Growth for growth’s sake
Everybody loves ‘high growth’ market areas. More often than not, they’re still in the early stages but they’re places where vendors can see the potential to get high margins from sales. No surprises then, that those are the markets vendors are keen to get more business in. And usually this means trying to enthuse their partner base to get more deeply involved in high growth markets.
The most recent example of this is HPE which has made changes to its Partner Ready programme, due to take effect in November, that will reward providers for investing in high growth market areas, such as composable infrastructure, hyper-converged solutions, storage, software and consumption services. As an aside, when composable infrastructure becomes obsolete, have the vendors taken steps to ensure it can become decomposable infrastructure?
Anyway, HPE is keen to steer partners towards these areas by giving them “greater rebates and quicker access” to higher membership tiers and helping them to “earn more through the increased focus on high growth areas of the market”, in the words of the vendor’s leader of worldwide sales, Paul Hunter.
The changes to the partner programme will create “a simpler model for channel partners, allowing them more predictability through the rebate levels”, he adds.
And that’s great, as far as it goes. But amid all the talk of high growth markets, it’s always important to remember the higher volume, lower growth, run rate (bread and butter) business. Without it, there’s no foundation to many businesses. The difficulty for quite a few partners is in trying to strike a balance between carving out a meaningful presence in the high growth areas while keeping the run rate business at healthy levels.
You only have to take a look at the current Brexit mess unfolding across the Irish Sea to see what happens if you over-emphasise high growth at the expense of high volume existing business. The anti-EU side have spent the last two years eulogising the benefits of doing trade deals with faster growing markets in other parts of the world, implying that this will more than compensate for any loss of EU business.
What they neglect to mention is that a lot of these high growth markets, many of them geographically distant from the UK, are miniscule compared to the single market of 27 countries on their doorstep. Even at their current rates of growth – assuming they can be sustained – it will be many years before those markets overtake the EU (and that assumes the EU market stands still in the intervening years).
Luckily, the IT industry has been dealing successfully with balancing mainstream and high growth markets for years. Indeed, a lot of today’s run of the mill IT was once in the fast growth column. Thankfully, a very large number of companies operating in the industry – vendors and partners alike – have done a good job of not losing the run of themselves over the years.