contents
July 15, 2012 l Volume 1 Issue 18
Cover Story Despite economic uncertainty, most enterprise VARs expect to grow by more than 20 percent in FY2012-13 on the back of deep selling, services and pursuing opportunities in high-growth verticals
22 Cover Design : Deepjyoti Bhowmik
NEWS Analyses
Channel Chief Ganesan Arumugam, Director, Channels & Alliances, VMware, speaks about the virtualization market and how the company is enabling partners to earn more
18
Axis charts a micro-vertical strategy
8
Norton moves into upcountry markets
8
Market Focus
10
Accessories are a profitable business In terms of mindshare they do not sit at the top, yet accessories can be more profitable than the PCs and tablets themselves
HDS emerges from the Sun shadow
Kingston seeks 25 percent share 10 LifeSize increases emphasis on India
12
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Partners can now bill Office 365 12
Role Model
READ More
The man who won his bet He started the business with `50,000 borrowed from his mother. Today, Dipesh Mangla, Director, Computers Network & Telecom, has transformed it into a renowned SI with revenue of `38 crore
38
Editorial 14 Opinion
16
Feedback
16
Channel Buzz
42
New Products
43
Shadow Ram
46
Get Personal
46
6
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Tech Focus 6 opportunities in network security There is no end to the number of threats facing customers, from the risks associated with cloud computing to employee mistakes
40
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starting line MUST
Axis charts a micro-vertical strategy
Norton moves into upcountry markets
n SONAL DESAI
Read
Norton from Symantec has increased its focus beyond the metro cities to tier-1 and tier-2 cities. On the same lines, the company recently kickstarted its 40-city road show that will last till September 2012. “We have covered 10 cities including Delhi, Mumbai, Chennai, Bengaluru and Ahmedabad,” said Effendy Ibrahim, Director, Asia Consumer Business, Symantec. “The subsequent focus will be on the next level of tier-1 and tier-2 cities such as Pune, Nashik, Jaipur and Lucknow. Utilizing the hub-and-spoke model, we are also identifying the top 20 cities which will act as hubs to enable deeper penetration of Norton products into upcountry markets.” The company has tripled its partners from 50 last year to about 155. “We expect to double our volume partners by June 2013. Volume partners help us build relations with retailers and provide extensive coverage. On the support front, our top priority is to train partners in Norton products,” said Ibrahim. To increase Effendy Ibrahim partner engagement, the company has increased the number of channel managers from five last year to 11. For increased visibility Norton is also focusing on LFRs. It is currently aligned with nine LFRs including Croma, Reliance Digital, Jumbo and Staples. Ibrahim revealed that the company is planning to add 2-3 more national as well as regional LFRs. “In addition, we have partnerships with six OEMs such as HP, Toshiba and Samsung to bundle our antivirus product. We are looking for more such partnerships.” The company also has plans to introduce a series of new antivirus products in Q42012 that will protect a range of new devices and platforms. “According to a recent Norton survey, 96 percent of online Indian adults consider online security as necessary, and about half of the surveyed adults would prefer a multi-device/multi-platform online security solution,” Ibrahim explained. n — Amit Singh
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xis Communications, the manufacturer of network cameras for the physical security and video surveillance segments, is penetrating India the microvertical way. The company launched its strategy for the gems & jewelry segment last month. Besides, it is focused on the retail, SMB and transportation segments. According to an IMS Research report, the network video surveillance market in India is poised to grow 58 percent YoY. According to Lee Oh Tee, Regional Director, South Asia Pacific Region, Axis Communications, with increasing investments in government sectors, the infrastructure sector would also invest significantly in network security. Although the company has large ports as its customers, Tee remarked that the segment requires education. “We see cameras at bus-stops, railway stations, airports and seaports. Opportunities for partners are increasing by the day as transport authorities are looking at digital solutions and want to transform all their data from analog.” Another opportunity is from the highways. “The network surveillance is restricted to major highways. Just imagine the amount of data a camera every kilometer and thousands of cameras across the highways can capture. Such vigilance would compel motorists to drive safely and thus reduce accidents,” he added. The company is betting big on the SMB segment. It recently launched the Axis Camera Companion, an entry-level IP video solution. Consisting of a free software client and Axis network cameras or video encoders with SD-card support, the solution is
“Price is not our biggest strength; value is. Our camera may cost $100 more than the competition, but our video compression is more efficient” Lee Oh Tee
Regional Director, South Asia Pacific Region, Axis Communications
designed for systems with up to 16 cameras. Tee explained, “It is ideal for businesses that need easy-to-use and future-proof video surveillance with HDTV quality. Video clips and snapshots can be exported to colleagues and authorities, and the system supports third-party apps for viewing live and recorded video on smartphones and tablets.” To meet the increasing demand for Axis solutions, the company is enhancing its distribution system. “We have about 15 people in India. We recently hired Sudhindra Holla as the Country Manager. Our next step is to move to tier-2 and -3 cities,” Tee said. Axis will work with national distributors, national and regional SIs, and resellers. “We have 1,000 registered tier-2 partners in India who work closely with Ingram Micro and Anixter, and who are part of the Axis Channel Partner Program,” Tee informed. “In India the selling cycle is price-centric. Our strategy therefore is to educate the market so that end-users can distinguish between competing brands and us. Also, price is not our biggest strength; value is. Our camera may cost $100 more than the competition, but our video compression is more efficient, uses less storage, and provides better image quality.” n
starting line MUST
HDS emerges from the Sun shadow
Kingston seeks 25 percent share
n sonal desai
Read
Kingston is hoping to grab 25 percent of the DRAM market in the next one year. The memory vendor currently has 15 percent marketshare. “We saw some de-growth in the last six months. The global slowdown hit us really hard. Coupled by the strengthening of the dollar, we had to hike the prices of our products by 25 percent,” explained Ann Bai, DRAM Sales Director, APAC Region, Kingston. Kingston feels that its 3-pronged strategy— channel empowerment, concentrated marketing and enhanced post-sales service—will help it attain the desired marketshare. “We are working on a renewed pricing strategy for India,” Bai said. In terms of partner empowerment, Kingston wants its channel partners to benefit from the attractive pricing, complete product training and demo units. The company plans to be more aggressive with its channel strategy and increase its focus on tier-2 and -3 cities. It will increase its reseller base by 60 percent Ann Bai from the current 2,000 resellers to 3,200 by the end of FY2012-13. It will also leverage its HyperX and server RAM products in the current fiscal. “We have found that in several cities there are sizable business opportunities from gaming communities which we would like to grab. On the other hand, we have seen growing demand for server RAM from corporates in the south. Our strategy will be to adapt to the unique needs of these cities,” added Bai. Besides, Kingston will tap opportunities in providing server RAM products to the top 100 corporate customers. It also plans to create a special loyalty program for commercial partners. Kingston will provide premium post-sales support and information on new releases on a priority basis. For consumer marketing Kingston will create a buzz during festive seasons and special occasions. The company is presently evaluating its post-sales service and based on the results may increase the centers from the current 60. n — Abhijeet Mukherjee
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torage vendor Hitachi Data Systems (HDS) has laid out an aggressive channel strategy that includes providing free certification training to create strong skill-sets in the marketplace, expanding market coverage and working closely with partners to win deals. “In the past we were too OEMfocused with our business largely driven through Sun Microsystems. But since its acquisition by Oracle our focus on partners has increased over the last two years. We are revisiting old partners, explaining that we are no longer hybrid, and that we are here to grow with them for both sales and services. Nearly 95 percent of our transactions last year were partner-led,” said Yogesh Sawant, Director, Partner Sales & Field Alliance Organization, HDS. For that the company will focus on its complete product portfolio ranging across enterprise storage, modular product, storage management software, and file and content solutions. According to Sawant, many of its tier-2 partners have started winning large deals. Mumbai-based Ashtech Infotech recently implemented a unified architecture by virtualizing and consolidating block and file data over a single management console for a Gujarat-based conglomerate. “The migration of the core data was seamlessly managed with minimal disruption to the business by Ashtech with support from HDS,” informed Sawant. In the BFSI segment, Mumbaibased Pentagon Systems recently deployed a core banking solution for a large private bank in Maharashtra using HDS products and solutions. To further drive partner growth and profitability, the company has adopted a three-pronged strategy
“In the past we were too OEMfocused with our business largely driven through Sun. But since its acquisition by Oracle our focus on partners has increased” Yogesh Sawant
Director, Partner Sales & Field Alliance Organization, HDS
of engagement, enablement and relevance under its TrueNorth Partner Program. As a part of its partner engagement, HDS will segregate partners into Platinum, Gold and Silver based on the target accounts and the target verticals. “We have 20 Silver partners in each region (60 partners across three regions). We are moving some of them to the Gold level, and are scouting for more partners. We are talking to those partners who have never been approached, and even those who were not comfortable working with us earlier,” Sawant said. The company’s distributors include Redington iValue Infosolutions and the recently signed Avnet. “To drive partner relevance, we have introduced specialized training programs across six cities in the last quarter. So far we have certified 540 people across sales and technology in partner organizations,” he added. Through enablement, partners will be enabled with back-end rebates, PoC support and demo units. “We also plan to launch a new program where we will hire senior sales and pre-sales certified resources who will be placed at the partner site; their entire cost will be jointly borne by HDS and the partner,” Sawant informed. n
