Channel analyst firm Canalys is hosting its digital Channels Forum in APAC for 2020, sharing insights from across the region in a year in which discussion has centred around digital transformation, collaboration, the importance of tech, and partner challenges in the time of a pandemic.
Contextualising those important tech conversations with data and predictions is a difficult job at the best of times, and even more so when global events disrupt most markets.
So to discuss some of the challenges and trends for the channel, running events, the new normal of work, consumption pricing and the benefits of being a reseller in 2020, Canalys chief executive Steve Brazier sat down with CRN Australia.
Michael Jenkin, CRN: Thanks for joining me. Starting off, tell me a bit about how the year has been for Canalys?
Steve Brazier, Canalys: This is the question we’ve been asking all the partners as we prepare for the conference!
First of all, we got to March-April and honestly, we were scared. It felt a bit like the global financial crisis.
We wondered if we were heading into a sudden period where nobody was going to spend any money and everything was going to stop. So, like everybody else, we hunkered down, cancelled travel and put recruitment on hold.
That was Q2, but by June we realised it wasn’t like the financial crisis. The technology industry was doing pretty well, the vendors were continuing to be active, and actually to our pleasant surprise, the demand for information content, data and research was bigger than ever.
So our research business has been incredibly strong, and I think you’ll see the same from our peer group in companies like Gartner and Forrester as well.
Of course, then we had the challenge of converting our events to virtual. I think it's no secret that the sponsorship money for virtual events is much lower than face-to-face events but it’s also true that the costs are lower. So we’ve gone through that transition for this year.
We come to the end of the year and we’ve announced a lot of new headcount and a lot of the things we had on hold will come through. This is an excellent time to recruit, so we’re on a recruitment drive.
CRN: Tech businesses love putting on events, whether you’re Canalys, CRN or Microsoft. We’re seeing many companies shift to digital conferences, and some may not have tried this before. Do you think it will come as a surprise to people that this is actually viable?
Steve Brazier: It’s definitely viable, and there are some key positives; we have a bigger audience for our event than ever before. Simply because instead of inviting the CEO of a partner, we can tell the CEO they can invite their colleagues too.
Because of that the event almost becomes like a training exercise for the partners because they can log on and view content one-by-one or in group sessions.
So your reach is much better, that’s the positive. The downside is that we know that when we attend events in person the best conversations are over a coffee or in the bar. Those times where people open up and share their real concerns face-to-face, that’s when you learn the most and it’s difficult to recreate that virtually.
But there has been success, if you look at Apple’s product launches, for example, I imagine they won’t go back to doing those in person.
CRN: Will most big digital events quickly disappear once we can get back to in-person conferences?
Steve Brazier: To borrow a little from the server or cloud market, we think the future is hybrid.
You might get 500 people to an event, but you’ll also live broadcast the keynotes so that people can watch them remotely, and perhaps more interestingly, like we’re doing now, we’ll set up meeting rooms where you and I might be together, but a third person can join by video.
That’s again a good opportunity for the tech industry because hotel rooms and places where those meetings happen will need to be equipped with TVs, microphones, soundproofing and everything required to create really good hybrid meetings.
That’s what we think the future is and we’ve put out money where our mouth is and launched a new company called Canapii to deliver virtual and hybrid event platforms.
We’ve gone heavy on that this year; to take our expertise in events and events software and build new business on the back of that. And the number of leads coming into that new business in its first few weeks are phenomenal, and not just in the tech industry.
CRN: ‘The new normal’ is a term that’s being discussed a lot with regards to what work will look like when we go back to the office. What does the new normal look like inside Canalys and what are your thoughts on how workplaces might be changed on the other side of this?
Steve Brazier: We’re in the technology industry and we employ bright, flexible people. So we’ve done a lot of this already. We already had flexible working in place and we were all enabled to work from home, so for a company like us it's not as big a change as it has been for others. We will be looking further, however, at running as a hybrid environment going forward.
But, to predict the future a bit, the HR manager in any organisation is going to be the most important employee, all eyes are on them because there are some big decisions ahead.
Do you ask people to come back to the office? Do you force them to come back to the office? How much do you want them in the office? Is it five days a week? Is it nine-to-five? What do you do to those who refuse? Do you fire them, do you pay them less?
What happens if you had employees who were living in Sydney until March and then decided to go off and live in Bali or wherever, is that acceptable? Is it not?
I think the whole issue of company culture will be defined by the decisions HR managers make.
Good employees certainly have probably worked harder this year than ever. The problem with HR is you end up writing policies for the bad employees, and they spoil the atmosphere for everybody because there are always people who will take the mickey.
CRN: You’ve discussed in your keynote that this new normal period will bring about spatial challenges in the office too.
