Comms Business Live S4Ep1
DAVID DUNGAY [00:01:23] Welcome to Comms Business Live. My name’s David Dungay editor of Comms Business magazine. And today I’m joined by three of our industries, greatest distributors. Welcome to the show, guys. Shall we do a few introductions, first of all. Tell us who you are and who you work for, Paul.
PAUL EMERY [00:01:40] Sounds good. My name is Paul Emery on the vice president of ScanSource for Cloud Solutions and Services.
DAVID DUNGAY [00:01:47] Lovely and Hanspeter Eiselt.
HANSPETER EISELT [00:01:49] Hanspeter Eiselt, chief marketing officer for Nuvias.
DAVID DUNGAY [00:01:52] Lovely, last but not least, Bruce.
BRUCE HOCKIN [00:01:54] Hi and thank you for inviting me today. My name’s Bruce Hockin. I am the partner development director for Cloud Distribution in the UK.
DAVID DUNGAY [00:02:01] You’re very welcome, Bruce. As are you both Paul and Hanspeter. So today we’re gonna be talking a little bit about digital transformation in the channel. It’s been that buzz word which feels like it’s been around a little while now. Shall we talk a little bit about how that’s impacting the wider ICT community? Paul, what are you seeing?
PAUL EMERY [00:02:22] Yeah, I think digital transformation is is a huge buzzword, but it’s it has some real debt into it into what we do on a day to day basis. We kind of see it as being wrapped into the other buzzword of CX customer experience. And it’s changing the way that the channel is approaching the end users. So it’s not so much these days about feeds and speeds and more around how that customer interaction is engaging and creates the business outcomes that are required. So, yeah, I think, you know, it’s it’s not not so much of a buzzword. It’s more now used in day to day organisations.
DAVID DUNGAY [00:03:03] Hans obviously digital transformation. There is a bit of a period there where partners would use that word, but potentially not understanding the sort of substance and what that meant. At a greater depth, are we seeing that now filtering through to partners?
HANSPETER EISELT [00:03:17] Absolutely. Because some of the traditional partners who who couldn’t see that transformation happening are suddenly being outperformed by a complete new breed of partners, sort of partners born in the cloud. And and the service requirements, the how you service these new partners is changing. And I mean it. I remember the days when, you know, resellers had a lot of stock in their warehouses, in their garages and were driving it around to their clients to sell it. These days, you know, all you do is send tracking numbers if you need that or everything is virtually in the cloud.
DAVID DUNGAY [00:03:59] Bruce, you know cloud distribution. I mean, what does what does your warehouse look like?
BRUCE HOCKIN [00:04:04] It’s not a big warehouse. I mean, the compliance initiatives that came along like socks and things like that absolutely change the way that organisations and suppliers started to work with us interest in the on top of that digital transformation as a whole. It is of a broad terminology. Right. And that has meant that a lot of the stuff that we sold when I have been in distribution like 22 years before, it was all hardware. Now, things have changed a lot. There’s a lot of software. There’s a lot of services to augment that. So that has changed dramatically. It’s not that we’re not selling as much. Of course we’re selling more. But the fact of the matter is, is that now it’s being delivered in different ways. And the whole software defined experience and what digital transformation is enabling is totally changing that. So, yes, smaller warehouse, bigger business.
DAVID DUNGAY [00:04:53] Smaller warehouse, which is great. You know, moving forward or progressing, what does that mindset change look like from your from your partners perspective?
BRUCE HOCKIN [00:05:04] You know, I’m not too sure that it does. I tell you what it does change it. And I don’t mean what does a smaller warehouse mean? I mean, what does move into software and services mean? There’s a complete change in the way that a partner can take a technology to market, particularly if you look at a sale cycle. Traditionally, people go right okay, I want to test that product. I want to know what that looks like and you just think right. Well you’ll have a warehouse full of proof of concept kit that’s changing. Then you’d go out and say, well, I can’t get hold of that product now. And I’ll ring up the manufacturer and they’ll say, okay, well, that’s four weeks. So what you’re able to do is you’re actually able to compress the sales cycle. And certainly from an evaluation perspective, you can draw that down, which is fantastic. The bigger challenge is now that when you have it is appliances or hardware, technology, everything operate fairly independently. Now, it’s a real integration play and that’s what we need the partners for to work with them because to make technology work, you’ve got to integrate it at that level. And that really changes the game. So it’s sure to compress sales cycles. But the integration means that. Absolutely. You’ve got to know what you’re doing.