starting line MUST
LifeSize increases emphasis on India
Partners can now bill Office 365
n sonal desai
Read
In a move to eliminate the point of friction that existed between Microsoft and its solution providers since the launch of Office 365 in June 2011, Microsoft has announced the Office 365 Open program. “What we had earlier was a separate program for Office 365 where you became an office 365 Partner of Record (Microsoft parlance for Office 365 reseller). Even though you trained resources and acquired certifications as per the cloud competency, you had to make a separate arrangement for the services and migration you offered your customers. A different invoice was made for Office 365. The Open program allows you to create a single invoice for Office 365 and the services,” said Sanjay Manchanda, Director, Microsoft Business Division. Manchanda said that the goal is to continue to expand the partner ecosystem. “It will help partners to reach out to customers across multiple locations. We have set goals (for us) in terms of the number of partners we want Sanjay Manchanda to build. We have a set of partners called Essential, Advisors and now Open. Each of these partners has a certain number of customers, a certain deal size, and trained resources. We will help them to build the technical and commercial size of the business.” Microsoft has signed on 750 reseller partners who were trained in the last 16 months to deliver Office 365 to customers, and has collectively trained 5,500-6,000 sales and technical resources. Partners reselling Office 365 are happy with the announcement. Said Paresh Shah, Partner, PH Teknow “They have decided to stop supporting the Microsoft Small Business Servers next year onward, and want partners to migrate these customers to Office 365. The Open program will encourage customer stickiness and loyalty.” n — Sonal Desai
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ifeSize Communications, a Logitech company and a provider of high-definition video conferencing solutions, is betting big on tier-2 partners in India. The company recently launched its LifeSize Enablement Network (LEN) Training on LifeSize products and solutions. The training is delivered in a series of short HD video episodes, and is strategically designed for sales professionals, installers, administrators, support personnel and users. It also launched the LifeSize Learning Exchange (LLX), a collaborative online social learning platform for community members to share information, create videos, download tools and ask Expert partners questions about LifeSize solutions. “We have an installed base of more than 15,000 users across 100 countries. Mid-market, education and healthcare are the major contributors to our revenue here,” said William Sim, Senior Manager for Education & Services, LifeSize Communications Asia Pacific. Virgin Mobile, one of the largest customers of LifeSize in India, is using the latter’s Data Video Communication solutions for training its employees. According to Sim, “The training enabled them to reach out to the market quicker; the company also saved 20 percent on travel costs in 12 months.” Meanwhile, LifeSize is increasing its focus on India. “We were the first to launch the sub-$1,000 Passport unity series targeted at cloud and video applications across devices. This has given us good volumes from companies with a couple of branches. SMBs will continue to be the key focus,” Sim said. LifeSize is also investing in human resources. It
“We have 15,000+ users in 100 countries. Mid-market, healthcare and education are the major contributors to our revenue here” William Sim
Senior Manager, Education & Services, LifeSize Communications Asia Pacific
recently appointed Deepak Braganza as Country Manager and Raghunandan Nair (ex Bharati Teletech and Siemens Communications) to drive its distribution strategies in India. In June 2012 the company signed on Ingram Micro and Redington to drive its tier-2 strategy. It has signed on Team Computers as one of its tier-2 partners, and is scouting for more registered partners. “All the registered partners will have to undergo LEN training. We will provide them 40 hours of HD video clips on new products, technology, knowledge enablement and perspective. Each video clip is 5-16 minutes,” Sim said. LifeSize will elevate its registered partners (who require sales and technical certifications) to the Expert level and bring them under the LLX umbrella. According to Sim, the Expert level is exclusive, and encourages tier-2 partners to ask questions about sales and technical issues, the responses to which they do not get anywhere else. “We throw open a repository of our global resources (from even outside LifeSize). The partners will get at least one response within the same working day, and at least 3-4 options to the same problem in one week.” n
edit opinion Volume 1, Issue 18
Showing true resilience dhaval valia
I
was pleasantly surprised to see that of the 125 enterprise VARs who took our latest annual CRN Channel Confidence Survey, almost two-thirds expected to grow at more than 20 percent in the current fiscal. I have been a pessimist about the economic scenario globally and back home, and hence had expected muted growth or even de-growth to emerge as the key finding of the survey. Barring a few, a large number of partners have grown at more than 20 percent in the past 6-12 months with many growing faster than 30 percent. This shows the true resilience of the Indian IT channel. While most partners have resigned themselves to external factors not improving, they are looking inward to see how they can augment their solutions and services portfolio, create more internal efficiencies, and harness more deep selling opportunities within their existing customers. This is a positive sign, and indicates the shift in outlook among enterprise VARs. Most partners who took the survey are not sticking to a product-centric approach but are moving toward a serviceoriented engagement with customers. This is evident from the fact that services are increasingly becoming the key focus area for partners. Interestingly, plain-vanilla AMC and FMS are no longer profitable, and VARs have deployed or are looking to deploy remote infrastructure management tools. Deep selling is the best strategy for any business in an uncertain economy because dealing with a known devil is better than tackling an unknown one. What this has resulted in is that most partners are building skill-sets in solution and service areas they hitherto did not have a presence in. While it is great to see buoyancy in channel sentiments, I do not see overall market sentiments changing for the positive soon. Globally, I do not believe the EU will be able to manage its sovereign debt crises any better than it has done so far, and the US is going to be busy till the end of the year with its presidential elections. While the change of finance minister in New Delhi has spurred sentiments, I doubt if the current government with all its political compulsions will be able to effect any major policy change. I only foresee a slight breather on the back of minor improvements in the stock markets, a marginal decrease in interest rates, and some stability in the rupee-dollar rate. But that is unlikely to change the overall consumer and corporate sentiments in a big way for the next 6-9 months, and hence a cautious approach is advocated. n E-mail CRN Executive Editor Dhaval Valia at dhaval.valia@ubm.com 14
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Managing Director Printer & Publisher Associate Publisher & Executive Editor Group Commercial Director Contributing Editor Assistant Editor Principal Correspondent Senior Correspondent
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edit opinion The new decision-makers Rauline Ochs
A
n analysis of a recent IPED 2012 survey on end-customer buying preferences for managed and cloud services or private cloud solutions in US found that when the cloud service is an application—Salesforce.com, for example—new buyers, including chief sales or marketing officers, are the primary decision-makers. Pretty much business as usual for sales teams selling applications; not much new there. Findings indicate that sales to small business or lower midmarket customers can be accelerated. The accelerated sales cycle is a function of the customer with little or no IT staff who finds the lower TCO attractive and is eager to pass on servicelevel responsibilities to a third party. What we found interesting was insight into the enterprise customer, where the decision process has changed the most. In the enterprise, when the cloud or managed services solution sold involves infrastructure components, new decision trends are visible. The trends present a training need for IT vendor and partner sales teams alike. In the enterprise IaaS sales pursuit, the duration of the sales cycle has become longer and involves more decisionmakers such as the chief security officer and the CFO. Upfront deposits, the portion of the transaction to be accounted for as opex and the portion accounted for as capex, show up as additional information required by the CFO to support the proposed infrastructure services decision. The CEO, who may or may not participate as a traditional decision-maker, emerges in a new role as orchestrator of a new decision process. This new process results from the shift of the IT infrastructure service-level burden from the CIO to an external service provider or hoster. As newer IT service providers emerge, new and non-traditional decision criteria (including a minimum service-level history demonstrated by the service provider’s history of service reliability) is introduced to the sales process. As a result, a committee consisting of direct-reporting executives to the CEO emerges, replacing the traditional CIO decision-maker supported by CFO and CEO decision sign-off. These new sales and decision criteria comprise the new enterprise managed or cloud services sales cycle. New or modified sales training curriculum, marketing messages and references specific to the decision-maker or influencer role are required. My request to IT infrastructure service providers: Help your resellers or white labelers by providing these materials as part of your partner program; it will help speed the sales process. If you are yearning for the good old days of a simple VAR transaction, stick with private clouds. Customers indicated that private cloud solutions located in their data centers look like standard IT procurement. 52 percent indicated a desire to buy from their hardware vendor with 46 percent indicating they would also buy from their trusted solution provider. n Email Rauline Ochs at rauline.ochs@ec.ubm.com 16
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Impact of external factors on IT retail
Role Model: Champakraj Gurjar
The recent market focus on the impact of external factors on IT retail held the pulse of retail partners. IT retail has been facing one trouble after another since October 2011. The latest is the dollar appreciation and increased excise duty, which have worked negatively against consumer emotions. The footfalls have gone down, and many interested consumers are delaying their purchases. Although we believe this is a temporary phase and that buying will resume soon, the effect till now has been spinebreaking. I particularly liked the idea of localized consumer schemes as suggested in the article.
