In a landscape where margins are increasingly declining and hard to sustain, partners are discovering that services offer an opportunity to supplement their business. Reseller ME speaks to experts to learn how the channel can differentiate through a strong services offering.
Low margins continue to be one of the biggest problems for regional IT channel players. Partners need to constantly find ways to improve their bottom line and focus on profitability even today. While both vendors and distributors have a responsibility to ensure partners are trained on latest technologies to improve their skillsets and devise profitable initiatives, it also depends on the channel firms themselves to address the issue head on.
Increasing number of channel organisations are finding that by offering value-added services, they are able to enhance their margins considerably.
“The Middle East IT services market is polarized, with a contrast of low-value and high-value services,” says Savitha Bhaskar, COO, Condo Protego. “Many Middle East channel partners offer low-value managed services that provide operational assistance with day-to-day administration. On the other end are specialised partners with specific domain expertise who provide high-value and high-cost business consulting and technology consulting, and assist with creating new efficiencies and driving digital transformation strategies.”
In order to differentiate their portfolio through services, partners need to consider their own branded offers and services supported by the vendor, says Will Hamber, senior director, partner operations, EMEA, Juniper Networks.
“Service and support are no longer just hardware maintenance, they need to review and evaluate how their offering covers the full hardware and software support cycle. They also need to consider their in-house skillset and people available to provide upfront support and services through to post-sales support and services,” he says.
According to Hamber, installations are now reaching across multi-vendor platforms with an increasing demand for open platforms and automation.
He adds, “Excellence across these areas increase the chance to provide real consultancy to businesses and will lead the way to a higher value margin sale.”
Partners need to remember that if they are offering services, whether it is managed or professional ones, they have to ensure the customer is finding value in it.
Bhaskar points out that most Middle East resellers’ operating models are based on order fulfillment and trading.
She says, “By stepping up to become value-added resellers, they can, not only increase their own competitiveness, but also bring value to their customers. However, resellers must have a long-term strategy and investments to become value-added players.”
How can regional channel players decide which kind of services to invest into? The first step is examining internally at the strengths that the firm possess to decide which path to take.
Talking and listening to customers are also vital elements in understanding their requirements and challenges, adds Hamber.
“This way they can evaluate the real need and better determine where business value can be added through their services.”
“Top value-added resellers should build capabilities to understand the specific customer requirements, domain and technology expertise, and be able to engage with customers from design through deployment to management of these solutions,” says Bhaskar.
Today, professional services are in high demand and are key to a complete evaluation of a successful deployment.
Hamber says, “Services such as analytics and business intelligence are also being added to partners’ portfolios, in line with the growing importance of data to a business.” He adds that it is essential to remember that customers too are working hard to differentiate themselves in a competitive marketplace.
However, in order to be adept at building a robust services portfolio, partners must consider the challenges too. They should take the time to understand the market they operate in.
“Channel firms must be able to identify the real demand from current and new customers,” says Hamber.
He explains that partners must assess if they are able to cover the opportunity with existing in-house staff or establish if re-skilling is required.
“Questions such as do they need to hire externally or acquire the knowledge through an acquisition are aspects they must evaluate,” he explains.
At the end of the day, vendors do have a grave responsibility at their hands.
Bhaskar says, “Vendors need to see IT services as not just a revenue stream, but also as a means to motivate partners to tie up with them, and help them to scale out their supply chain and market penetration.”
After all, enhanced IT services training will also aid the vendors in delivering localised services to customers through their partners, and customers would benefit from lower cost services.
“More efforts are needed from vendors to train and certify their partners to deliver professional services on their behalf,” she says.
Agreeing, Hamber adds that vendors can help partners with training, up-skilling staff and allowing partners to benefit from professional services programmes.
“Innovative revenue and margin share models will also become prevalent as projects become a greater mix of multi-vendor hardware, software and services,” he says.
Partners have a huge opportunity in maximising value-added services to combat low margins. They should look at transforming the business with the evolving times and find ways to gain long-term profitable revenues.
