Six months ago, Irish Computer asked a number of distribution luminaries for their verdict on 2012 to date and what they thought the rest of the year would bring. Now we’ve gone back and asked them what really happened in 2012 and how they think the new year will shape up.
Michael Callaghan, Ireland managing director, CMS Peripherals
The distributor had a very successful year in 2012, Callaghan reports, achieving strong double digit growth on 2011. He cites the adoption of SAP as its core internal system, rebranding the company to reflect its expansion across three sites in Ireland and the UK, and the launch of a new website as pivotal in its progression.
The launch of a graduate sales programme by An Taoiseach Enda Kenny in August was another highlight.
As well as an increase in sales of existing brands, there is a strong pipeline of opportunity for the new brands CMS made available to the Irish market last year. "Our product portfolio now encompasses a much broader range, providing increased opportunities for both our customers and vendors, while allowing us the scope to cater for new customers," Callaghan says.
"Internally, our commitment to People Development and investment in new talent has allowed us to maintain our customer -centric approach in the market, where our customers view us a trusted advisor".
Ireland continues to be a challenging market to operate in, he admits, given the underlying economic difficulties but CMS has maintained its momentum throughout this period of uncertainty. "Our position as a value-add distributor means we are focused on areas where there is real growth potential and on working with our customers to create incremental business opportunities," he adds.
In terms of growth areas, he identifies software storage and security solutions as very strong, with cost and productivity savings a very important part of all solutions. THe distributor’s partnership with Symantec is flourishing with mobile security coming to the fore. "While businesses are adept at securing their desktops and laptop computers, most do not have the same controls and processes in place for the fastest-growing computing platform of smartphones and other smart mobile devices," Callaghan observes. "We see this as a key area of opportunity and growth and look forward to further collaboration with Symantec in this area."
The addition of Storage Options to its retail portfolio has created opportunities in the tablet and home security markets. Its range of range of affordable, entry-level tablet devices, "has proved extremely popular with retailers in recent months, as has the range of CCTV and surveillance kits".
CMS’ relationship with Quantum goes "from strength to strength", he adds.
The biggest inhibitors to growth in the Irish market are credit lines and cash flow. "From what we can see, this will continue throughout the year," Callaghan predicts, which will have a knock on effect with a number of projects being deferred. Reduced Government spend in 2013 will also impact the IT market in Ireland.
CMS is working closely with customers to support them on credit issues and will "continue to take the long term partnership view in working through short term cash flow issues. As always, communication is the key and we have a very strong finance team who can work with customers on providing financing solutions".
The majority of companies continue to operate with a leaner resource model and as a result investment in getting staff up to speed on new technologies can prove difficult.
Overall, the Irish channel is performing well given the economic conditions and well-managed distributors and resellers are "weathering the storm".
But CMS hears "mixed reports" regarding the performance of certain competitors and resellers and expects "to see further consolidation and closures in the coming months. The challenging environment for retail across UK and Ireland has been highlighted by the closure of Comet and HMV in recent months".
The distributor has "a strong pipeline of opportunity" for the first quarter, and expects continued year on year growth.
"We want to keep the momentum going, and to that end, we will continue to engage with our partners on collaborative projects, strengthen our internal processes, maintain our customer-centric approach to business and, ultimately, exceed our vendors’ expectations in the market," Callaghan concludes.
John Dunne, managing director & Emer Breathnach, commercial & sales director, Sharptext
In terms of business levels, 2012 was "fairly consistent" with the previous year, says Dunne. After a slow start in January and February, there was increased activity for the rest of the year. "Generally, I would say we saw more in the way of smaller deals coming through," he observes, "so although the individual values were a bit less than the previous year, there were more of them and the closure rate was higher, so it all balanced out in the end."
In terms of interesting developments and success stories, Breathnach highlights IBM’s ‘PureFlex’ integrated solution, "which is suited to SMB and enterprise companies. It consists of hardware and software modules that can be combined easily to produce an array of solutions, saving time and cost for users". She adds that ?Samsung is enjoying great success with its range of tablets that come in a choice of specifications to suit all corners of the market. "We saw great traction in the educational sector during the year," she reports.
The main business drivers are the move to "as a service", as well as the trend for increased mobility and BYOD, "which opens many doors for our partners". Security and storage remains strong and the move to managed print services "represents a growth area as companies switch on the greater returns to scale afforded by that model".
Like many others, Dunne identifies credit an issue that inhibits growth, "as is the general reduction in consumers’ disposable income and its knock-on effect for Irish businesses".
Breathnach says the good news for the channel is that customers are relying on partners more than ever to be a source of expertise and advice. Partners that are investing time and energy in attaining vendor certifications are the ones best placed to spot opportunities and grow their businesses. "In support of this, we are continuing to provide training and education for our partners, and we are always there to advise on quotes and product suited to the local market," she adds.
Looking forward to the first quarter and the rest of 2013, Dunne notes "tentative signs of increased confidence in the market generally, which is very positive this early in the year, and we are predicting a year of steady growth".
Trish Egan, managing director, ASBIS UK & Ireland
No beating about the bush from Egan who describes 2012 as "our most successful year for over 10 years". To give an idea of the scale of the distributor’s performance, she reveals that profit in the fourth quarter of 2012 was "more than our total profit for 2011 and I think it is an understatement to say that our second half performance was absolutely phenomenal" despite very tough market conditions.