The recent article on Champakraj Gurjar, MD, Maxtone Electronics, provides inspiration and motivation to seek accomplishments. The article demonstrated that for a sustainable business self esteem, honesty and trustworthiness are essential. It gives the message that anybody can attain an enviable level and fulfill his ambitions through hard work. Champakbhai has not only given us dreams and goals but also shown the path to achieve those. Through his grit, he has encouraged us to overcome our shortcomings and deal with obstacles through positive thinking. We look forward to more such inspiring articles.
Prachi Desai via email
Srinivaasan Edamana MEPL, Kochi
Send your feedback at editor@ubmindia.com or post your views on www.crn.in
Advertiser Index Company name
Smartlink Smartlink Emerson LG-Monitor Compuage-Odyssey Rashi IBM HP-IPG LG-Projector Dell Schneider NEC CLS Dell HP-PSG Cantonfair Dell IBM Interop HCL Asus Biz Eaton EMC
Page No Web site
1 www.digisol.com 2 www.digisol.com 4 emersonnetworkpower.com 5 www.lg.com 7 www.compuageindia.com 9 www.rptechindia.com 11 www.ibm.com 13 www.hp.com 15 www.lg.com 17 www.dell.co.in 19 www.schneider-electric.com 21 www.necindia.in 24-25 www.crn.in/lsummit 27 www.Dell.co.in 29 www.hp.com/in/notebooks 31 www.contonfair.org.cn 33 www.dell.co.in/tnc 35 www.ibm.com/in/xoffers 37 www.interop.in 44 www.asus.in 45 www.hclpos.co.in / www.hcl.in 46 www.indiaantivirus.com 47 www.eatonpowerquality/india 48 www.emc.com
Sales Contact
helpdesk@digisol.com helpdesk@digisol.com marketing.india@emerson.com serviceindia@lge.com odyssey@compuageindia.com response@rptechindia.com response@in.ibm.com in.contact@hp.com serviceindia@lge.com www.dell.co.in/vostro in-care@schneider-electric.com enquiries@necindia.in salil.warior@ubm.com nitin_phadnis@dell.com in.contact@hp.com info@cantonfair.org.cn dell.co.in/details response@in.ibm.com salil.warior@ubm.com reachus@asus.com wecare4u@hcl.in sales@indiaantivirus.com EatonPowerQualityIndia@Eaton.com VSPEXIndia@emc.com
channel chief “Virtual servers will outnumber non-virtual” Ganesan Arumugam, Director, Channels & Alliances, VMware, spoke to Ramdas S about the virtualization market and how the company is enabling partners to earn more Virtualization has wide acceptance today. Going forward, where do you see opportunities for partners? Customers now have a better understanding of the technology and how it can be used. VMware and our competition have been educating partners to address new opportunities. I believe very soon in India we will see a point where virtualized servers will outnumber non-virtualized servers. Partners need to understand that virtualization cuts across every practice. It is not just about hosting server consolidation or virtualizing desktops. Whether your current focus is networking or storage, developing skillsets around virtualization is imperative. In terms of immediate revenue opportunity, we still see license revenue as a key element. On the license business, VMware offers potential margins which can be up to 53 percent. We are also ensuring that we are not over-represented or over-distributed. When a customer invests in virtualization, for every dollar of license they pay for they create opportunities for products and services that are 7-10 times more.
You recently appointed Redington as your third distributor. Are you planning to increase your partners? Redington is now our third distributor, joining Avnet and Ingram Micro. We are certainly interested in adding more partners though we are not targeting a specific number. We need partners mostly in Class B and C cities; besides, we require partners who have domain expertise in verticals such as banking and manufacturing. There are a few enterprise partners who are not very active with VMware business even in metros and Class A cities. This again creates opportunities for our new partners. We presently have around 70 active partners; the number will go up this year.
You also work with the partners of leading OEMs. How is that different from your direct partner program? We have extended our partner program through the
“On the license business VMware offers potential margins which can be up to 53 percent. We are also ensuring that we are not over-distributed” 18
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channels of our OEM partners such as Cisco, Dell and HP. It is not very different as we enable channels through the OEM partners, and they can avail benefits such as rebates and training. There is also a lot of overlap since most of our partners are aligned with one or another of the OEMs. 70 percent of our business is through our direct partners and the rest through OEM alliances.
How can a new person who is keen to test the virtualization space partner with VMware? First of all you need to register with us. We have no entry barriers for registration on the VMware Partner Central, and you can be on board very soon with a number of free tutorials and training kits that can take you toward VMware certifications. Once you are comfortable, you can get in touch with us and we can handhold you to the next level. Another option is to work through server or storage partners and work on a specialization. Even if you are not competent to deploy our solutions we can help you with an opportunity by connecting you with a VMware partner who can protect your interests. Once you are on board you can avail all benefits.
The desktop virtualization market is said to be in limbo, what with a huge capex investment and notvery-friendly licensing by Microsoft. What are you doing to grow this market? I agree that the licensing policies of vendors such as Microsoft have not helped the cause. However, the high capex investment is just a perception that most of our partners have been able to dispel. Today, when a customer is planning to do a technology refresh across a few hundred desktops, it makes economic sense to deploy VDI over buying new desktops in every aspect of ROI calculations. It is not fair to expect any organization to deploy VDI at one go; they will do so in small parcels, experiment, see the benefits and chalk out strategies. There are thousands of customers who have done a pilot, and many of them would consider VDI when they opt for their technology refresh. In addition, BYOD is slowly becoming an accepted practice across many organizations. You cannot implement a secure and robust IT governance policy without virtualization.
You changed your licensing model last year, and partners say it has resulted in confusion. I believe this opinion would be from those partners who are not among our active partners because we have done
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channel chief multiple rounds of educating our partners. In mid-2011 we switched from a regular CPU-based pricing model to a memory entitlement-based licensing model. Our decision to switch to a VRAM-based licensing model was based on feedback from customers, and we changed the memory entitlements based on the immediate feedback after the launch. The idea was to align our pricing model based on the cost benefits of virtualization rather it being a function of the physical assets of the server which a customer is using. You can visualize it as a license for your data center and not just for your physical servers. VMware vSphere 5 licenses are simple license keys that contain encrypted information about the VMware vSphere edition (or kit purchased) and the processor quantity. These license keys do not contain any server-specific information and are not tied to a specific piece of hardware. This means that the same license key can be assigned to multiple VMware vSphere hosts as long as the sum of physical processors and the memory entitlements do not cross the licensing terms.