DAVID DUNGAY [00:06:12] You mentioned that proof of concept there as well. I mean, Hans, what what are you seeing on that side has that been the is the critical piece of the puzzle.
HANSPETER EISELT [00:06:21] Absolutely. And especially that you continue having multi vendor environments and projects that the end user wants to install and get running on. The bigger challenge that I see for our partner communities. It’s also the financial one in terms of the transition from selling, you know, a million dollar data centre or a 10 million dollar data centre or telecoms infrastructure to I only want to pay when I use it. And I think we’re seeing some of something similar. What the big manufacturers and I think Microsoft went through that when suddenly you didn’t buy a physical office box with CD’s in them, but now you pay , I don’t know, 100 pounds or 60 pounds for office for a year and then every year you have to subscribe to that again. And as there’s a lot of pressure from end users coming to partners across the industry everywhere, I think both in the US as well as here where the pressure becomes financial one, because if your financial model requires you to have a big invoice and suddenly they only want to pay a slice of that invoice, then that puts pressure on cost and the whole admin administration of services so I think distribution is even more important in that stage because, you know, we are facilitating through financing and support.
DAVID DUNGAY [00:07:46] Paul how are you helping your partners deal with that pressure from end users? you know only want to pay for what they consume which when you say out loud, doesn’t seem that unreasonable. Really? I mean, what are you doing now?
PAUL EMERY [00:08:00] Yes, it’s true. But it’s become what? Going back to that digital transmission and customer experience. That’s what the customer experience is. That’s what they need. And that’s where we come in to help them with those solutions. There are a number of different programs that we can offer. And one example of those would be things like advanced commissions where, you know, yes, we can help them out with some of that being upfront to enable them to have a better cash flow because cash flow is key. Right. But when it comes to cloud, everything becomes a cost per user per month as opposed to a one time big deal upfront sale. And as a lot of retailers and part of those that are transitioning from those CapEx deals to cloud service and solutions, and it’s we’re the ones there that are actually trying to support and help our customers in that transition that they’re going through right now.
DAVID DUNGAY [00:08:47] That that is a huge, huge transition to get right as well. But Bruce, what what are you seeing that CapEx to OpEx? It’s been talked about for for years, it seems. How are you helping your partners manage that transition?
BRUCE HOCKIN [00:09:02] I think Hans came on to it a second ago. You know we’re looking at different financial models. We run through brokers sport. We have something called cloud capital which allows our partners to actually go and turn an OpEx from a CapEx deal. But interestingly, that’s table stakes that gets you through the door. It supports the partner, which is what we want to do. We want to be able to provide breadth as distributors in terms of the way that people want to consume. You go to an end user and they’re still running budget cycles. They’re still, you know, the amount of times we’ve taken on OpEx based solution to an end user. They’re still come back and said, I’ve got this CapEx budget. Can we do that? that subscription in advance type thing. So we’re actually seeing a transition period. As far as I can see, we’re seeing where there’s a demand from an end user. Certainly at CxO level, they’re saying, right, okay. I want to move to this model before you actually go underneath the hood and actually have a look at these organisations. They’re still demanding CapEx type payments in areas. And so it’s about having a fluid commercial opportunity for the partners so that we can win at whatever level we’re at. So I don’t think we’re being impacted in a negative way by the demands of the customer. I think it’s challenging the channel distribution, our partners to go out and come up with different ways to do business.
DAVID DUNGAY [00:10:25] Okay. We’ve got our first Twitter question in from David Middleton. Thank you very much for watching. Is there an increasing emphasis on education for partners and end users to ensure they fully understand developments in technology? And how can it can be developed and adapted to suit different needs? Hans, what do you think? Hanspeter Sorry.
