CHAN­NEL OUT­LOOK 2019

In spite of the un­cer­tainty about the Mid­dle East busi­ness cli­mate in some parts in the re­gion, chan­nel stake­hold­ers re­main op­ti­mistic about what the next 12 months will bring to their busi­nesses.

Channel Middle East - - Editor’s Notes - By MANDA BANDA

While the over­all busi­ness cli­mate in the Mid­dle East and North Africa (MENA) chan­nel re­mained slug­gish for most of last 12 months, in­dus­try ex­perts are op­ti­mistic that 2019 will see busi­ness im­prove de­spite lin­ger­ing un­cer­tainty es­pe­cially in the mo­bile and PC seg­ment, where sales of hand­held de­vices, and desk­tops have con­tin­ued to dip.

An­a­lyst IDC, has said ven­dor rev­enue in the world­wide server mar­ket in­creased 37.7%, year over year to $23.4bn dur­ing the third quar­ter of 2018.

Cit­ing the World­wide Quar­terly Server Tracker, IDC said global server ship­ments in­creased 18.3% year over year to 3.2 mil­lion units in Q3, 2018.

Ac­cord­ing to IDC, the over­all server mar­ket con­tin­ues to ex­pe­ri­ence ro­bust de­mand with Q3, 2018 mark­ing the fifth con­sec­u­tive quar­ter of dou­ble-digit rev­enue growth and its high­est to­tal rev­enue in a sin­gle quar­ter ever.

The an­a­lyst firm said vol­ume server rev­enue in­creased by 40.2% to $20.0bn, while midrange server rev­enue grew 39.4% to $2.0bn. High-end sys­tems grew 6.9% to $1.3bn.

“The world­wide server mar­ket once again gen­er­ated strong rev­enue and unit ship­ment growth due to an on­go­ing en­ter­prise re­fresh cy­cle and con­tin­ued de­mand from cloud ser­vice providers,” said Se­bas­tian La­gana, re­search man­ager, In­fra­struc­ture Plat­forms and Tech­nolo­gies at IDC. “En­ter­prise in­fra­struc­ture re­quire­ments from re­source in­ten­sive next-gen­er­a­tion ap­pli­ca­tions sup­port in­creas­ingly rich con­fig­u­ra­tions, en­sur­ing av­er­age sell­ing prices (ASPs) re­main el­e­vated against the year ago quar­ter. At the same time, hy­per scalers con­tinue to up­grade and ex­pand their data cen­tre ca­pa­bil­i­ties.”

Among the orig­i­nal equip­ment man­u­fac­tur­ers (OEMs) Dell Inc achieved the num­ber one po­si­tion in the world­wide server mar­ket in Q3, 2018 with 17.5% rev­enue share and 33.3% growth. HPE/New H3C Group was the sec­ond largest sup­plier with 16.3% share of to­tal ven­dor rev­enue, grow­ing 14.8%. In­spur/In­spur Power Sys­tems took third po­si­tion in the mar­ket with a

share of 7.3% while the new joint ven­ture con­tributed to 156.5% growth year over year. Len­ovo was fourth with a share of 6.2% on 67.0% growth. IBM, Huawei, and Cisco rounded out the top five, all sta­tis­ti­cally tied with ven­dor rev­enue shares of 5.1%, 4.5%, and 4.5% re­spec­tively.

IDC noted that the ODM Di­rect group of ven­dors in­creased its col­lec­tive rev­enue by 51.9% year over year to nearly $6.3bn. Dell Inc led the world­wide server mar­ket in terms of unit ship­ments, ac­count­ing for 17.6% of all units shipped dur­ing the quar­ter.

De­spite this, the spread of new emerg­ing tech­nolo­gies and the mo­men­tum around ar­ti­fi­cial in­tel­li­gence (AI), in­dus­try pun­dits still have mixed feel­ings about what 2019 will bring to the re­gional chan­nel.

In fact, most com­men­ta­tors are fore­cast­ing an un­pre­dictable IT fu­ture where busi­ness will be lean and not ev­ery chan­nel player will gain from the busi­ness op­por­tu­ni­ties that will emerge this year.