You have been actively pursuing partners to sell cloud-based services and solutions. What are the opportunities you see for partners on the cloud? There are multiple business models which partners can opt for to address the cloud opportunity. We have the widest range of software that helps a customer to set up a private cloud. We also offer licensing models which can be tied to the actual cloud usage. In addition, we are encouraging our partners to be cloud service providers and set up private, public or community clouds for
“We have employed a pay-per-use model, which means that you can get the complete VMware product line for as low as $360 a month� their customers. We are talking to mid-market resellers to launch their own branded cloud offerings under the VMware Service Provider Program. We have employed a pay-per-use model, which means that you can get the complete VMware product line for as low as $360 a month, and as they sign up customers they can pay us on an hourly basis. We offer a monitoring tool which will bill the partner who in turn can bill customers.
You have made several acquisitions in the recent past. What should partners expect from them? Over the past three years we have acquired several companies, partly for their products but mostly for their technologies which are being integrated with our product line. Partners are already familiar with Zimbra, which is gaining acceptance as a premium enterprise messaging and groupware tool. Some of our acquisitions such as Spring Source, Cloud Foundry, RabbitMQ or Dynamic Ops have been more for their technologies which have been integrated into our products. For example, vFabric is a result of the Spring Source acquisition and other minor acquisitions. Another example would be RabbitMQ, a portable messaging system that is ideally suited for applications deployed in a cloud environment. n
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cover story
Despite economic uncertainty, most enterprise VARs expect to grow by more than 20 percent in FY2012-13 on the back of deep selling, services and pursuing opportunities in high-growth verticals n RAMDAS S
I
ndian enterprise VARs have expressed optimism about the year ahead despite signs of an economic slowdown and other long-term obstacles to growth. According to the 125 enterprise VARs who participated in the recent CRN Channel Confidence Survey, if not for the hiccups surrounding the global economic outlook, the weakening of the rupee against the US dollar, and the price hikes as a result of supply shortages, the growth rate in the past six months would have been robust. With all this they remain unruffled, and focused on their own growth strategies for the days ahead. Despite the shortcomings, in the first half of 2012 47 percent of these enterprise VARs said that their growth expectations were on track, while 11 percent were pleasantly surprised with better-than-expected growth rates. While a significant 33 percent felt that the growth
22
Computer Reseller News
15/07/2012 www.crn.in
was just below their expectations, around 9 percent expressed disappointment with their results. In terms of growth rates, 6 percent stated that they grew in excess of 50 percent over the same period last year, 11 percent said that they saw growth between 30 and 50 percent, 16 percent mentioned 20-30 percent, 45 percent 10-20 percent, 19 percent fell in the less than 10 percent bracket, and just 3 percent reported de-growth. Dollar fluctuations have been the biggest dampener. “With dollar rates climbing we have seen prices go up. This has forced several sectors, including education and corporate, to defer purchase decisions,� observes Sanjeev Gupta, Director, Veltronics. Neel Shah, Director, Insight Business Machines, agrees. “We had earlier tried hedging, but we abandoned it because of the risks involved. The dollar fluctuations
cover story PERFORMANCE IN past 12 months
REVENUE GROWTH IN past 12 months Negative Growth
Much below expectation
9%
Above expectation
Less than 10 percent
11%
33%
REVENUE GROWTH EXPECTED IN FY2012-13
> 50 percent
19%
Less than 10 percent
Grow more than 50 percent
30-50 percent 3% 6% 11%
5% 15% 32%
16% 47% Slightly below expectation
10-20 percent
18%
45% As per expectation
30% 20-30 percent
Base: 125 enterprise VARs
30-50 percent
20-30 percent
10-20 percent Base: 125 enterprise VARs
have forced customers to ask more for less, thus shrinking our margins.” 53 percent of partners observed that customers are investing in solutions that provide clear ROI. “No more is an IT decision an EDP manager’s domain. Today, the CFO—and sometimes even the CEO—is involved because technology is critical to business. If you cannot convince them about the ROI the project moves to the back-burner,” says Ashok L, CEO, Futurenet Technologies, Chennai. About 54 percent of those polled said that revenue growth last year was powered by services, 44 and 36 percent said that the networking and server business grew their top-line, 35 and 34 percent said that storage and software licensing revenue accounted for their growth spurts.
Growth projections
Base: 125 enterprise VARs
areas THAT BOOSTED GROWTH IN past 12 months Services
53%
Networking
44%
Servers
36%
Storage solutions
35%
Software licensing
33%
Notebooks
33%
Desktops
33%
IT security
29%
Virtualization
26%
UPS & Power solutions
While the present mood may be bleak, no one is expecting de-growth in the coming year. 5 percent VARs projected growth of less than 10 percent, 32 percent expected 10-20 percent growth, 30 percent expected 20-30 percent, 18 percent expected to grow in excess of 30 percent, and 15 percent were upbeat enough to project a 50 percent and above growth rate. As in the CRN Channel Confidence Survey 201112, enterprise VARs are betting on five big verticals— manufacturing, IT/ITeS, government, education and BFSI. While they said that manufacturing has been the largest contributor in the past six months followed by IT/ ITeS, in the year ahead they are betting on education and government leading the way. 63 percent partners said that technology refresh was the main reason for growth. “Over the past 2-3 years many customers had deferred IT buying decisions, so some of them are considering large-scale investments this year,” comments Ashok of Futurenet.
19%
Business application software
15%
Physical security & Surveillance
14%
Imaging & Printing
11%
Base: 125 enterprise VARs
INDUSTRY VERTICALS THAT BOOSTED GROWTH IN past 12 months Manufacturing
47%
IT & ITeS
46%
Education
40%
Government
35%
Banking & Financial services
29%
Hospitality & Travel
24%
Retail
24%
Media & Entertainment
Priorities Almost 95 percent of those polled said that adding new Continued on page 26 ä
“We tried hedging, but we abandoned it because of the risks involved. The dollar fluctuations have forced customers to ask more for less, thus shrinking our margins”
23%
Healthcare & Pharma
21%
Infrastructure & Real estate Public sector units Transportation & Logistics Telecom
20% 18%
15%
12%
Base: 125 enterprise VARs
Computer Reseller News
15/07/2012
www.crn.in
23
Presents
July 26-29, 2012 | Holiday Inn, Goa
India’s most influential enterprise VAR forum The 4-day CRN Leadership Summit will witness participation from 25 leading technology companies and 100 of India’s finest enterprise VARs, having an aggregate turnover in excess of $1.5 billion. With a power-packed conference program interspersed with technology tracks, workshops, keynotes, and discussions, the event features an exhibit that showcases latest products. Recognition is an integral element of the Summit with over 35 awards to be presented to partners for business and technology leadership and excellence. What makes the Summit even more exciting is the informal and fun-filled activities that include talent show, quiz and water sports.
