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SA's channel space to shrink in 2019 say experts

SA's channel space to shrink in 2019 say experts

Should the economic climate persist in South Africa, there is a strong likelihood that the technology channel market will shrink in 2019. However, it is the opposite in the rest of Africa.

Andries Janse van Rensburg, Channel Manager at Westcon, said, "Even though the shrinkage is still relatively small, if these conditions persist, we are likely to see a steady decline in players in the channel market. However, for Africa, we are seeing the exact opposite, with strong channel growth in regions such as Kenya, Uganda, Ghana and Mauritius."

Riaan Graham, Sales Director, Ruckus Networks sub-Saharan Africa, agrees given that these specific countries are not dependent on South Africa's economy. As a result, he says that there is a steady growth in these regions especially from a Wi-Fi perspective as new hotspot roll-outs and infrastructure upgrades have become a necessity and priority in the respective regions.

The companies believe the channel market is changing. They say not only are solutions across different categories combining "to create a more holistic, horizontal approach to the channel offering", new lines of business now demand hyper-specialised businesses and application technology skills from vendors.

"(vendors) are not only able to offer this technology, but also the required business support," reads a statement from the companies, who add that this trend is likely to continue in 2019.

Increase costs

"With wireless staking a claim as 'critical infrastructure', there are a number of implications and trends that we are seeing coming to the fore in the channel. Channel players have looked at diversifying their own offerings - from partnering with home automation installers to working directly with the logistics sector around a unified communications strategy," adds Graham.

However, budgets aren't keeping up. As most IT products are imported either in Euros or US Dollars, due to the exchange rate, the products are rapidly increasing in cost.

"As a result of the escalation in costs, we have seen two things happen. Firstly, projects for specific high-quality Wi-Fi projects are placed on hold, as these are now more expensive than originally budgeted for, or secondly, cheaper lower quality alternative products get used instead. The end result is an inferior network that will have to be replaced again in the near future - making this option a more expensive endeavour," says Van Rensburg.

He adds that with most vendors introducing cloud products to market, there has been a decline in hardware sales. Where customers would have previously acquired hardware products to build their own networks, they can now access these services straight from the cloud with additional infrastructure costs.

"Cloud and security are key - in fact we've seen vendors change their strategy based on these two technologies - areas they're essentially not known for. Additionally, we are seeing a lot a disruption from fibre - as it is starting to drive the content market both from a consumer and business perspective, where home users can now get quality connectivity, whereas in business customers want real time reporting especially in logistics. We are also seeing a demand for data in public areas due to the cost of data," adds Graham.

Shaping the channel in 2019

While the channel is changing as a result of both technology and economic factors, it will certainly not disappear anytime soon, and both Ruckus and Westcon say it is still the most effective way to market and sell products to a broader and dispersed audience.

"For vendors and distributors looking at growing channel partners or implementing a channel strategy, it's important to clearly determine what your partner/channel landscape should look like, what you would like to achieve through the channel, and what kind of channel partner will fit your objectives. Only after this should you put a strategy together that will achieve these set of objectives. In our experience as a distributor, it is imperative to only engage with partners where needed and when most advantageous. Where the real growth is with strategic partners, here you can establish joint business plans with these players and make them put skin in the game, so that there is accountability and a focus on achieving these joint goals," says Van Rensburg.

For the channel, Graham recommends looking at the surroundings to understand clients' strategies and objectives. "It's essential to become a trusted advisor by means of being game changers, understand that networking is at the core of every communication or cloud solution, and be cognisant of the fact that if you don't expose your clients to new solutions, another partner will. Partners also need to get out of their shells and start engaging non-traditional companies as alliances with trusted services providers in different sectors, this will in turn give them access to a new revenue stream and clientele."

Both agree that cost, solution initiatives and service will shape the channel market in 2019. Furthermore they feel that the digital delivery of solutions via an omni-channel commerce model will start to permeate the market, particularly as the channel itself looks for new growth avenues. Lastly a new approach to marketing will be paramount and out-of-the-box thinkers will assist significantly in achieving sustainable growth.

"There is no doubt that the channel is changing - but every year we see change so it's not change we need to fear. Instead, for the immediate future the channel is here to stay and while the local market adapts to economic challenges, the Africa market is thriving. Looking ahead we will continue to see a big focus on the cloud for services, with wireless as the catalyst to making this all happen," concludes Van Rensburg.

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