Part­ners that will ben­e­fit are those that are al­ready play­ing in the IT ser­vices, cloud ser­vices, man­aged ser­vices and solutions space.

Karim Re­fas, re­gional chan­nel man­ager, Ea­ton Mid­dle East, said: “One key chal­lenge for chan­nel part­ners in 2019 in the MENA mar­ket will be main­tain­ing their fo­cus on or­gan­i­sa­tional goals with­out be­ing dis­tracted by ma­jor macro-eco­nomic trends or events, such as tar­iffs, po­lit­i­cal in­sta­bil­ity and crude oil prices.

Re­fas added that this is es­pe­cially im­por­tant as un­cer­tainty and a lack of vi­sion are quick routes to im­mo­bil­is­ing an or­gan­i­sa­tion. “In a year when many com­pa­nies are hop­ing to do busi­ness early given a po­ten­tially tough sec­ond half to the year once the UK has left the EU, those paral­ysed by doubt will strug­gle,” he said. “Or­gan­i­sa­tional ca­pa­bil­i­ties and sup­plier-cus­tomer re­la­tion­ships may be tested dur­ing the im­ple­men­ta­tions of tar­iffs and fluc­tu­a­tion in crude oil prices.” He said chan­nel part­ners will be re­quired to man­age tar­iff fluc­tu­a­tions as well as nav­i­gate around tighter bor­ders. “Chan­nel or­gan­i­sa­tions must proac­tively pre­pare for these even­tu­al­i­ties to avoid be­ing paral­ysed by un­cer­tainty in a year of ma­jor change,” he said.

Dave Russell, vice pres­i­dent, Prod­uct Strat­egy at Veeam, said in early 2019 the IT in­dus­try in the re­gion will wit­ness the first 5G-en­abled hand­sets hit­ting the mar­ket at CES in the USA and Mo­bile World Congress in Barcelona. “I be­lieve 5G will likely be most quickly adopted by busi­nesses for ma­chine-to-ma­chine com­mu­ni­ca­tion

Chan­nel or­gan­i­sa­tions will need to con­sider dif­fer­ent in­cen­tives to at­tract mil­len­ni­als, from train­ing and rev­enue gen­er­a­tion re­wards to im­ple­ment­ing new tech­nolo­gies and clear pro­cesses that can be ag­ile to change. In this way, they can make their com­pa­nies more ap­peal­ing to mil­len­nial tal­ent and set them­selves up for a suc­cess­ful 2019 and be­yond.

KARIM RE­FAS, RE­GIONAL CHAN­NEL MAN­AGER, EA­TON MID­DLE EAST

and In­ter­net of Things (IoT) tech­nol­ogy,” he re­marked.

Ac­cord­ing to Russell, 2019 will be more about the tech­nol­ogy be­com­ing fully stan­dard­ised and tested, and fu­ture-proof­ing de­vices to en­sure they can work with the tech­nol­ogy when it be­comes more widely avail­able, and EMEA be­comes a truly Gi­ga­bit so­ci­ety.

He ex­plained that for re­sellers and cloud ser­vice providers, ex­cite­ment will cen­tre on the ar­rival of new rev­enue op­por­tu­ni­ties lever­ag­ing 5G or in­fra­struc­ture to sup­port it. “Pro­cess­ing these higher vol­umes of data in real-time, at a faster speed, new hard­ware and de­vice re­quire­ments, and new ap­pli­ca­tions for man­ag­ing data will all present op­por­tu­ni­ties

In early 2019 the IT in­dus­try in the re­gion will wit­ness the first 5G-en­abled hand­sets hit­ting the mar­ket at CES in the USA and Mo­bile World Congress in Barcelona. I be­lieve 5G will likely be most quickly adopted by busi­nesses for ma­chine-to-ma­chine com­mu­ni­ca­tion and In­ter­net of Things (IoT) tech­nol­ogy.

DAVE RUSSELL, VICE PRES­I­DENT, PROD­UCT STRAT­EGY, VEEAM

and will help fa­cil­i­tate con­ver­sa­tions around edge com­put­ing,” he pointed out.

