024 and we expect the first quarter to be a running start”. He describes 2023 as “a year of challenges: political and economic uncertainties coupled with ongoing conflicts around the world has dampened spending somewhat, but the market remained robust generally”.

Tintri expects to see signs of pent-up demand in the first quarter, with exponential data growth fuelling urgent business and technical requirements that will overcome any reticence to spend. “In summary, the business outlook for Q1 24 looks strong for vendors and our partners, barring disruptive ‘bad news’ that might cause the economic uncertainty to worsen,” he says.

Jonathan Wright, director of products and operations at GCX, is a fellow optimist, expecting a very positive start to the year as more customers commit to transforming their network architecture. One potential holdup could be a lack of customer clarity, which he describes as a “hangover” from Covid. “I still see customers who are struggling to triangulate their staff location policy, with their security policy, their IT policy and their budget – this manifests itself as wider stakeholder groups, longer approval cycles and more stakeholder debate,” he says. “This lack of clarity introduces time into deals and as the adage goes, time kills deals.”

An added complication is that even if the cost case to move is compelling, “many will simply try to squeeze more out of their existing suppliers and solutions as it may be a quicker short-term fix, whilst the decision-making around them remains nebulous”. “As a managed service provider, it is part of our role to deliver clarity and make the services as compelling as possible to remove debate,” he says. “Ultimately, this can just mean a far more consultative approach on some occasions”.

Antonio Calvelli. vice-president of sales for EMEA at Virtuozzo, takes a cautious approach. “We don’t see a big bang start to 2024,” he says. “High interest rates and political uncertainty are suggesting a more cautious use of money. This will be reflected in how companies invest their capital, and they will be focused on OPEX control to avoid having to borrow.”

Macroeconomic trends

Luca Brandi, EMEA channel sales director at Trellix, concurs with those highlighting the effects of wider macroeconomic trends on potential growth in 2024. “Inflation has knocked market confidence, and as a result there’s been more scrutiny among customers around investing in new technology,” he says. “With increased costs and restricted budgets, we can expect customers to remain cautious rather than optimistic.”

But he stresses that partners and vendors will continue to play a key role in 2024 to help customers manage costs while maintaining their security. “Though uncertainty will continue, this support through the channel will provide customers with the right tools and expertise to withstand an increasingly complex threat landscape,” says Brandi.

Simon Pearce, vice-president for EMEA and APAC at Netwrix, identifies upselling and cross-selling as one of the main areas where opportunities will emerge in 2024. “The vendor consolidation trend is not new: organisations optimise their security arsenal to gain more reasonable pricing by purchasing software from a smaller group of trusted vendors,” he says. “Mid-sized organisations and enterprises shift from point tools to solutions to eliminate security gaps and streamline interaction with vendors’ support teams. Helping customers to rethink their current security architecture is a growth point for all channel partners.”

In terms of potential pitfalls, he says “it’s all about growth coming back into the economy”. “We seemed to miss the predicted recession, and if economic growth were to further slow in the first quarter, it could derail the growth of our business.”

Greg Jones, EMEA vice-president of business development at Kaseya, believes MSPs could do well in 2024. “The technology industry often does well in times of economic uncertainty,” he argues. “There is huge potential, especially for those MSPs who can pivot and spot opportunities to grow.”

Kaseya CEO Fred Voccola takes it further, claiming MSPs that provide IT and security solutions to SMBs are in the early stages of a huge boom cycle. “Their SMB customers are increasing their spending and investment in technology at a rate three to four times GDP expansion, with little plans of slowing any time soon,” he says.

A lot to be grateful for

Jason Howells, vice-president for MSP international sales at Barracuda, concedes that 2023 was “a tough year for many businesses” but for channel partners there was “a lot to be grateful for”. “Channel partners that have managed to remain relevant to their customers and their changing needs have seen accelerated growth,” he says.

Partners that “can remain agile and relevant to their customers’ needs will not only continue to succeed, but will be placed perfectly to head into 2024 with growth ambitions and thrive from their competitive advantage”, he says. “There continues to be a huge opportunity for the channel to grow, especially as we head into 2024.”

Ciaran Bolger, senior strategic recruitment director sales at Acronis, lists three reasons why 2024 could fall into the glass-half-empty category: geopolitical uncertainty, supply chain challenges and regulatory changes. On top of that, there are several other issues that could have an effect on the market in 2024. Intense competition could make it challenging for businesses to differentiate themselves and capture market share, while a shortage of skilled professionals in certain industries could limit growth and innovation. Businesses may also face challenges related to sustainability and environmental regulations.

According to Mike Barron, managing director for the UK at SYNAXON: “Everyone is going into the new year with a sense of optimism, and we are confident that 2024 will be a much better year for everyone in the channel. We should remember that it was not all doom and gloom in 2023.”

He cites a presentation by market analyst GfK presented at the company’s recent partner event in Manchester. “The gist of what they said was that while the past year had seen a significant fall in hardware sales, software and services continued to grow,” says Barron. “They also said that in 2024 the market will recover, it’s really just a question of when we are going to see that upswing.” 

But Barron is not getting carried away, stressing that the upswing is unlikely to come in the first quarter. “It will be closer to the middle of the year before we see a real change,” he says. “That said, we’ve been encouraged lately, and I think we are already seeing customers take a more positive approach. I think resellers need to stay alert and be ready to take advantage when the opportunities come. That may not be in the first three months of 2024, but we do expect the climate to improve and to see a return to good levels of growth over the year.”