Platinum Partners
Gold Partners
Technology Track Partners
Workshop Partner
Conference
Ideas@Work
Technology vendors will present their strategic technology and market initiatives
Partners will share their best practices that have helped them become smarter and more profitable
Solutions Pavilion
Power Breakfast
Technology companies will showcase latest products and solutions
Focused group discussions between partners and technology companies
CRN Xcellence Awards
Talent Show
Backed by a comprehensive Jury process, the awards will be presented in 35 categories
Partners will showcase their hidden talent and winners will be rewarded
www.crn.in/lsummit
Presents
Presents
Exhibitors
Powered by
Organised by
cover story SOLUTIONS THAT BOOSTED GROWTH IN past 12 months Data center solutions
44%
Security surveillance solutions
39%
Software-as-a-service/Cloud computing services
34%
Virtualization
29%
Desktop conferencing/video conferencing
28%
Software applications like ERP, CRM
25%
Remote infrastructure services
25%
Business continuity & Disaster recovery solutions
23%
Unified communications
20%
Managed security services
18%
Connectivity & Voice solutions
17%
Business intelligence & Analytics
16%
Document management services
16%
Green IT
14%
WAN optimization solutions
12%
Managed print services
11%
Base: 125 enterprise VARs
BUSINESS ACTIVITIES THAT BOOSTED GROWTH IN past 12 months Deep selling to existing customer base
64%
Added new solutions and services
62%
Focus on new technology areas
61%
Enhancing efficiency of your company Tie-up with new IT companies Focus on new industry verticals
47% 37%
28%
Geographical expansion in India and abroad
25%
Cost cutting
23%
Base: 125 enterprise VARs
FACTORS THAT WILL DRIVE GROWTH IN FY2012-13 Technology refresh by customers
63%
SMBs will drive IT demand
57%
Cloud computing and Infrastructure-as-a-service will drive growth
ä Continued from page 23
solutions and services will be vital to growth in the days ahead; a similar number were thinking of increasing their wallet share as a top priority. 64 percent were looking at adding new vendors to add more services and solutions. Many partners are considering the creation of alliances among partners rather than looking at new vendors. Says Kshitij Kotak, CEO, Fortune Grecells, Mumbai, “We have been collaborating for some time, but now our efforts are more organized. We recently joined the Association of Systems Integrators & Retailers, and are taking collaboration to the next level. Joining hands with other partners with complementary skill-sets is the way forward.” Suresh Ramani, CEO, TechGyan, is also attempting to add customers through other partners. “We recently organized a customer-facing event along with Techlink Infoware, another Microsoft partner. We have our strengths on the cloud, Techlink has engineers who can support customers on-premise, and together we are building a winning combination.” KV Jagannathan, CEO of the Hyderabad-based Choice Solutions, agrees. “We are not planning to add any new principals this year, but are adding new collaborators, both big and small. The idea is to align with another solution provider who can add value to our customers, reduce TCO and keep the customers happy.” 94 percent of the partners who took the survey wanted to deep sell to their existing customer base. They felt that since new customer acquisition costs were high, it was imperative that they increased the wallet share within their existing customer base. This was also said to be the reason for giving top priority to adding new products and solutions, and also seeking new services. “In 2005 we had stopped doing passive networking projects,” says Shah of Insight. “Now we realize that many customers are upgrading their LAN or planning new capacities. To increase our wallet share, we have decided to re-start this service.” This may not be easy. “While all partners want to increase their share, it is not easy because most customers would like to stay aligned with existing vendors and not disrupt existing relations if they are smooth,” says S Sriram, CEO, iValue Infosolutions, Bengaluru. 92 percent of partners had improving overall efficiency levels of their company as a top priority. Partners are also investing in, for their own organizations, the technologies that they promote. Many polled report that they are implementing unified communications, CRM and help-desk management systems to boost their productivity. “We as a Cisco partner have been promoting Webex to our customers. We started seeing the benefits when we implemented Webex within
46%
Customers will invest in consolidation and virtualization
46%
New policy initiatives by the government
30%
Foreign investments (FDI and FII)
14%
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Base: 125 enterprise VARs
15/07/2012 www.crn.in
“We have been collaborating for some time, but now our efforts are more organized. Joining hands with other partners is the way forward”
cover story KEY CHALLENGES LIKELY TO HAMPER GROWTH IN FY2012-13 Dollar fluctuations
76%
Payment delays by customers
65%
Customers are bargaining too hard resulting in margin pressures
50%
Lack of government policy
46%
Increase in prices of products
45%
Customer behavior
Changes in vendors' channel strategies
31%
Negative customer sentiments Lack of right skill-sets
30%
27%
Lack of proper customer financing
20%
Lack of proper channel financing
19%
Cloud computing will negatively impact business
18%
Competition from non-traditional channels
16%
Base: 125 enterprise VARs
KEY BUSINESS PRIORITIES IN FY2012-13 Add new solutions and services
85%
Deep selling to existing customer base
84%
Focus on new technology areas
79%
Enhancing internal efficiency
77%
Focus on new industry verticals
59%
Tie-up with new IT companies
52%
Cost cutting
An overwhelming 75 percent of the partners opined that customers preferred IT consolidation to IT expansion, while 53 percent said customers were looking for guaranteed ROI. 45 percent of the partners said that customers were opting for managed services. Just around 30 percent felt that customers were considering cloud adoption, and only 42 percent said that customers preferred opex to capex investments. “Some of the trends may sound surprising. Most analysts have been saying that SMBs prefer opex to capex, and that they would embrace the cloud. But though SMB customers understand the theoretical benefits, they are apprehensive because they do not own anything even after paying for the service for a long period,” explains Sriram of iValue. “That is the reason you may discover that the cloud or opex-based services are not finding the kind of acceptance they were expected to find.” However, partners point out that IT consolidation is definitely top-of-the-mind for customers. “Consolidation is happening across businesses. Customers are cutting down on multiple offices, and consolidating. Similarly, you have IT infrastructure merging, you have applications running in silos being scrapped and new integrated applications being acquired,” says Dutta.
43%
Focus areas
Geographical expansion in India and abroad
35%
Inorganic growth
17%
Base: 125 enterprise VARs
CHANGES IN CUSTOMER BEHAVIOR Preferring IT consolidation to IT expansion
75%
Investing only in solutions that guarantee ROI
53%
Demanding managed services with products and solutions
45%
Moving from IT capex to opex Moving toward cloud computing
41% 30%
Base: 125 enterprise VARs
our organization,” says K Subramanya, Director, Central Data Systems. Partners are continuing to invest in processes and systems to scale their operations. “We have invested about `1 crore to enhance our internal service processes such as compliance, billing system and integration of ERP and CRM,” says Vipul Dutta, CEO, Futuresoft Solutions.
28
Almost 42 percent of partners were considering geographical expansion in India as well as the overseas market. “Last year, along with Dax Networks, we expanded into the Sri Lankan market under a joint brand called Dax India,” says Madhav Chandran, MD, Cyberland Tech, Kochi, a Dax partner addressing the Kerala market. About 24 percent of the partners were considering inorganic growth by either acquiring smaller companies or looking at a merger.
Computer Reseller News
15/07/2012 www.crn.in
Almost 96 percent of the partners were betting on services providing them with enough impetus to grow both their top-lines and bottom-lines. Partners are exploring all kinds of services ranging from remote managed services to business analytics to big data. Around 86 percent saw IT security as a trigger for growth, and about 83 percent saw networking giving them growth. While greenfield projects are back, the major growth was expected from network optimization, security, implementation and reporting services. Another opportunity partners were betting on is consulting on IPv6 and migration to the new IP standards. 80 and 71 percent of partners saw high growth in storage and servers; 74 percent felt virtualization would be a key catalyst. “We are expecting 2P racks and the blade market to grow. More servers are getting virtualized every
“Consolidation is happening across businesses, customers are cutting down on multiple offices. Similarly, you have IT infrastructure merging”
cover story AREAS THAT WILL DRIVE GROWTH IN FY2012-13 Services
76%
IT security
62%
Networking
62%
Storage
60%
Virtualization
50%
Managed services
49%
Servers
49% Notebooks
42%
Software licensing
41%
Physical security & Surveillance
41%
Business application software
35%
UPS & Power solutions
34%
Enterprise mobility
32%
Desktops
Growth verticals
31%
Imaging & Printing
25% Thin clients
21%
Base: 125 enterprise VARs
SOLUTION CATEGORIES VARs WILL INVEST IN DURING FY2012-13 Security surveillance
57%
Data center integration
55%
Cloud computing
53%
Virtualization
51%
Video conferencing
44%
Remote infrastructure management services
44%
Business continuity & Disaster recovery
42%
Mobility solutions
40%
Business intelligence & Analytics
38%
Private cloud solutions
35% Unified communications
34%
Software applications like ERP, CRM
30%
Base: 125 enterprise VARs
month as customer acceptance increases,” says Rajiv Mehta, MD of the Delhi-based Zest Systems. Just about 50 percent of the partners were betting on the desktop market growing, while 61 percent felt that notebooks would continue to grow. Some of the partners were thinking of exiting the desktop market, or being selective about the deals. As many as 57 percent felt that physical surveillance
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Computer Reseller News
and security was an area they wanted to build expertise in, a key reason being that the surveillance market is moving from analog to digital/IP-based. Points out Ajay Maitin, CEO, Graphic Trades, Patna, “With terrorism and insurgent threats, just about any public place needs surveillance solutions.” According to Yogesh Godbole, Director, Ace Brain Systems, Pune, “Fire fighting and fire control is another big opportunity. In the next few years 50 percent of the IT budget would essentially be for fire control, remote monitoring and remote activation.” 71 percent of the partners wanted to build expertise around disaster recovery solutions. “Data loss is like a dowry death. Till it happens in your family you will not believe that it can happen to you. People who lose personal data once understand the importance of DR,” says Kotak. Almost 63 percent felt the software licensing business would be critical to their top-line growth. About 44 percent said they have launched or beefed up their data center offerings, while 39 and 34 percent have ventured into cloud or SaaS offerings.