She highlights the success of PC tablets, especially the Prestigio range. "Prestigio has established its tablet range by delivering a quality product at the right price point," Egan claims, including pre-installed apps such as Google Play Store, a leather sleeve/pouch included in the box, 2 year warranty, OTA upgrades and free tech support over the phone and email. "Basically, customers are getting the features and services of an A-brand product but at the right price for them," she states.
Ireland accounted for 27.5% of Prestigio PC tablet sales in 2012 compared to 72.5% in the UK. While there will be more growth in Ireland in 2013, ASBIS anticipates achieving even greater growth in the UK because it has already established the brand in some of the major retailers in the UK and is working with some new retailers. The size of the UK market compared to the Irish market is another key driver. "We are also expecting further growth in the UK [through] the TV shopping channels and in e-tail," she adds.
The Prestigo brand has been established in some of the major retail chains in Ireland and it has also introduced a new range of dual SIM card non-contract smartphones that customers are interested in. "This has already generated interest in other products in the Prestigio portfolio, so we are expecting more growth, especially with tablets and smartphones," Egan says.
In terms of threats, she predicts increased competition from A-brands in the tablet market with decreasing RRPs. Market proliferation will also become more of an issue. But the Prestigio smartphone and a number of other new products from existing and new brands should help to grow profits again this year.
ASBIS was ahead of its projected target for January "and the pipeline for February and early March is very positive. We think 2013 will be another fabulous year", Egan says.
Garnett Stewart, general manager, SquareOne Distribution
After an "‘extremely slow start" when he was worried the market could be heading back to 2008/2009 levels, Stewart was happy to witness an improvement as 2012 progressed to the year. "We ended up slightly ahead of the previous year, so I was quite pleased," he tells Irish Computer.
He is especially pleased because the distributor managed to plug the large gap left by the decline in education business from 2011 to 2012. It did this with the aid of a lot more corporate projects. "There have been changes in relation to audio-visual in the corporate market," Stewart states, with customers looking at large dispolays and more touchscreens in training rooms. As the cost of displays comes down, there are more opportunities with video walls and displays.
The distributor has also started to benefit from good growth in managed print, particularly with Samsung, following the distributor’s decision to enter the print and imaging market three years ago. The AutoID and EPOS divisions are also starting to grow.
One potentially interesting development is the acquisition of SquareOne’s close partner RADvision, which provides video conferencing infrastructure, by Avaya. Stewart believes this will lead to opportunities in markets where the distributor hasn’t played before in the general IT space. "We’re quite a niche distributor, we don’t do PCs, servers or storage, we’ve predominantly been in the AV and print area, so this gives us a little bit more traction within larger IT resellers and gives us the opportunity to speak to these guys." It may also open the door to opportunities with some of the other products SquareOne stocks.
At a time when they are uncertain whether there is going to be a huge amount of new business and they’re not expecting too much growth, SquareOne’s resellers are concentrating on looking after the customers. "They continue to service their major customers and are more conscious of holding on to they business they have and looking after people," Stewart observes.
The distributor’s customer base has remained reasonably strong and there have been no major casualties. "People have adjusted to situation," he believes. "They are less likely to make huge changes in terms of expansion". Their businesses are being run on a better basis and a sounder footing.
In terms of threats, he identifies the performance of the economy, but thinks it is "probably on the right track this year, there was a little bit more positivity at the end of the last year. Perhaps, we’ve turned a corner". Nevertheless, he accepts that a fear of what happened over the last few years could inhibit growth.
And there are still challenges in terms of credit he notes.
So far, the first quarter has started more positively than in 2012. "We have seen some good activity," he reports, "and there are some projects in pipeline we have visibility of that should happen."
John Mooney, country manager, Cohort Technology Ireland
Mooney describes 2012 as "a very interesting" year with the distributor achieving "consistent growth" in its core security product set of Symantec PGP, Swivel, Gigamon, Stonesoft while successfully introducing enhancements to those solutions and adding new products.
Cohort also forged a new alliance with Citrix to give it the ability to offer a cost saving virtual desktop through N-Computing. It also introduced Centrify to the mix to cater for companies that have Macs and Linux servers and need help managing them. Centrify enables the management of Macs, Linux and Solaris machines and iPads under a common dashboard using Microsoft Group Policy. The additions meshed nicely with Cohort’s focus on solutions which control, manage and secure company information.
He says that while there has been "a great deal of debate around and about the cloud and exactly what can be achieved", and cost savings can be attractive, security seems to have been overshadowed by the enormous potential of the cloud. "I think people are taking a closer look and putting more emphasis on the growing security issues," Mooney adds.
Companies need to secure their in-house data and be sure they can manage and control that vital resource, before considering using cloud infrastructure and porting their strict data policies across. "I mention this because there are still gaping holes in the way we secure our in-house data and moving to the cloud will not necessarily solve the puzzle," he says. "Perhaps we should rename it the "beta cloud" for now."
In terms of growth areas for Cohort, he also points to NAC, the network access control solution from Forescout chosen by McAfee as its NAC offering. "That’s big news," Mooney claims.
With every new innovation such as smartphones or BYOD comes new threats. And while these innovations may be game changes, it’s important not to lose sight of securing the information. "I would guess there is a tiny percentage of encrypted and managed smartphones and tablets out there," he warns.
He believes the channel "is doing well, under pressure". The distributor has noticed more emphasis on training: "We see proof of this as our training centre increases activity."
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