Company value and competitive differentiators have always contributed to business success. But in 2022’s post-pandemic times, what customers want and need from their ICT providers is rapidly evolving.
In Dicker Data’s ‘Meeting of the Minds’ series, we aim to cover the key trends impacting prospects for Australia’s Partner community, as well as debunk common misconceptions affecting the Partner ecosystem. By doing so, we hope to help you make sense of where to focus your efforts in the coming years in order to realise the greatest possible returns for your business.
Trend #1: Basic IT Management Isn't Enough Anymore
Although Partners have largely stayed up-to-date enough to maintain business-as-usual over the last two years, some have fallen behind when it comes to proactively implementing new technologies and features. The unfortunate result, in many cases, has been customer churn, lost renewals, and lost bids and tenders.
“We’re seeing what I would call the evolution of managed services,” explains Tim O’Neill, Dicker Data’s Microsoft Solution Sales Lead. “What we need from technology today is completely different than 5 years ago. People are looking at more than just having someone come in and fix their laptops. People are looking at different solutions; they’re looking at how they can do things better and smarter.”
In response to this evolution, vendors are offering funding to channel partners to transform their businesses and migrate customers to the cloud. But there may only be a small window of opportunity for these incentives; the Partners that pivot now stand to reap the rewards of vendors’ appetite for helping them bring new technology and business model offerings to their customers.
Unfortunately, O’Neill notes, many Partners still operate from a reactive mindset, waiting for events—such as having to replace a dying hard drive at 3AM—to act as a catalyst for change or conversations on what could be possible.
In part, this hesitation may be driven by the hybrid approaches many customers seek, given the added billing and management complexity Partners believe they create. However, it’s worth understanding where Microsoft is going, as evidenced by recent changes to the Microsoft Partner Program.
At a fundamental level, Microsoft is no longer a licensing software company—it’s a cloud company offering a hyperscale cloud services. Exploring new ways of operating within this landscape through expanded unique service offerings will be critically important for hosting, managed services, and hardware Partners in the years ahead.
Trend #2: Surging Numbers of Managed Security Service Providers
Customers’ demand for security and compliance offerings are no longer just about their peace of mind —it’s now front and centre as a business priority.
“The perimeter has moved from the corporate office to the home user, yet a lot of businesses still don’t have basic security in place,” explains Darren Bennett, a Modern Work and Security Specialist at Dicker Data. “If we reference the 'Essential 8', the essential digital protection for businesses, my observation is that only 1-2% of our partners are practising and implementing Essential 8 controls for their customers.”
That’s a problem, he notes, as increased media attention on cybersecurity is leading to greater interest in security among businesses. “In the last 12 months we are having more conversations with our Partners, where their customers are asking for security postures or for an audit or assessment, very different to pre pandemic” he says.
This growing demand for security is reflected in our Australian budget, which shows an increased focus on and investment into cybersecurity. The suggestion that the Australian government may hold company board members and directors personally liable if their organisation suffers a cyberattack also contributes to customer demand for secure solutions.
All of these factors together—along with the depth of specialisation required to implement effective security practices—are contributing to the dawn of the Managed Security Service Providers (MSSP). The expansion of these MSPs into security services often places them in direct competition with incumbent Partners.
Increasingly, we’re seeing Partners package hardware options with the existing security offerings built into common productivity suites to create ‘good, better, best’ package designs that support the security needs of Australian SMBs. Not only can this practice reduce upfront investment and minimise staffing challenges, but it can also help break/fix Partners move clients to more desirable recurring revenue models.
Incumbent Partners are also uniquely positioned to leverage the modernisation and optimisation of their customers’ existing environments to free up investment that can be repurposed into more advanced services—such as the assessments and audits for which Bennett and other Dicker Data leaders have observed increased demand.
The key to building traction with these approaches, however, is product and solution knowledge. Many Partners are selling solutions without their full security capabilities turned on—something that’s akin to buying a Ferrari and only driving it in first gear. According to O’Neill, “the more that Partners look at and understand their product, the more they can actually see the opportunities to service their customers.”
Trend #3: Key Customers are Heading to Market
Research tells us that consumers manage as much as 76% of the sales cycle on their own before engaging potential providers. By the time you realise that one of your key customers has gone to market, they may already be more than three-quarters of the way through the buying process with another ICT provider.
So what’s driving the increase witnessed by Partners in the number of customers seeking new solution providers?
One major factor is the growing demand for cloud solutions. Gartner reports that “by 2025, 85% of infrastructure strategies will integrate on-premises, colocation, cloud and edge delivery options, compared with 20% in 2020.” As many companies are already using cloud-based line-of-business technology, it may only be a matter of time before they start questioning what they’re paying for on the infrastructure side of things.
Furthermore, Paul Randazzo, SMB Product Lead for Microsoft Australia, notes that, “In 2021, SMBs are adopting cloud offerings to replace existing solutions, whereas, in 2018, they were more likely to augment existing solutions.” An influx of ‘free migration’ promotions from AWS and other hyperscale cloud providers attempt to capitalise on this trend—and they may prove particularly effective on customers who lack the technical knowledge to appreciate the value their incumbent Partners provide.
Yet all too often, concerns about profitability keep Partners from developing the kinds of cloud solutions these customers seek when they go to market, observes Jakub Wolinski, Cloud Services Manager at Dicker Data.
This is a common misconception we’ll explore throughout the series—the fact is that choosing cloud-based solutions requires you to reassess your business and operating models with a long-term view to profitability, rather than compare your on-premises hardware existing costs with the Azure calculator in a ‘lift and shift’ scenario.
Trend #4: It's an Employee's Market
Attracting and retaining the right talent has never been harder. In fact, in my role as Dicker Data’s General Manager of Microsoft Cloud, I have seen talent costs increase by more than 30% compared to pre-pandemic times. This challenge is particularly acute in South Australia and Western Australia, notes Geoff Smith—Microsoft Solutions Development Specialist at Dicker Data—where major mining companies are able to grab up talent and leave smaller businesses struggling.
If hiring truly is your only path forward, there are levers you can pull. One of the factors I have observed driving IT employees’ choice of employers is the ability to work flexibly in family-friendly environments. Cross-disciplinary agility and the employer’s breadth of technology are also influential—increasingly, I see employees choose roles based on whether they’ll have the opportunity to leverage the ‘latest and greatest’ technologies.
But the silver lining here is that Partners are no longer locked into traditional employment within their primary states, as partnerships make it possible to access additional skillsets without the headache of hiring. Although many Partners serving SMB customers haven’t been keen on partnerships in the past—seeing single relationships as being important in the space—the risk of losing clients to more well-rounded competitors makes the proposition more appealing.
To support the development of these new relationships, Dicker Data has created our Partner to Partner Portal, which connects resellers with Partners who may have solutions or services in specific Microsoft Cloud or customer segments.
The Portal is just one of the ways Dicker Data—the only Australian Microsoft distributor that manages everything in Australia—expands your business through programs and engagements built for Partners. No matter what your organisation’s level of maturity is, our team is here to help you know what you don’t know and protect you from potential business risks, costs, and reputation damage.
For more on Dicker Data’s perspective on what Partners need to prosper in 2022, stay tuned for the second instalment of our Meeting of the Minds series. Geared towards ICT Providers’ options for expanding into security.
Or, take a peek at the handpicked resources we have selected to support the series and accelerate your growth as a Microsoft Partner.