As chan­nel part­ners are be­ing urged to evolve their busi­nesses in the re­gion to adapt to the ever chang­ing IT land­scape, where should they be fo­cus­ing on?

“Large com­pa­nies are grow­ing through ac­qui­si­tion and ex­plor­ing new ge­ogra­phies as a re­sult of glob­al­i­sa­tion,” said Ea­ton’s Re­fas. He con­tin­ued and ex­plained that while the way in which or­gan­i­sa­tions nav­i­gate this growth might change as global mar­ket bor­ders shift in 2019, this trend will con­tinue putting a squeeze on smaller part­ners. “Com­pa­nies strug­gling to keep up in this mar­ket will need to find dif­fer­ent tech­nolo­gies and strate­gies to re­main rel­e­vant,” he said. “Re­sellers and distrib­u­tors feel­ing the im­pact of

change will be forced to keep find­ing new, bet­ter and quicker ways of do­ing things in order to help cus­tomers do more with less – and in less time.”

He said at the same time, chan­nel part­ners in­vest­ing in re­la­tion­ships fo­cused on per­son­alised ser­vice and value add are see­ing more suc­cess – and will con­tinue to reap the re­wards through­out 2019 and be­yond.

Scott Gib­son, group ex­ec­u­tive, Dig­i­tal Busi­ness Solutions, Di­men­sion Data, said one of the big­gest growth ar­eas in 2019 will be

B2B dig­i­tal trad­ing plat­forms. Gib­son noted that Bill McDer­mott, CEO at SAP, pre­dicts a world where cus­tomers con­nect di­rectly into your sup­ply chain, and it’s hard not to agree with him. “The ad­van­tages, both in terms of cus­tomer ex­pe­ri­ence and op­er­a­tional ef­fi­ciency, are too ex­cit­ing to ig­nore,” he en­thused. “If your chan­nel part­ner busi­ness can show busi­ness clients not just cur­rent stock lev­els but the ex­pected date of re­plen­ish­ment, they will be more con­fi­dent about or­der­ing from you. If they can give you bet­ter data on their fu­ture de­mand, you can op­ti­mise your in­ven­tory and pro­duc­tion ac­cord­ingly.”

Gib­son said fu­ture in­te­gra­tion will go even fur­ther be­yond to­day’s sup­ply chain col­lab­o­ra­tion linked to ERP, the re­gional IT chan­nel will see in­te­gra­tion with CRM sys­tems fea­tur­ing ar­ti­fi­cial in­tel­li­gence and ro­botic process au­to­ma­tion. “These will al­low con­sumers to reach right back to your sup­plier’s in­ven­tory through their mo­bile apps. That’s true dig­i­tal busi­ness,” he said.

He ob­served that many com­pa­nies in MENA aren’t set up cor­rectly for dig­i­tal trans­for­ma­tion. “An­ti­quated job func­tions and pro­cesses have re­sulted in a real lack of flex­i­bil­ity,” he added. “En­cour­ag­ingly, we are now see­ing more com­pa­nies ac­cept­ing that to trans­form suc­cess­fully, they must first re­design their core busi­ness pro­cesses around the cus­tomer ex­pe­ri­ence and then re­or­gan­ise the en­ter­prise to align with these dig­i­tal pro­cesses and this is where chan­nel part­ner can play a role.”

As the re­gional chan­nel looks to the year ahead, what will be the big tech­nol­ogy bets and game chang­ers in 2019 and how should chan­nel part­ners be pre­par­ing?

Ea­ton’s Re­fas noted that the cur­rent “al­ways on”, dig­i­tal way of work­ing means that power is a sig­nif­i­cant re­quire­ment for ev­ery com­pany – not just tech­nol­ogy firms. He said in fact, the elec­tri­fi­ca­tion of so­ci­ety is rapidly chang­ing power re­quire­ments more broadly. “As a re­sult, we have seen an in­creas­ing fo­cus on how to store power and use it more ef­fi­ciently. This year, this trend will con­tinue with more em­pha­sis on mov­ing away from gen­er­a­tor-type solutions and tak­ing ad­van­tage of the ben­e­fits of en­ergy stor­age and pro­duc­ing in­no­va­tive prod­ucts for the re­gion,” he said.

