Sen Chandaka, Vendor Alliance Development Manager Europe at Nuvias Group, highlights three megatrends influencing growth in the IT channel now and in the future
When Nuvias polled channel partners at the end of 2020, there was an air of optimism, with almost two thirds (63%) expecting business growth of more than 5% – and 43% expecting growth of more than 10%. Almost one year later, it’s time to take the pulse of the European channel, to see if the signs of optimism are still prevalent, where some of the focus has shifted and what the latest challenges are shaping up to be.
All in all, 2021 has been another year of uncertainty for businesses, with vaccine rollouts tempered by the spread of additional Covid variants and rolling lockdowns across EMEA. Against this challenging backdrop, organisations have continued to invest in the digital transformation of their existing businesses, presenting great potential and opportunities for channel partner growth.
In PWC’s 24th annual Global CEO survey1 conducted earlier this year, a record 76% of CEOs said they expected the global economic outlook to improve over the next 12 months, up from a pandemic- era low of 22% in 2020. Just under half of CEOs were planning increases of 10% or more in their digital transformation initiatives in 2021.
The increased focus on digital transformation delivers a perfect storm of opportunity for channel partners who are willing to transform as quickly, or even quicker, than their customers. Most organisations will continue to rely on partners for technical expertise and infrastructure to support their business initiatives, since all but the largest organisations have challenges building up these skill sets and transformation teams in house.
That said, there are some headwinds to navigate. In its 2021 predictions, Forrester projected a 24% decline in the growth of hyperscale public cloud by 2022 due to a maturing market; and IDC forecast2 that 51% of software revenue wouldcome from recurring business models. As organisations become more mature in their processes and initiatives around digital transformation, they will most likely switch towards driving efficiency in existing projects rather than rushing headlong into new investment areas.
Where, then, should channel partners focus their efforts in order to prosper over the next few years? I believe there are three main megatrends that will generate significant opportunities in the years to come:
1 The transition from transactional relationships to true partnerships
As businesses adjust their digital transformation strategies, the channel must tailor its professional services offerings accordingly. For example, partners face increasing competition from cloud giants as businesses migrate to cloud infrastructure in the constant search for agility and efficiency. In fact, Gartner recently revised its outlook for end-user public cloud spending significantly upwards to 21.7% growth and a total forecast value of $482B in FY223. This upward trend is expected to continue until FY26 and is an opportunity for partners to deliver solutions and services that are focused on helping their end customers on-board and off-board data across multiple public and private cloud providers.
The first consideration for partners, therefore, must be to evolve their discussions with their customers from asking ‘what technology do you need?’ to a more strategic discussion around ‘what digital transformation projects are currently underway?’. After all, focusing on business outcomes is critical to understanding an organisation and developing a strategic technological roadmap together.
The accelerated adoption of the ‘anything as a service’ (XaaS) model is central to this role shift. As budgets are reallocated from infrastructure LoBs towards applications and data, with corresponding consolidation of existing technology stacks, resellers can play an important role in managing customers’ infrastructure so that it delivers maximum value.
Furthermore, through offering an XaaS model on a subscription basis, businesses can consume partner professional services in an elastic manner, just as they do with public and private clouds. Partners embracing this model can have a significant first-mover advantage in the market and help nurture long-term customer relationships.
2 Cybersecurity: a top priority
One certainty in this turbulent period is that cybersecurity is becoming a main priority for any business pursuing a digital transformation strategy. Another perspective to consider is that businesses can also experience cybersecurity attacks via their managed service providers or suppliers, which has resulted in cybersecurity policies being much broader in scope than ever.
With 91% of UK CEOs rating cyber threats amongst the major concerns facing them in 2020, 6% more than the global average, this is clearly a big opportunity and one that has caught the attention of partners, 82% of whom rate cybersecurity as the biggest growth prospect for the channel in 2021.
Organisations are likely to continue to invest in cybersecurity as hybrid working capabilities look set to become a mainstay for businesses going forward. Not only does this allow for more flexibility for the workforce but according to a recent global Accenture survey4, 63% of organisations have made hybrid working a strategic priority; 85% of the workforce of these companies say that they plan to stay with these employers for a long time.
