This presentation is a summary of the research that analyses how the channel has evolved over the last years in the UK. The results of the research have been presented at the official launch of the new website Channelbiz.co.uk in London on 15 March 2012. The complete research is avalable here: http://www.slideshare.net/NetMediaEuropeUK/the-evolution-of-the-uk-channel

1. CHANNELBIZ LAUNCH
THURSDAY, 15 MARCH, 2012
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2. Who am I?
Why ChannelBiz?
There’s still money in the channel
But the channel has changed
There are big challenges for the channel
The vendors are moving everything to the cloud Editor in chief -
Vendors need to pump more money into the channel ChannelBiz.co.uk
But companies have to get smaller, because small is beautiful
Smart technology means more points, and points mean prizes
Distribution, and lorries are far from dead
Vendors need distributors more than ever
Etailers are not smart enough
Channel Biz UK will focus on smart money, and smart starts
Our research shows that there are both opportunities and threats
Thierry Hamelin will now present our qualitative and quantitative results
2

3. EVOLUTION OF THE UK CHANNEL ECOSYSTEM
- A NETMEDIAEUROPE RESEARCH STUDY -
3

4. 1. OVERVIEW
2. END-USERS SURVEY : ANALYSIS AND
STATISTICS
3. CHANNEL SURVEY : ANALYSIS AND
STATISTICS
4. CONCLUSION
4

5. WHY THIS RESEARCH?
1/ Find out how the market trends impact on the channel ecosystem
 How vendors shortlisting is influenced by social media ?
 Are new channel competitors (MSPs, hosters) dangerous for legacy players?
 What are the incoming evolutions of IT procurement (direct vs. indirect, E-Markets)?
 How does the increasing adoption of cloud computing impact on the channel?
2/ Identify the stakes for the channel
 What are the key challenges regarding the economic perspective and the rise of Cloud
computing?
 What does the channel think about cloud computing?
 What does the channel expect from vendors and distributors to support the move to a cloud
service provider model?
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6. OVERVIEW
Populations surveyed: two distribution levels
 End-users
 2nd tier channel players
Coverage Channel 2nd tier End-users
Country UK UK
Number of interviews 80 100
Contacts CEO, MD, GM, Business DM CIO, CTO, IT DM
VARs, Pure resellers,
Company profiles Managed service providers, All sectors
System integrators, Hosters…
Company size All All
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7. SAMPLE STRUCTURE
(CHANNEL)
Job function Company size Main business model
Other
IT & (Etailers,
Operations Retailers,
Manager etc.)
System 9%
9% >=50 integrator
empl. 4%
9%
Consultant
5%
Pure reseller
32%
Business CEO, MD, Managed
DM (Sales, GM service
Marketing) 53% provider
< 50
38% 19%
empl.
91% VAR
32%
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8. SAMPLE STRUCTURE
(END-USERS)
Job function Company size Business area
IT
Consultant
CEO, MD, 7%
GM
7%
IT Business >=500
empl. < 50 Industry
Developper 22%
20% empl.
9%
91%
IT Manager
43%
IT Business 100-499
DM empl. Public sector
Services 12%
12% 16%
>=50 66%
IT Director, 50-99 empl.
CIO, CTO empl. 9%
22% 12%
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9. 1. OVERVIEW
2. END-USERS SURVEY : ANALYSIS AND
STATISTICS
3. CHANNEL SURVEY : ANALYSIS AND
STATISTICS
4. CONCLUSION
9