15/07/2012 www.crn.in
Most of the partners said that manufacturing had been the best vertical over the past year, and 54 percent felt it would continue to be high growth. “The manufacturing industry has matured, and they are hiring professionals,” comments Rahul Meher, MD, Leon Computers, Pune. “They are betting on best-of-breed solutions to ensure advantage, and are willing to invest in IT.” 55 percent partners believed that the IT/ITeS sector would continue to drive growth because the sector has an employee-to-PC ratio of 1:1 or above, and is constantly looking for new technologies and ideas. While some partners indicated that the education vertical saw a dip in the last six months, almost 59 percent saw the segment as the one which would provide growth in the future. 44 percent of the partners saw the government as a major growth vertical. They said that the slowdown in reforms and delays in project announcements had affected their optimism about the vertical. Some partners also pointed out that most mid-market VARs cannot qualify in certain bids because of strict tender conditions. However, Godbole argues, “Partners who are looking at selling PCs and peripherals would have seen de-growth, but for a true solution provider government opportunities are immense. In Maharashtra alone we have 98,000 big and small government offices, and the IT budget for Mantralaya alone is `2,000 crore.”
Challenges & issues The rupee-dollar fluctuation has become the biggest source of worry for partners. While some of the enterprise
“Data loss is like a dowry death. Till it happens in your family you will not believe it can happen to you. People who lose data once understand the importance of DR”
cover story INDUSTRY VERTICALS THAT WILL DRIVE GROWTH IN FY2012-13 Education
58%
IT & ITeS
55%
Manufacturing
54%
Government
45%
Banking & Financial services
41%
Retail
39%
Public sector units
35%
Hospitality
33%
Infrastructure & Real estate
30%
Healthcare
29%
Media & Entertainment
28%
Pharma
27%
Telecom
27%
Transportation & Logistics
22%
Travel
20%
FMCG & Consumer goods
15%
Base: 125 enterprise VARs
SUPPORT REQUIRED FROM VENDORS IN FY2012-13 Ensure better profit margins
78%
Improve lead generation and pass on more qualified leads
46%
Maintain market operating price
41%
Have clear customer management policies
37%
Offer qualitative incentives rather than quantity-based
36%
Provide cost-effective training and certification programs
34%
Offer better pre-sales support
32%
Provide deeper discount on their products and services
32%
Provide more MDF support for customer development activities
29%
Provide clear guidance on areas to focus on for future growth
28%
Offer customer financing/project financing
26%
Help us move to a solution-centric path
25%
Base: 125 enterprise VARs
customers have deferred purchase plans or have been buying within planned budgets, partners focusing on DGS&D contract rates-based business say that the business has virtually stopped. “We have seen decreased spending from the government because of non-availability of revised DGS&D rate contracts in the JFM quarter,” says Inderpal Singh, CEO, Aman Technologies, Jammu. “Though the DGS&D market opened again in April, the softening of the rupee over the past few weeks is likely to throw a spanner in many customers’ purchase plans.”
32
“Vendors believe in a cap of 8 percent on hardware—including all discounts and rebates—as the margin for partners. This is ridiculous”
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Partners also point out that recent government policies and policy roll-backs are affecting customer sentiments. “We need more FDI flowing in to inspire customers to invest. At present the sentiments are not in favor of opening up the purse,” notes Jagannathan of Choice Solutions. Singh of Aman believes that central government projects are being delayed because decisionmakers are scared of potential scam allegations and are therefore delaying decisions. Payment delays continue to be another major concern. “Payment delays have gone from bad to worse. A customer who used to pay in 30 days now does that in 45 days, and those who paid in 45 days now pay in 60 days,” complains Paresh Shah, Partner, PH Teknow, Mumbai. Almost every other partner polled said that customers are bargaining hard, resulting in margin pressures. “Hard bargaining has become a norm even with customers who never used to indulge in this activity earlier,” rues Shah. Others point out that customer sentiments have turned negative. “Customers are sitting on money, and are scared to invest. We hope that government policies change, and customers become less reluctant to invest,” says Kotak.
Expectations from vendors 78 percent of partners wanted vendors to ensure that they got better profit margins, and for a third year this continued to be the biggest demand from enterprise VARs. “Vendors believe in a cap of 8 percent on hardware— including all discounts and rebates—as the margin for partners. This is ridiculous especially with costs going up because of inflation,” says Mihir Chahwala, Director, Innovative Telecom & Softwares, Surat. “Many big customers are giving direct business to vendors, which restricts the partners’ role in the project, and hence revenue. Vendors try to reduce us to commission agents in such cases,” says Gupta of Veltronics. Many partners pointed out that MDF and rebates are shrinking every quarter. “Most vendors have cut down on back-hand rebates, or are launching programs that make it difficult for us to accrue them especially in the large enterprise space,” says Prarthna Gupta, CEO, Cache Technologies, Delhi. “We expect changes in the vendors’ partner strategy in terms of decision-making; we expect it to become process-driven. Currently, the decision-making is highly people-driven. People keep changing and that affects the relationship and comfort with the new channel manager,” says Ajit Mital, MD, Acme Digitek, Lucknow. Other demands include reducing the paperwork on rebates. “To close a deal the vendors’ sales folk make a number of commitments, but the back-end teams ask for additional paperwork and almost always ensure delays in payments,” complains Chahwala. n — with inputs from the CRN team
market focus
accessories ARE a profitable business
In terms of mindshare they do not sit at the top, yet accessories can be more profitable than the PCs and tablets themselves n ABHIJEET MUKHERJEE
A
ccording to one industry estimate, the Indian PC and tablet accessories market is worth around `1,000 crore in 2012. “I peg the PC accessories market at $165 million, and expect it to cross $388 million by 2016. The products include keyboards, mice, hubs, cooling pads, protective cases and charging adapters,” says Mohit Anand, MD, Belkin India Subcontinent. According to Sandeep Ramani, COO, Envent Worldwide, “The total addressable market for tablet cases, Bluetooth keyboards and power packs is `200 crore in 2012-13.” Increasing demand for accessories from consumers, and their easy availability in India, have helped the market to grow. New vendors specializing in IT and telecom accessories are coming to the country to explore the potential here. Forward Industries and Elecom are two of those who recently entered India. Envent is focused solely on smartphone accessories and IT peripherals. “There is a gap between customer expectations and reality, especially in terms of product pricing, quality and features of products. We will bridge that gap. We currently have 10 employees across India, China and Sri Lanka, and plan to add 25 more in the near future,” says Sukesh Madaan, Founder & CEO, Envent. Vendors such as Targus, Belkin, Lenovo, Logitech and Antec dominate the segment in the country. Today, accessories have become an integral part of the product for many consumers, and they do not mind
Trends Newer form-factors such as tablets and ultrabooks are gaining traction in India, and OEMs expect the demand for these devices to make them the top two devices in the next couple of years. This will also drive the IT accessories market. In India, PCs, especially desktops, still have a good market compared to the west, where the demand has almost died. “We do not see any such declining trend in the short-tomedium term in the country, and there are many pockets where desktops are in adequate demand. In the west the demand for notebooks is also declining, which is not the case in India. This will also catapult the need for PC accessories,” reasons Anand. Until recently the IT accessories market was not organized. However, with MNCs entering the market the dynamics are changing. “I think that, with the entry of MNCs and LFRs, the unorganized accessories market will soon become organized,” remarks Ramani. “These companies have realized the potential for accessories
“A retailer can make `300 by selling a `30,000 notebook— and the same amount of money by selling an accessory worth `3,000”
“Some companies import cheap and poor-quality accessories from China. Consumers do not realize these products can be a threat to the environment”
Mohit Anand
Sandeep Ramani
MD, Belkin India Subcontinent
34
spending `5,000-`15,000 on accessories. “Vendors have given end-users a lot of options in terms of products and pricing, due to which they are willing to make reasonable investments,” explains Jyotin Shah, CEO, JS Equipment, an importer and distributor of Apple accessories.
