Resellers must become service businesses
It is estimated that about 140 000 to 250 000 formal small and medium enterprises (SMEs) in SA need to accelerate their digital journeys in the wake of the COVID-19 pandemic, meaning there has never been a better time for ICT resellers to reinvent themselves as services businesses.
“Those that get it right will be positioned to grow faster than the market in 2021,” says Gary Pickford, chief commercial officer at Tarsus Distribution.
According to him, for SMEs, the journey from ‘transactional to digital’ is in its infancy, with most looking to their reseller partners to gain the full value of digital platforms.
It’s not too late for those resellers that have yet to move beyond a box-dropping model to change, Pickford says.
“There is strong demand in the market from customers that need help transitioning to digital business models – with the digital commerce and work-from-home trends prompting many of them to fast-forward their IT investment plans. There are opportunities for the channel to add value in every part of the value chain and in every leg of the customer journey.”
He says the majority of organisations in the ICT sector took a hit in their trading during April, which impacted their cash flow during lockdown, and Tarsus Distribution was no exception.
“The lockdown has forced companies throughout the supply chain to re-evaluate their cost base in order to navigate this difficult time. Yet the pandemic has also opened some doors for the channel.”
Pickford says despite the months of trade lost under the level four and level five national lockdowns, the ICT market regained momentum as the economy started to reopen under level three. According to GfK South Africa, the office equipment and stationery market grew 55% and the IT market by 8% in the first eight months of this year.
This, he says, was driven by the demand for work-from-home solutions. “We saw a strong uptick in demand in the retail channel and among mid-market resellers as their business customers realigned for the digital era. Yet completing the digitisation journey will take three years or more of investment for most SMEs.”
To achieve their digital goals, SMEs need to partner with resellers that can offer them pre-sales consulting, implementation skills, ongoing support and optimisation in a range of areas – from hybrid and multi-cloud, to cyber security, big data analytics and AI.
In addition, SMEs need support in less glamorous areas of technology, such as optimisation of managed print service contracts and end-user device strategies for a world of remote work.
He says he is optimistic about the growth prospects for the channel in the medium term, adding a caveat that a slower U-shaped recovery in 2021 rather than a V-shaped bounce-back can be expected.
One factor that has hampered the short-term market recovery is disruption to the global supply channel, creating shortages of key products, such as entry-level notebooks.
Pickford believes that Tarsus Distribution, its channel and the wider ICT industry will enter 2021 in good shape for the challenges that lie ahead. “Being an ICT reseller in SA takes a special type of human, unafraid of challenges. Staying relevant, competitive and top of mind, and differentiating yourself can be a relentless task in this industry.”
Competition is high, margins are shrinking, and greater expectations will bring challenges next year and beyond, he adds. “The resellers and distributors that thrive will be those that are following the advice they’re giving their customers: use digital technology to transform the business.”