This increased reliance on a communication stack brings multiple new threat vectors to organisations. In fact, between February and May 2020 alone, more than half a million people were globally affected by breaches in which the personal data of video conferencing users was stolen or sold on the dark web5. Worse still is that data breaches take up to nine months on average to be uncovered, leaving a very long time period for attackers to exploit security vulnerabilities before effective safeguards are put in place. No longer can infrastructure, security, communications and policies be considered in a siloed manner.
From a channel perspective, this allows for a unique combination of secure communications technology stacks that can be offered together with customised professional services for each end- customer. This is one channel megatrend that will be around for quite some time
3 Advanced Networking will be a requirement
During the pandemic, companies had to reassess their technical and budgetary priorities to cater for the almost overnight surge in remote working, with budgets that were allocated for networking infrastructure upgrade projects being reallocated towards pure connectivity and end points. These decisions had to be taken at very short notice and difficult compromises had to be made. Now that the outlook is more certain, budgets are being reallocated towards infrastructure, connectivity and security as a whole, instead of in a siloed manner.
The rapid adoption of public and private clouds by end-customers requires the network infrastructure to be equivalently flexible and agile, especially when taking into account the competitive requirements of secure DevOps (SecDevOps) teams.
Retailers, for example, will want to reboot for a post-pandemic world and provide a consistent customer experience across multiple channels, whether these are social media-driven, physical in store or via e-commerce. All of this will have to be done with minimal or in some cases no increases to the networking team opex. One of the key methods to accomplish this is to bring together AI-driven network automation and operations (AIOps) systems with the existing retail end-customer teams to unlock efficiencies by reducing the repetitive and time-consuming manual tasks required to operate the infrastructure.
Overall, 33% of UK CEOs surveyed by PwC1 are looking to drive productivity through automation and technology investments. From a channel perspective, leveraging AIOps tools is a fantastic way
to continue the dialogue with customers that have recently implemented networking infrastructure projects.
The channel must be one step ahead of vendors with this trend and anticipate the need for advanced networking solutions that are able to provide a foundation today for the needs of customers in the next few years. A prime example of this will be the need to offer an end-to-end solution for the hybrid cloud instead of point products focused on cloud security or networking. One validated framework by which this can be achieved is the secure access service edge (SASE).
Although it was defined only in 2019, the technological megatrend of convergence between networking and security and purely cloud-delivered edge solutions has been around since the late 2000s. There is explosive growth being predicted here, with the Del’Oro group predicting a CAGR of 116% for SASE until 20246.
Partners that take the lead here will be able to offer a step-by-step solution for SASE, starting with VPN replacement and SD-WAN, moving to micro segmentation and Zero Trust and then lastly pure cloud- delivered security solutions to the edge devices and users.
Businesses will no doubt continue to face uncertainty, but the channel has a huge opportunity to support its customers as they transition to a hybrid way of working, whether that is through the integration of security, networking or communication platforms or being able to deliver customer business outcomes via an end-to-end hybrid cloud technology stack.
While this will require reorganisation and potential realignment of resources within the channel, there are step-by-step frameworks, such as SASE, that can provide clear guidance as to how to achieve this. Technology has never been more fundamental to the plans of CEOs and organisations, and the ability to provide and operate that technology, coupled with the technology megatrends of the next few years, creates one of the largest opportunities for the channel in decades.
- 1.https://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2021/report.html#improved-outlook 2.https://www.idc.com/research/viewtoc.jsp?containerId=US46246920
3.Gartner, Forecast: Public Cloud Services, Worldwide, 2019-2025, 2Q21 Update, August 2021 www.gartner.com
- 4.https://www.accenture.com/us-en/insights/consulting/future-work 5.https://www2.deloitte.com/ch/en/pages/risk/articles/impact-covid-cybersecurity.html 6.https://www.delloro.com/news/sase-market-to-grow-at-116-percent-compound-annual-growth- rate-over-next-five-years/