10. VENDORS SELECTION SOURCES
How do you gather information to create your shortlist of vendors for
IT product and solution purchases?
Vendors’ websites 59%
Events, seminars, shows 48%
Feedback from peers 43%
IT media 42%
Direct networking with vendors 42%
Direct networking with resellers 34%
Reseller web sites / e-mailing 33%
Consultancies 19%
Social media 14%
Other 7%
The two main sources for shortlisting are vendors’ websites and the participation to events, seminars or shows.
Feedback from peers and IT media are also widely used.
Social media is not perceived as a direct source for building the vendors shortlist, at least not consciously.
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11. IT PROCUREMENT THROUGH SOCIAL MEDIA
What social media do you currently use for IT procurement ?
IT blogs, boards and forums 47%
IT community websites 46%
LinkedIn 34%
Webcasts 31%
Twitter 19%
Google+ 18% 82% of ITDMs use social media
IT Social platforms 12% as a source of information for IT
YouTube 12% technologies.
Document sharing 10%
Facebook 9%
Other 3%
If Social media is not perceived as a direct influencer when it comes to create a shortlist of vendors, it indirectly guides
decision making.
IT blogs or forums, as well as community websites are widely used as information sources.
LinkedIn is well positioned with regards the use of social media tools, opposite to Facebook (which is only used by one
out of ten ITDMs).
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12. IT PROCUREMENT THROUGH SOCIAL MEDIA
Do you think you will increasingly use social media
for IT procurement within the next 3 years?
Don't know
9%
No Social media will be intensively used on a
21% mid-term basis.
Among non social media users, half of ITDMs
plan to use it within the next 3 years.
Yes
71%
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13. THE IT PRODUCTS PROCUREMENT CHANNEL
How do you usually acquire your IT products?
Reseller 68%
63%
Directly from the vendor 54%
51%
E-markets 35%
43%
Retailer 27%
26%
7% Currently
Hosting provider 11% In 3 years
Other 6%
5%
Resellers and direct channel will remain the main sources of IT products purchase.
Nonetheless, alternative channels such as E-markets and hosting providers gain additional points. Online shopping
becomes more popular among ITDMs, due to the raise of consumerisation.
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14. SAAS ADOPTION RATES
Do you currently use SaaS solutions? Who did you solicit first to enquire about
SaaS solutions?
No, but
Other
plan to use
8%
it Peers
13% 8%
Yes
Hosting
39%
provider Vendor
8% 38%
Services
company
No 12%
48% Reseller,
VAR
12% Consulting
15%
Four out of ten organisations have already adopted SaaS . On a short-term basis, 50% will use it.
The vendor is an integral part of the SaaS ecosystem as its marketing and branding are still direct influencers of the
purchase process.
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15. 1. OVERVIEW
2. END-USERS SURVEY : ANALYSIS AND
STATISTICS
3. CHANNEL SURVEY : ANALYSIS AND
STATISTICS
4. CONCLUSION
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16. MID-TERM BUSINESS CHALLENGES
What are the key challenges for your business within the next 3 years?
Stay competitive 72%
Develop new skills to enter new markets 42%
Control costs 40%
Increase sales force 32%
Develop niche expertise 25%
Develop E-commerce to better reach customers 23%
Find new partner vendors 21%
Finance development / investments 19%
Switch from product to service led culture 12%
Increase marketing budget 11%
Provide consulting services 9%
Switch to a recurring revenue service oriented model 7%
Obtain more certifications 5%
Provide training and certification degrees to customers 2%
Other 5%
Staying competitive and developing new skills are the main mid-term challenges for the channel players.
Controlling costs comes just behind, as it rhymes with business efficiency.
Switching to a Cloud related recurring revenue model seems to be underestimated (only 7% consider it as a challenge).
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17. PERCEPTION OF THE CLOUD COMPUTING
How do you perceive cloud computing with regards your business?
A threat
9%
Both an
opportunity Cloud computing is perceived in a positive
and a threat manner.
11%
A quarter of the channel is not currently
impacted by the cloud. Most of them are
An VARs and resellers.
opportunity
No impact 56%
25%
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18. TOP CLOUD OPPORTUNITIES
Why do you perceive the cloud as an opportunity?
Source of recurring revenue 47%
Source of additional revenue 34%
Develops new channel partnerships 26%
Lower setup costs 18%
Only few resellers provide appropriate cloud services (yourself included) 16%
Allows selling more expensive software than in a traditional licensing model 13%
Higher margins 8%
Geographical proximity to customers is no longer an advantage 5%
Other 11%
The main cloud opportunities are profit oriented. On the other hand, the cloud doesn’t mean higher margins. This is
one of the channel “cons” regarding cloud solutions.
New partnerships arise from the necessity to reselling cloud solutions within the channel in order to benefit from the
specialists’ expertise.
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19. … AND TOP CLOUD THREATS
Why do you see the cloud as a threat?
High infrastructure investment costs 45%
New competitors arise such as managed service
providers and application hosting providers 36%
Metered billing difficult to set up for bundled cloud
services 27%
Vendors bypass the channel to sell unsophisticated
solutions 18%
Other 9%
By enabling end-users to offload infrastructure and maintenance, the cloud passes it on to the channel ecosystem.
At the same time, application hosting providers and MSPs are well placed because they have already adopted a
recurring revenue oriented model and the cloud seems a natural evolution of their skills.
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20. WHAT TO EXPECT FROM VENDORS AND
DISTRIBUTORS WITH REGARDS THE CLOUD
What do you expect from vendors and distributors to provide you
for your business transition to a cloud service provider model?
Training 61%
66%
New accreditation/ partner programs 57%
61%
Access to infrastructure 34%
34%
From distributors
Other 5%
11% From vendors
Expectations are rather similar from vendors and distributors.
They are logically based on training but also new accreditation and partner programmes in order to better meet to
customers’ needs.
Access to infrastructure in order to propose their own cloud solutions (Iaas, PaaS and services) comes after.
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21. CHANNEL PLAYERS IN THE CLOUD
In your opinion, what channel players are more suitable for selling cloud services?
Hosters / managed service providers 59%
System integrators 35%
Telecom carriers 33%
Converged voice and comms solution
30%
providers
E-markets 28%
Other 4%
The most suitable partners for selling cloud services are the hosters and managed service providers. Their core business
is based on outsourcing and cloud technologies.
They are followed by the system integrators for their competencies in building specific cloud applications and for their
cloud infrastructure.
As for E-markets, Amazon is a good example of cloud adoption.
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22. 1. SUMMARY
2. CHANNEL SURVEY : ANALYSIS AND
STATISTICS
3. END-USERS SURVEY : ANALYSIS AND
STATISTICS
4. CONCLUSION
22

