SA’s IT channel mood downbeat

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Adrian Hinchcliffe
Adrian Hinchcliffe

Major macroeconomic factors are concerning the local channel, and the outlook from channel players, particularly those on the front line, is markedly more negative this year than last. These are among the key findings of The Margins 2019 Channel Survey, which were revealed in Sandton on 19 September.

Approximately three quarters (74.%) of respondents from across the local channel cited economic and political uncertainty as the biggest threat to their organisations outlook, followed by the rand / dollar exchange rate, which was cited as the next big threat by 62.4% of all respondents.

In 2018, 63.6% of all respondents had a positive outlook, which compares to 51% this year. While much of that weighting has shifted to a mixed outlook, the percentage of respondents with a negative outlook grew from 5.5% to 7%.

Managed service providers, systems integrators, resellers and independent software vendors, grouped as front linerespondents were the most negative of all at 8%.

In fact, front line channel players seem to be the most concerned category, by listing more potential threats on average per respondent than those from distributors or vendors.

Local market conditions were also seen as a threat with increasingly competitive marketcited by 38.6% and the general business environmentcited by 31.3% of respondents. The next group of threats was around the skills shortage, listed by 27.8% of respondents, and B-BBEE rating, which was listed by 25.1% of respondents.

Empowerment was also an issue highlighted by respondents as requiring more work, as 16.8% of respondents admit that either their company or the wider channel wasnt doing enough to meet B-BBEE standards and transformation. This figure was 7.1% last year.

Across the board, the top area of business focus for the year ahead was to find new customers. Vendors were also concerned with growing market share, as were distributors. A joint second area of business for distributors however was to improve market awareness of their offerings. For the front line respondents the second most important area of business focus was to upsell.

The channel was also asked to identify the technologies where there was most focus and interest. The top three retained their spots from 2018, with cloud selected by most respondents, security was ranked second and IoT ranked third. 

With 14 technology options to choose from, the bottom three were blockchain in 12 place, business continuity and disaster recovery in 13 and augmented, virtual and mixed reality in last spot.

The executive summary of the report can be found here.

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