Ac­cord­ing to Re­fas, this grow­ing in­ter­est in en­ergy sources and be­com­ing more en­ergy ef­fi­cient pro­vides a strong op­por­tu­nity for chan­nel part­ners to em­pha­sise their po­si­tion as a trusted part­ner. “They can fo­cus on how they can help busi­nesses nav­i­gate this power trans­for­ma­tion process so cus­tomers can make the most of their en­ergy – re­duc­ing costs, cut­ting down on emis­sions and fu­ture this proof­ing the busi­ness,” he said.

He pointed out that on the part­ner front, 2019 will see new chal­lenges arise around re­cruit­ment in the chan­nel. “In an en­vi­ron­ment of po­lit­i­cal un­cer­tainty and low un­em­ploy­ment lev­els, chan­nel part­ners will need to con­tinue strik­ing the bal­ance be­tween hir­ing skilled yet af­ford­able staff. Work­ing out how to ac­cess the mil­len­nial work­force will be key, but tap­ping into this tal­ent source can be dif­fi­cult to nav­i­gate,” he said.

Re­fas re­it­er­ated that chan­nel or­gan­i­sa­tions will need to con­sider dif­fer­ent in­cen­tives to at­tract mil­len­ni­als, from train­ing and rev­enue

If your chan­nel part­ner busi­ness can show busi­ness clients not just cur­rent stock lev­els but the ex­pected date of re­plen­ish­ment, they will be more con­fi­dent about or­der­ing from you. If they can give you bet­ter data on their fu­ture de­mand, you can op­ti­mise your in­ven­tory and pro­duc­tion ac­cord­ingly.

SCOTT GIB­SON, GROUP EX­EC­U­TIVE, DIG­I­TAL

BUSI­NESS SOLUTIONS, DI­MEN­SION DATA

2018 was a chal­leng­ing year and we don’t ex­pect it to get any eas­ier in 2019. Fur­ther, Ira­nian at­tack­ers will con­tinue to im­prove ca­pa­bil­i­ties, even as we see new, less ca­pa­ble groups emerge. Ear­lier in 2018, Dubai launched the Dubai Cy­ber Se­cu­rity Strat­egy, an ini­tia­tive that aims to help busi­nesses and in­di­vid­u­als to cre­ate a safe cy­ber space, mak­ing the city’s cy­ber se­cu­rity ex­pe­ri­ence a global model.

MO­HAMMED ABUKHATER, VICE PRES­I­DENT, FIREEYE MID­DLE EAST & AFRICA

gen­er­a­tion re­wards to im­ple­ment­ing new tech­nolo­gies and clear pro­cesses that can be ag­ile to change. “With a key fo­cus in the UAE and Saudi Ara­bia on Emiri­ti­sa­tion and Saud­i­s­a­tion re­spec­tively, the chan­nel needs to fo­cus on pro­vid­ing train­ing and knowl­edge to make sure they have an easy tran­si­tion into the in­dus­try,” he said. “In this way, they can make them­selves more ap­peal­ing to mil­len­nial tal­ent and set them­selves up for a suc­cess­ful 2019 and be­yond.”

With com­pa­nies op­er­at­ing across bor­ders and the re­liance on tech­nol­ogy grow­ing more prom­i­nent than ever, an ex­pan­sion in multi-cloud usage is al­most in­evitable. Re­search firm IDC es­ti­mates that cus­tomers will spend $554bn on cloud com­put­ing and re­lated ser­vices in 2021, more than dou­ble the level of 2016. IDC stated that on-premises data and ap­pli­ca­tions will not be­come ob­so­lete, but that the de­ploy­ment mod­els for data will ex­pand with an in­creas­ing mix of on-prem, SaaS, IaaS, man­aged clouds and pri­vate clouds.

Over time, said IDC, the re­gional IT in­dus­try should ex­pect more of the work­load to shift off­premises, but this tran­si­tion will take place over years, and it is im­por­tant for chan­nel part­ners to be ready to meet this new re­al­ity to­day.