23. END-USERS KEY INSIGHTS
Two out of three ITDMs plan to increasingly use social media for IT procurement within the
next 3 years
 An opportunity for vendors to promote their solutions but don’t forget that social
media is not limited to LinkedIn, Twitter or Google+ ! Almost 50% of ITDMs use IT
blogs, forums and IT community web sites
E-commerce players will continue to rise on a mid-term basis. 43% of organisations will
make use of them (a gain of 8 points within the next 3 years)
 How far can Amazon or Ebay go? Will they be able to provide to small software
vendors the infrastructure to host and sell their software “as a service” ?
Vendors are still an integral part of the SaaS ecosystem, as 38% of ITDMs solicit them first
to enquire about SaaS solutions
23

24. CHANNEL KEY INSIGHTS
The main challenge for the channel players is related to competitiveness (72%) through
nurturing new skills and entering new markets (42%)
 Nonetheless they tend to underestimate the challenge of a cloud related recurring
revenue model for their business (only 7% feel concerned about it).
The cloud is mainly perceived as a business opportunity in terms of recurring and additional
revenue source.
 However, it is not synonym to higher margins - (only 8% relate it to higher margins)
Channel players tend to always promote training and new partner programmes from
vendors and distributors to support their move to a cloud service provider business model.
=> Access to infrastructure (allowing the channel to customize cloud offerings instead of
only reselling SaaS) is not a priority, but it could rapidly become a stronger expectation.
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25. MID-TERM CHALLENGES FOR THE CHANNEL
GLOBAL CHALLENGES SPECIFIC CHALLENGES
Succeed in building relevant influencer For Manufacturers
strategies in correlation with the increased > Rationalization of IT spending via virtualization
role of social media within IT procurement > Reorientation of the offer due to increasing demand
from the untraditional channel (SaaS / IaaS providers)
and decreasing demand from customers
Move from traditional billing to a “pay as you For software vendors
go” financial model (related to cloud Invest into a reliable and secure infrastructure (on
computing) premise or in partnership) to provide their software “as
a service”
Acquire deeper expertise by creating a brand For Distributors
new market strategy involving business Find new sources of revenue to counteract the rise of
decision makers and not only ITDMs (due to dematerialization and the nebulous nature of business
the rise of cloud computing based on services)
For VARs and Resellers
Many of them still lack cloud related skills. They have to
hire cloud specialists and invest in certification.
For Pure Resellers
They are in real danger because of shrinking margins
and lack of value added business
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