Steve Brazier: If your regular office is open-plan like most are, and you come back to the office and people want to do video calls, which they certainly will, there will be some problems.
There’s a webcam in the notebook but not in the desktop monitor, so now you’ll need to get external webcams, people on video calls can also be noisier than normal, and if you’re on a video call and you have a colleague in shot behind you, it raises issues. One, they might be messing around and not looking very professional, but also there are privacy issues when unintentionally broadcasting background staff without their permission.
So we have to work out these things, in terms of what's acceptable and what's not. One of the ideas is to have meeting pods or desk pods, a bit like a first-class cabin on a plane where you could draw around screens and make it more private, maybe with a nice background and some soundproofing.
There'll be a lot of money in coming up with those designs that both respect privacy and are environmentally suitable.
CRN: Modern workplace rollouts and remote enablement had been steadily gaining popularity before suddenly having to be switched on overnight for many, is there any risk now in going all-in in a future workplace shaped by COVID-19?
Steve Brazier: There is risk in that the companies that have been too flexible with employees may find it difficult to bring them back, and may find they become less productive and less innovative.
We’ve heard small companies and big companies say, ‘We’ll be remote forever’ or for the next year. Often when you read the small print on those claims it’s not really true. It will be those who are able to be remote that will be remote, there are caveats in there.
Being careful about applying flexibility correctly will be important. Plenty of journalists have written articles over the past year about how great it feels to work from home, but generally, those articles miss the point that companies are in competition with their competitors.
So if you’re very flexible and all your employees are happy, great. But if your company is less effective and your competitor is less flexible and they start to do better than you, you have a problem.
CRN: To go back quickly over some of the things you’ve talked about in the keynote this year, vendors are still pushing hard for consumption pricing and you’ve cautioned that it’s still not right for everyone, can you unpack that a little?
Steve Brazier: Australia tends to be at the leading edge of consumption model adoption, so I would couch it differently for an Australian market than for a global or Asian market.
Part of the reason for that is that one of the big risks of consumption models is currency. Vendors want to push [consumption models] and they want to push those in dollars. Well, if you’re in an emerging market and your currency goes down 50 percent overnight that means your cost of IT has gone up 50 percent.
So who’s taking the risk? It’s typically the customer taking the risk and why would they in that scenario? Also there’s a pandemic going on and some companies will go bankrupt, maybe airlines, hotels, restaurants, and hospitality businesses. So if you do a consumption deal, who’s carrying the risk that the customer goes bankrupt and you’ve got all this secondhand stock to deal with?
The vendors go a bit quiet when you ask those questions, and it’s not always clear where that risk lies. Even in Australia, you’ll have bankruptcies, it can happen.
Microsoft and Adobe, who virtually have monopolies, have very successfully gone through subscription models and their share prices have boomed as a result, but in a competitive market, it’s not always right for the partner or the customer to take a subscription model.
That’s not to say it isn’t right either. There has been a rise in rental-type business this year particularly with notebooks because of the speed that people needed them deployed. But it's not a panacea for everybody, and just needs a bit of balance.
I’d also point out that when it comes to the public cloud, which became famous on it being flexible and consumption-based, it’s often now paid for upfront by big customers, they don’t buy it in a consumption model because it’s too expensive.
CRN: This year we’ve also seen other striking metrics in volume distribution in selling kit and PC sales, and you’ve answered questions from partners curious about whether they should expand or consolidate their vendor coverage.
The really interesting thing about 2020 is that going into the year, everyone was talking about software-as-a-service, public cloud and consumption models. Of course, some of those things have played out, but also this year we saw that the channel partners that did really well were those that sell kit. Those who sell stuff.
Actually, some of the partners that had pivoted to the future, pivoted too fast and would have been better off having a mix in their business, with some focus on the future but also on the core business of reselling.
We feel the partners that do everything, from resell and maintenance through to service and consulting, are the ones who are best positioned for the future. We encourage partners to remember across that business that selling kit is good business. Don't be ashamed if that's part of your business.
So we certainly don’t recommend partners shrink the number of vendors they work with. In general, you want to at least maintain your vendor portfolio. Whether you want to expand the number of vendors you work with depends on which sector you’re in.
For example, if you’re going into the security market, which is incredibly strong and something we recommend for many partners, security is a very fragmented market. In security, it's important to have lots of different vendors at different places within that stack.
Speaking generally, for typical partners, something like 80 percent of their profits will come from the big vendors such as Dell, Lenovo, HPE, HP Inc and Microsoft, but it’s important for customers that partners offer a good mix and provide access to the whole portfolio. In general, we encourage partners to expand the number of vendors and don’t forget that their core business remains very important.