Russell agreed with the view for part­ners to be ready and ex­plained that the “ver­sa­til­ity” (or gen­er­al­ist) role will in­creas­ingly be­come the new op­er­at­ing model for the ma­jor­ity of IT or­gan­i­sa­tions.

He said while the first two trends were tech­nol­ogy-fo­cused, the fu­ture of dig­i­tal is still ana­logue: it’s peo­ple. “Tal­ent short­ages com­bined with new, col­laps­ing on-premises in­fra­struc­ture, pub­lic cloud and SaaS, are lead­ing to broader tech­ni­cians with back­ground in a wide va­ri­ety of dis­ci­plines, and in­creas­ingly a greater busi­ness aware­ness as well,” he said. “Stan­dard­i­s­a­tion, or­ches­tra­tion and au­to­ma­tion are con­tribut­ing fac­tors that will ac­cel­er­ate this, as more ca­pa­ble sys­tems al­low for ad­min­is­tra­tors to take a more hor­i­zon­tal view rather than a deep specialisation.”

Rus­sel said specialisation for chan­nel part­ners will of course re­main im­por­tant, but as IT be­comes more and more fun­da­men­tal to busi­ness out­comes, it stands to rea­son that IT tal­ent will like­wise need to un­der­stand the wider busi­ness and add value across many IT do­mains.

En­ter­prises and gov­ern­ments are fac­ing a hy­per-con­verged world where con­nected sys­tems put not only crit­i­cal data and in­tel­lec­tual prop­erty but also phys­i­cal safety at risk.

“The cy­ber­se­cu­rity in­dus­try and at­tack­ers ex­pend ef­forts in a never-end­ing cy­cle of breach, re­act, and cir­cum­vent—a true cat-and-mouse game,” said Raf­fael Marty, vice pres­i­dent of re­search and in­tel­li­gence, Forcepoint. “We need to es­cape this game. Re­search­ing these pre­dic­tions forces us to step back and see the over­all for­est among the mil­lions of trees. Cy­ber­se­cu­rity pro­fes­sion­als and busi­ness lead­ers need to adapt to changes based on the risk they rep­re­sent, al­low­ing them to free the good while still stop­ping the bad.”

“The ‘as-a-ser­vice’ trend will con­tinue to be ex­plored in the chan­nel next year as it pro­vides cus­tomers with dif­fer­ent ways to fi­nance projects and solutions to get max­i­mum ben­e­fit.

Many busi­nesses are con­sid­er­ing routes to cut costs on op­er­at­ing ex­pen­di­ture to re­lease money while negat­ing the need for so much cap­i­tal ex­pen­di­ture,” Re­fas said. In ad­di­tion to cost sav­ings, this ap­proach al­lows busi­nesses to re­main ag­ile. Our new soft­ware at Ea­ton of­fers In­tel­li­gent Power Man­ager that will give bet­ter choices to cus­tomers to se­lect be­tween CAPEX and an OPEX in­vest­ment model.

Re­fas said with tech­nol­ogy evolv­ing so quickly, many or­gan­i­sa­tions are aware that buy­ing a so­lu­tion to­day to use for the next 5 to 10 years could put them be­hind their com­pe­ti­tion within a few years. “Con­stant evo­lu­tion is re­quired and the ‘as-a-ser­vice’ makes this pos­si­ble – driv­ing cus­tomer, and there­fore chan­nel, ap­petite for this de­liv­ery model into 2019,” he said.

Look­ing ahead, Re­fas said de­spite re­ports of doom and gloom about the po­lit­i­cal un­cer­tainty in MENA in 2019, the com­pany is ex­pect­ing to see plenty of op­por­tu­ni­ties in the chan­nel this year emerg­ing from in­creas­ing ap­petite to strengthen cy­ber­se­cu­rity to com­pa­nies grow­ing their smart tech­nol­ogy sta­ble through AI-pow­ered tech­nol­ogy. “The mar­ket may be rel­a­tively flat, but by com­bin­ing deeper lev­els of en­gage­ment, fur­ther devel­op­ment of new cus­tomers aligned to a clear strat­egy and strong com­mit­ment lev­els, Ea­ton is look­ing for­ward to an­other year of growth,” he said.

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