HANSPETER EISELT [00:10:45] That’s okay, call me HP as well. Absolutely. I mean, we’ve we’ve seen now at our training business and associated business in terms of business consulting actually substantially grow faster than than selling a box in the traditional way. It’s especially these owner managed businesses have the biggest appetite for, you know, having a business advisor in their distributor who isn’t just flogging them a great deal, but actually provides these services that we just heard and a range of services that can be covered because not every deal is the same deal. We read a lot about these digital transformation, but it’s done at the pace of our end users and our clients. And we we see the education part having the greatest interest.
DAVID DUNGAY [00:11:38] Have you seen that as well, Paul?
PAUL EMERY [00:11:39] Yeah, I’d say so. I mean, yeah, we we’ve we’ve had to adapt our training solutions that we offer. So there’s a wide range of training offerings that we give. Free of charge because we are the ones I have to educate the channel first before the channel can educate them, indeed, and channel labour into us is key. It always has been and always will be. And then we’re having to adapt to to help our partners. And I think that’s what that’s what all distributors are now having to do.
DAVID DUNGAY [00:12:06] Is your is your typical partner sort of up to speed with the appropriate skills? You say that that is required today?
PAUL EMERY [00:12:12] Yeah, I would say there’s a complete combination of Partners that are skilled for it or not. So with the partners that have adapted and gone into cloud solutions and services, you absolutely that they’re probably ahead of the game and some of those before can serve in the S&B market where the S&B market jumped the cloud years ago, whereas more of the mid-market and the enterprise end users that haven’t quite necessary taken that jump into cloud just yet. It’s those ones were able to help adapt to those conversations of on prem versus cloud.
DAVID DUNGAY [00:12:47] Okay. Bruce are you seeing any new partners come into the fold. Always. This constant churn in the UK of businesses falling by the wayside, new ones flourishing. What are you seeing? from sort of a new partners entering the market perspective?
BRUCE HOCKIN [00:13:00] Yeah, we are. I mean, it’s it’s it’s a difficult one because a lot of these partners have got a history in doing it the old way. And a lot of them when they come round again, I’m sure you get this. You know, because we’ve been in the industry between us a long time. These new companies that come up are not driven by new people. They’re driven by people who’ve been in the industry forever. And they’re trying to adapt themselves. So. And old habits die hard. So I think there are a few innovative partners out there, any sort of ball in the cloud type organisations who are able to better leverage the large manufacturers who are trying to drive them in that way. And they’re getting a lot of mindshare from those manufacturers because they’re coming in the way that those vendors want them. So if you look at that, Microsoft, they’re not some that we sell, but fundamentally, they’ve been critical in driving that whole cloud adoption piece with this year. And they’ve been really pushing hard on driving those those who are bought in the cloud partners. But they’re also doing a lot of into partnering. They’re pushing really hard on making sure the partners deal with partners and go together with the combined model that takes it to market. So that’s interesting to say.
DAVID DUNGAY [00:14:12] We’re not seeing that millennial generation then really impacted the channel yet Hanspeter, what are you seeing?
HANSPETER EISELT [00:14:19] Well, it’s like my colleague said, here we have two to service the entire spectrum. And there are some very successful new entrepreneurs coming out of the millennium side, especially when it comes to servicing their own age group as well. You know, there is online stores. There is there’s online services suddenly popping up that they will never buy a single piece of hardware or cable. They will subscribe from it from the bottom up and operate that way. And I wouldn’t even know what some of these technologies are that we’ve been talking in the past about. But that there is a there is a like a bell curve that you clearly see. There’s the early adopters, which may or may fall into that category. And then there is there’s all the way to the laggards. And, you know, when you look at the entire I.T. spent, it’s it’s really well spread out.
PAUL EMERY [00:15:16] Just to add thousands where you’re also seeing the rise of the agents. So one reason why ScanSource brought intelisis is because we now have a master agent. So those agents are more, I guess, consultants, right. They have access to all of the suppliers, whichever the vendor happens to be, and they’re going in. There is a trusted advisor to end users to advise which solution is best for them. You know, they don’t have a thousand employees. They are more niche, small, smaller agents and consultants that kind of for the UK, or at least they come out.