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COO, Envent Worldwide
market focus “Consumers want energy-efficient products to reduce the negative impact on the environment, and vendors are gearing up to provide such products”
“Vendors have given end-users a lot of options in terms of products and pricing, due to which they are willing to make reasonable investments”
Subrotah Biswas
Jyotin Shah
Country Manager, Logitech India
CEO, JS Equipment
in India, and they are aggressively showcasing their products through organized retail.” What has increased interest among consumers is the fact that MNCs have come up with innovative products such as Bluetooth keyboards and mice, power pack cases for iPhones and smartphones, dual-purpose utility products (like an iPhone case-cum-bottle opener), protective cases, protective screens that prevent cracks, and smartphone cases with built-in projectors. The market for accessories for children has also increased in the last couple of years, with companies either manufacturing specialized products for this segment or selling white-label products with Disney characters to attract kids. Meanwhile, awareness about energy-efficient and quality products is on the rise, and consumers now demand low-power consumption products as well as certified accessories. “Consumers today want energyefficient products to reduce the negative impact on the environment, and vendors are gearing up to provide such products,” says Subrotah Biswas, Country Manager, Logitech India.
to the growing demand.” For example, Mumbai-based JS Equipment, which ventured into the accessories business in 2011, garnered revenue of `5 crore last year and expects to touch `8 crore in the current year. “Depending on the product there is a minimum of 30 percent margin in accessories for our partners,” reveals Shah. IT accessories for kids are another big opportunity because parents have become aware of the need for specialized keyboards and mice for their children. “According to an industry estimate, the kids’ [IT] retail market is currently worth `200 crore and expected to grow to `1,500 crore by 2016. Out of this around 10 percent caters to the demand for IT accessories,” informs Ramani. A judicious mix of products, the right branding and better product training will help partners to derive better margins. “Partners need to become a bridge between the product and the customer, they need to provide a touchand-feel experience to the customer,” advises Biswas. “They also need to invest in shop-front branding to attract new customers.”
Opportunities
Challenges
According to Gartner, Indian PC shipments, including desktops and notebooks, are expected to cross 12.5 million in 2012, a growth of 17 percent over the 10.5 million units sold in 2011. According to ABI Research, the Indian media tablet market is estimated to grow at a CAGR of 71 percent with shipments climbing to 9.66 million units in 2017. In India, a typical customer spends around 12 percent of his or her PC price on buying accessories. “With every device consumers buy at least two accessories, hence with the huge demand for tablets and PCs in India the opportunity for partners to sell accessories is also growing,” points out Ripunjay Gajjar, Country Head, Forward Industries. What’s more, the margins in the accessories business are almost equal to or sometimes even more than those in notebooks or desktops. “A retailer can make `300 by selling a `30,000 notebook and the same amount of money by selling an accessory worth `3,000,” informs Anand. Agrees Kelvan Li, Regional Sales Manager, India, Antec, “Partners can easily make a 10-15 percent margin on accessories. With the increase in consumer awareness, people are willing to spend more in the last 12-24 months. They have also become more qualityconscious, so retailers need to equip themselves to cater
The biggest current challenge is the falling value of the rupee. Since most of the accessories are imported, either completely or as components, the cost of the accessories increases as the rupee falls. To complicate matters further, the global economy is facing another slowdown, and people have become cautious about spending. This has forced most vendors to hold back on any price rise. However, some of them were forced to hike their prices, and this has hampered partner profitability for the time being. “We have tried our best to absorb the hike in input costs and act as a cushion between the hike and the customer, but after the dollar strengthened by almost 25 percent we had no option but to increase our prices,” explains Anand. For others, the biggest challenge is that the accessories market is unorganized. According to Ramani, “Some companies import cheap and poorquality accessories from China and play with the prices. Consumers do not realize that these products can be a threat to the environment.” Dead stocks are another issue for channel partners. “One of the biggest problems we face is that device models change very fast while we are unable to sell them as quickly. This makes our stocks pile up,” says Shah. n
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role model the man who won his bet He started a small-time business with `50,000 borrowed from his mother. Today, Dipesh Mangla, Director, Computers Network & Telecom, has transformed it into a renowned SI with revenue of `38 crore n Amit singh
D
ipesh Mangla, Director, Computers Network & Telecom (CNT), has been swift in customer dealings from his childhood days when he used to assist his father AS Mangla’s garment retail business. After completing his BE in Computers from Pune University in 1993, he may have continued in his father’s business had he not developed a passion for IT during his graduation. He started his computer peripherals business under the name of Micromedia after a challenge thrown by his father. A small-time business started with `50,000 borrowed from his mother, Santosh Mangla, has now been transformed into a renowned systems integrator (SI) in north India with revenue of `38 crore in FY2011-12.
The beginning Micromedia started with a small office at home, and supplied floppy drives, cartridges and IT stationery to enterprise customers in Gurgaon. Although new to the IT business, Mangla found his experience in the garment business to be helpful in doing cold-calls and acquiring customers. “My previous business experience helped me to develop confidence to build relations and convince clients,” he says. In the first year of operations Micromedia earned revenue of `15 lakh. As Mangla recalls, “It was totally a 1-man show. However, the margins in peripherals were quite low and not worth the hard work I was putting in.” One of his customers then suggested that Mangla enter the electronic components business. Looking for the next level of growth, Mangla switched to this business in 1994 and started supplying ICs, capacitors and transistors. “Importing ICs attracted about 400 percent import duty at that time. Being a stockist we garnered 300-400 percent margins on most deals,” says Mangla. This enabled the company to clock revenue of more
“While retaining large customers we started focusing on smaller ones. We believe it is necessary to acquire customers when they are small and grow with them” 38
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than `50 lakh in 1994 and `2 crore in 1996. However, things got tough during 1996 and 1997 when the import duty was gradually decreased to 20-30 percent. “This ended the high-margin era as telecom companies started planning to import components on their own,” Mangla notes. In February 1997 Mangla closed Micromedia and got into the systems building (assembled PC) business by establishing CNT in Delhi. The company started supplying assembled PCs under the CNT brand to big SIs such as Team Computers. “Because we wanted to establish a base, we leveraged on our ability to offer a credit period of 45-60 days. At the same time, we acquired direct customers to increase margins,” Mangla explains. In the first year, the company earned revenue of `4.5 crore. “Within two years we started direct billing of customers and stopped supplying to SIs. Through this, we increased our margins and hence our bottom-line,” states Mangla. In 2001 the assembled PC market in the commercial segment started declining as businesses began preferring branded PCs, hence CNT partnered with IBM to offer its commercial PC range. The company opened an office in Gurgaon in 2004 to cash in on IT opportunities in Gurgaon, Manesar and Bhiwadi which were developing as corporate and industrial hubs. In 2004 CNT supplied 350 PCs worth `1.5 crore to Vaish College of Engineering, Rohtak; 300 PCs worth `1.25 crore to IFFCO Tokio and 500 PCs worth `3 crore to GLS Films. “We also executed major deals with organizations such as Maruti Udyog, Anand Group and UTStarcom,” Mangla says. A major turnaround for the company came in 2006 when IBM sold its PC business to Lenovo. Informs Mangla, “At that time we stepped into the end-to-end solutions business and also partnered with Cisco and Symantec.” CNT executed a project valued at `1.5 crore entailing integration and implementation of server, storage and PCs for upcoming terminals of Spicejet Airlines. It also completed a server and storage integration project worth `2 crore for Yamaha Motors in 2007. “We executed various networking and server-
Role model
Current business
1997
Got into the systems building market by establishing CNT
2001
Partnered with IBM to offer its commercial PC range
2004
MILESTONES
Opened an office in Gurgaon to cash in on opportunities in Gurgaon, Manesar and Bhiwadi
2006
storage integration projects in phases for various campuses of Amity University. This enabled our revenue to grow from `12 crore in FY2006-07 to `16 crore in FY200708,” says Mangla. In 2009 the company dropped the assembled PC business completely and expanded its solutions business by adopting virtualization and associating with VMware. It also partnered with Trend Micro and Juniper for networking and security.
Partnered with Cisco and
Premium Partner Award in 2011, and the Schneider Data Center Award in 2012.
Best practices CNT implemented Sage ACT-CRM in 2011 and recently got ISO 90012008 certification. Explains Mangla, “While CRM helped us to manage human resources effectively and bring down unwarranted expenses, the ISO certification helped us locate the gaps in our business model as well as correct our financial practices and core business activities.” CNT has created an internal sales team to focus on SMB accounts. This team makes cold-calls on potential customers and tries to convert their requirements into business. “We also organize day events for CIOs/CFOs and their families on weekends. With the day full of music, dance and other refreshing activities, these events help us to strengthen our relationship with customers,” notes Mangla.