DAVID DUNGAY [00:15:51] We’ve got another Twitter question from Miya Schulz. Thank you very much for watching. We can we can maybe guess Miya’s age in a moment, but this question might say it all. Is hardware still a thing? Was it all just cloud now? Bruce.
BRUCE HOCKIN [00:16:06] Absolutely hardware still effect. And it will continue to be a thing because fundamentally not everything can be driven out the cloud. I mean, we’re having conversations now, people talking and the clouding. I mean, it’s it’s it’s a strange situation to be in you getting sea level drive in the cloud adoption. Then we’re talking public cloud here. Yeah, sea level driving cloud adoption. They’re implementing it in a way that they feel is the correct way to implement that solution. People at the ground level are going to blimey this is a bit expensive because they haven’t integrated it correctly. They haven’t done it in the right way. So they go and hang on a second. We shouldn’t be putting everything in the cloud. We should be looking at multi cloud or hybrid cloud type of environments. So is hardware dead? absolutely not. And. There’s one reason for that is the cloud doesn’t you know, if you look around you, if you look at your phone or if, you know, cloud, does it come out the wall, you know, you still need wireless infrastructure and you still leave comms and all these sorts of things, you can’t get away from that. Where are the applications getting driven from? That’s where the interesting. That’s where the change is. But for us, absolutely. In how business with our customers in Wi-Fi, in securing mobile devices, all these sorts of things is there’s still hardware involved in that process.
PAUL EMERY [00:17:22] Yeah, I guess it might just mean that harbour is outside, right? The hardware is becoming more increasingly in the data centres. It’s still there from an infrastructure point of view, and then from an end user perspective what they see. Take UCAS typically, you’re still going to have a handset on desk. There’s another argument there. What’s going to happen to that in the future? But at some point, we will still need some sort of device wether a mobile device or a physical answer.
DAVID DUNGAY [00:17:44] Okay. We’ve been we’ve been talking about convergence for the best part of a decade as well. Bruce touched on earlier with that idea of ecosystems within the channel partner community. And you know, where where do you see this idea of convergence at the moment? Some people of the view that it happens, you get those all singing, all dancing partners out there and other people, you know, we’re still seeing these silos. What do we think?
BRUCE HOCKIN [00:18:12] It depends what you mean by convergence. I know, I know that sounds like a pedantic thing to say when I was doing multiplexes in 99. Convergence means converging at an infrastructure level. Now we’re talking about converging at a device level or an application level. And the conversation we had earlier about converging, you know, converging a messaging level. So I suppose it depends what you mean. It is going to happen. It’s going to continue to to to allow technology to become valuable, an increasing value so that people keep investing in, you know, that sort of thing. You’re going to have to make it more simple to deliver. You can have to converge. You have to drive costs down in order to do that. There’s lots of other things you need. But we will continue to converge as organisation. However, the back, it’s going to be all spread out, multiple cloud loads of services and they’re going to have to start integrating in the cloud before they deliver the solution to us.
PAUL EMERY [00:19:10] Suppose the other way to look at that is the convergence of the possible landscape. Yes. So having resellers look at all business, for example, we’ve got AV resellers, we’ve got comms resellers. Are they all starting to converge? Yes. Will they all converge? No. That’s my opinion on that anyway. But I think there’s going to be specialist areas where our partners won’t only specialise and serve in what they can do best, whereas with others out there that think, you know what? Why can I not add in other complementary services? And again, when there’s the opportunities, via an agency model where you don’t have to have the specialisations, you can use consultants that can actually help you do something that we can pay the offer. Why not add all these other services?
DAVID DUNGAY [00:19:55] Sure. So Twitter’s fired up again. Clint Fletcher, thank you very much for watching. How do I compete with a master vendor slowly going direct? Bruce whats your take on that?
BRUCE HOCKIN [00:20:15] These vendors, whether it be Microsoft, AWS, whoever it is, they’re all looking at ways that they can maximise the value that they’re trying to deliver. It’s a really cutthroat area of the market. Right. So if we’re going to participate in that, we have to continue adding value where they can add value. That’s just distributors. That’s as partners. If we’re going to do that’s around the convergence space. You’re talking about application level integration services. It’s amazing, really. I was trying to set up a Windows 10PC the other day and the amount of Problems I still have. Just do basic things you don’t expect to happen. Now multiply that out into an organisation that’s got many thousands of people. You’re still going to have challenges around new technology. You’re still going to have integration challenges, convergence, cloud, digital transformation. It specifically cloud. We’re talking about technologies that have just changed location. You’ve still got all the challenges that you had previously. So for us as partners and the suppliers into that channel partner community, absolutely. There’s a value there for us, this organisation.
HANSPETER EISELT [00:21:25] We’ve always been faster in the channel coming up with new solutions in implementation phases. Say for if a vendor does go direct, then it’s maybe part of the end of the technology curve in that field. But, you know, convergence has always been an ingredient to successful channel and channel management and are just looking at my own company. I mean, we’ve we’ve emerged from the. Convergence of this technology and when you look at our vendor portfolio, I mean, we aren’t reselling Microsoft or Clouds cloud offerings like a AWS because that’s in the commodity world in a way. Here we are looking for these value added pieces.
BRUCE HOCKIN [00:22:07] It’s about the integration to it, critical is that integration pace, people not going only cloud the ball in the cloud are going only cloud. There is still a plethora of opportunities around multi cloud or hybrid and that requires us to sell hardware still like that.
DAVID DUNGAY [00:22:25] Let’s let’s talk a little bit about current political climate. I’m sure we’ll probably a little bit sick of talking about Brexit. But tell us a little bit about how this has impacted your various businesses today. The big piece of research which hit was 27 billion pounds worth of IT projects have been put on hold by companies in the UK who are sort of a wait and see sort of mentality pending later next month. So, I mean, what are you seeing Paul from that point of view.
PAUL EMERY [00:22:59] Well, I guess I guess firstly a wait and see mentality is a better one. Then we’re stopping this project. So that’s the first thing. But at the moment, we’re not seeing that impact. Which is which is great. But I guess after the 29th March, who who knows? Right. Says the I’m the unknown, we say. But you’re right now talking to to partners. It’s it’s been pretty much business as usual and everyone else. And seeing that being different, a bit of slowdown down. But no, absolutely. Business is growing.
BRUCE HOCKIN [00:23:28] I’m hearing the old story of what’s out with the friend last week, and he said that his business had lost, not lost, delayed, and for six months, two million pound order where they were told one evening that they’re getting it before year end. And then the next time he said, someone said, we’ve got to wait six months to see what happens. But that appears to me to be few and far between. If you’re prepared to innovate, there’s always money on the table. There’s always a budget, there’s always an opportunity to drive value. And a lot of the things that we do specifically in the security area are about automating manual tasks. Well, they’re tasks that everyone does all the time and they cost money. If you can go in there with a solution that allows you to automate that space, there’s money on the table to be taken there. There’s an opportunity, right? So, yeah, we would in one instance, there are challenges, but there are few and far between. If you’re clever and you get it right, you support your partners well like we’re doing. It’s absolutely an opportunity to still continue to make money for them, for us, for the future.
HANSPETER EISELT [00:24:30] We’ve invested for over a year in getting Brexit ready, whichever way it goes. You know, no Brexit, hard Brexit, it’s tough Brexit because we can’t let our resellers that have multinational contracts for their clients hang in the trough, because in Dover or in Calais, there are some men in blue uniforms showing up on the 1st of April and checking everything. And so for all the hardware related products, we basically provisioned and set up dual locations so that European goods will be shipped from there and the UK will be self sustained with logistics systems. And I mean, it was quite a lot of investment and sweat and tears to get this all going because, you know, you’re increasing your inventory levels. You know, you need to talk to your vendors and get their support. And it’s who knows what happens.
BRUCE HOCKIN [00:25:28] And that’s one of the advantages of moving to a largely software and services model, isn’t it you don’t have to some of those challenges, but you can’t get away from.
DAVID DUNGAY [00:25:35] Okay. Well, let’s talk about the year ahead. We’re almost at the end of the session, actually. You know, where where’s the focus for 2019? Where are you really looking to add value to particular for your partners? Paul.
PAUL EMERY [00:25:47] Sure. I mean, the focus for us you know Cloud is a major part of that focus. It’s a huge strategy for us. And I think it needs to be for majority of partners out there. As I kind of mentioned earlier, one of those important key parts is to do the training educational piece. So that is still continuing as well as automation. So for us, you know, having online portals where everything is fully automated for things like phone visioning. So, yes, you buy that, UCAS CCAS platform, whatever comes to be. But you phones on desk, guess what? They’re going to turn up onsite and you plug them in and they work. That’s a key focus for us.
BRUCE HOCKIN [00:26:24] For us It’s going to be about the enablement and go to market focus next year because we’ve automated a lot of our and invested very heavily in our marketing and our go to market strategy with partners. We’ll also provision EDM mailers off our website. We do a lot of pretty cute stuff around business development and we’re going to have to continue to do that. And that’s really, really important as we grow as an organisation and our partners grow with us. So we’ll be focussing around enablement. We’ll certainly. Focussing around some apartment development activities to drive demand and sales.
HANSPETER EISELT [00:26:57] We’re investing heavily and again this business model change and being able to provide these subscription services that traditionally where OpEx or CapEx investments that end users hard to make and driving our partners to adopting that business platform and driving it. Of course, as everybody else said, the adoption of their technology conversions continues. So for us, security, networking, unified communications is all moving closer and closer together.
DAVID DUNGAY [00:27:31] You mentioned security. I didn’t dwell too too much into that area today. But today is Data Privacy Day in the UK. Currently, Twitter tells me, you know what? Just quickly, what what do we what are we going to see out of the year from a cybersecurity point of view, particularly more breaches, bigger breaches? Hanspeter what do you think?
HANSPETER EISELT [00:27:55] Absolutely I mean, nobody is immune to not being attacked, whether it’s through a foreign agency or whether it’s through just the hacker communities and so on. Everybody is being tested, whether you’re public sector or whether your private organisation. We see a lot more development in the cyber security space coming out of new niche markets and being further adopted so that you build out your technology solution to be secure. But everybody’s alert. Everybody I think, you know, having a data privacy act is sort of a reminder for us, again, to be compliant with GDPR are and and be as safe as we can.
DAVID DUNGAY [00:28:38] So Bruce if to a partner, if they’re not currently having that security conversation with their customers, what’s what’s your advice for them?
BRUCE HOCKIN [00:28:46] Pick up the phone and ring us. Do you know what the security conversation is? A difficult one for a lot of people, people, generalist partners. I had this the other day. They was slightly concerned about you know how can I sound like I know what I’m talking about when I go and have these conversations. Interestingly enough, security got a point now in people’s minds and understanding because it’s out these challenges from a security perspective in the press, in the media all the time. So people are very aware of the challenges around security. So I think it’s a great opportunity right now. The security market a few years ago got a bit boring. Have you got firewalls that we got a great. Now there’s all this new technology that’s coming along that’s dealing with completely different areas of the market. Probably too many vendors out there. It’s about choosing the right ones, which is going to come to the top, which are going to flounder. We think we’ve chosen a good bunch of new technologies to go out there to the market with. And it’s about making sure that we communicate the right value proposition at the right time, which is why we’re focussing very heavily on this whole AI automation piece, because it’s driving significant engagements with customers around some very, very big opportunities. So security once again is really interesting.
DAVID DUNGAY [00:29:57] Brilliant. Right. Well, on that note, other lots of thank you all for joining me today. I hope you had a fun conversation. I’d like to thank our viewers as well for watching. We’ll be back on the 11th of February for our next discussion, which will be on SD-WAN, another huge mayor of debate this year for the channel. Join me. My name is David Dungay. And I’ll catch you next time.