2012
2009
2007
Symantec CNT grew its topline from `20 crore in FY2009-10 to `32 crore in Completed server and storage FY2010-11 to `38 crore in FY201112. Growth in the last two years was integration project worth `2 triggered by an increased focus on crore for Yamaha Motors SMB customers. “While retaining our large customers we started Dropped assembled PC focusing on smaller ones to increase business; associated with our customer base. We believe that VMware it is necessary to acquire customers when they are small and grow with Reached a topline of them,” remarks Mangla. `38 crore According to him, the SMB focus has increased the company’s bottom-line. “These customers give you recurring Future strategy business and increased margins. The need is to Riding on its SMB focus and expertise in virtualization guide them in their pain areas and offer solutions and data center solutions, CNT is targeting revenue of around that.” `100 crore by the end of FY2013-14. The company is also Besides this, CNT expanded its presence in counting on cloud computing services to grow, especially virtualization and started offering data center designing back-up and DR. services from 2009. “We executed a virtualization project In addition, CNT started search engine optimization worth `1 crore entailing server and storage for Mother’s (SEO) and Web-hosting services in 2012. “It is a highPride. We also virtualized the data center for Amity profit business which adds significantly to the bottomUniversity to earn revenue of `1.5 crore.” line. We recently acquired Santum Learning as a customer In addition, the company completed a data center for SEO and Web-hosting services,” Mangle reveals. establishment and virtualization project valued at `3.5 CNT is collaborating with Apple for its entire product crore for a software organization in 2011. range and with Acer for its commercial notebooks and CNT stepped into cloud computing in 2011 by desktops. “In the current fiscal we expect `7 crore-8 crore offering back-up services. “We started offering back-up from Acer and about `5 crore from Apple.” and data recovery services to Sapient and Tower Vision,” says Mangla. On a personal note Amity University has been one of the biggest Mangla regards Ratan Tata as his role model for his ability customers of CNT for the last 11 years with about to inculcate honesty, professionalism and commitment in 15 percent contribution to its revenue. In 2011 CNT the organization. executed a project worth `4.5 crore entailing the He also considers his mother as the driving force establishment of a data center and the networking of behind his success. “She supported me in my darkest various campuses. hour and encouraged me to be honest and sincere, and The company has won many awards including remain committed to my business.” the IBM Best Performer Award and the Lenovo Best Mangla loves billiards and makes time for playing cricket every week. He is fairly active on LinkedIn and Facebook, and uses social media platforms as tools to build and strengthen relations with customers and peers. Riding on its SMB focus, virtualization and He drives a Toyota Fortuner and aspires to own data center solutions, CNT is targeting `100 a Bentley someday. His dream holiday destination? crore turnover by the end of FY2013-14 Mauritius. n
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39
tech focus
6
opportunities for partners in Network security
There seems to be no end to the number of threats facing customers today, from the risks associated with cloud computing to employee mistakes. But where there are risks there is scope for partners to do business n KEN PRESTI
W
hich network security threats are top-of-mind for your customers these days? A recent survey of more than 3,700 IT professionals shows there are several of them. The Information Systems Audit and Control Association, an international provider of industry information and certifications, has issued the results of a recent survey of the global security landscape, including perceptions of the most dangerous network security threats. According to the survey, in the past year 22 percent of enterprises have experienced a security breach and 21 percent have faced mobile device security issues. Here is a look at what respondents said are the most likely network security challenges they will face over the next year, including how partners might be able to get in on the action.
External hacking The good old fashioned external hacking seems almost quaint given the rapid extension of modern threats and attack vectors. But given the emphasis on these recent developments, it can be easy to take your eye off the ball regarding garden-variety hackers. 5 percent of surveyed IT professionals said external hacking is the most likely threat facing their network security over the next 12 months. For the most part, the strategy here is about keeping security suites properly configured and up-to-date. Not very exciting, we know. But it is still something that requires your ongoing attention in the never-ending quest to keep your customer’s information safe.
1
Disgruntled employees We have all heard the stories about people who had installed attacks to occur when their name disappears from the payroll, or some other attack on their employers in an illegal, or at least unethical, expression of ‘Take this job and shove it.’ This is the domain of the disgruntled employee—not to be confused with the accidental exposures committed by happy, gruntled employees otherwise in good standing.
2
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While such acts of malfeasance are relatively rare, it is important that partners identify potential symptoms and guide their clients toward policies that will help to prevent them before they occur. 5 percent of surveyed IT professionals said disgruntled employees represented the most likely threat facing their network security over the next 12 months.
Cyber attacks Cyber attacks happen every day, although only the most high-profile ones tend to make the news. The most recent types of cyber-attacks are even purpose-built by national governments for a variety of purposes such as espionage and sabotage. And some of the more famous ones, such as Stuxnet and Flame, are highly modular. That means some of the nastiest features can be lifted out of the military-grade bugs and dropped into existing malware platforms to make the more common types of attacks even nastier. That also means that as you read this, some malware author is probably using those modules to create a uber-bug that can put him on the map. 7 percent of surveyed IT professionals said cyber attacks represented the most likely threat facing their network security over the next 12 months.
3
Cloud computing Effective security for the cloud is a huge topic in today’s IT discourse, which means it is not surprising that 11 percent of surveyed IT professionals said cloud computing represents the most likely threat facing their network security over the next 12 months. Nearly every vendor has a strategy for how cloud security can be maximized, and (surprise!) that vendor’s products happen to be the focal point of truth and justice. This means that the partner is looking at a huge opportunity in helping customers to navigate these offerings and the related purchasing decisions. But that level of assistance implies that the partners have a very strong knowledge of the various risks and responses. According to industry insiders, some partner companies are doing a better job of that than others. And since one
4
tech focus of the key concerns about the cloud is that partners can become interchangeable parts, developing this expertise can be a key differentiator.
Inadvertent employee mistakes Forget about the proverbial inside job. The second biggest concern, cited by 16 percent of respondents, is accidental exposures by employees as opposed to the intentional inside job variety. These could include acts such as parking data on insecure storage sites; malware accidentally delivered by USB devices; loss of computers, phones or USB devices; and social engineering attacks in which victims are tricked into revealing sensitive information. The solution is based on more than just solid security technologies. It also involves no small measure of employee education on specific risks and how to avoid them. Look for partners to become more involved in this aspect of security as time goes on.
5
Data leakage Loss of data leads the league when it comes to IT security care-about, with 17 percent of respondents naming it as the most likely single threat facing network security in the next 12 months. And as various exploits target the seams of security coverage at the same time that the malware bugs are becoming more insidious, who can blame them? The data on the network represents a substantial percentage
6
of company value, and various compliance standards such as HIPAA and PCI have stringent requirements that can make data loss a more unpleasant experience than ever before. Thus, the topic is moving beyond its previous status as a technology-level discussion and becoming more of a business-level discussion as C-level executives of all types increasingly recognize the inherent risks.
Conclusion Of course, none of these threats exist in a vacuum, and the reality is than any number of them could be hitting your customers’ networks at any given time. When you consider that success with information security is dependent on one’s ability to approach the full range of threats, it is little wonder 19 percent of survey respondents named all of the above as the biggest threat facing network security over the next year. After all, when catastrophe strikes, customers are rarely mollified by a recitation of the attacks that did not succeed. By that point, one of them did, so the discussion turns toward what to do next. As a partner you are expected to have that solution pretty much in lock-and-load. Being fully prepared can actually help to maintain your customer relationship. Note that 8 percent of respondents actually said that none of these categories represent the biggest threat out there, so if you have got a jump start on what else might be lurking out there your customers will surely thank you. n
Clear Credible Competent Consistent Compassionate Communicative CRN Creative CRN – the 8th C of Channel Marketing www.crn.in
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channel buzz Microsoft partners collaborate for cloud
I
n what could be an ideal example of partner-to-partner collaboration, IT infrastructure and application solutions provider Techlink Infoware jointly conducted on July 6, with TechGyan, a customer event on Microsoft Office 365 named Cloud Services Event. Attended by 40 CEOs, IT professionals, marketing managers and customer service/support engineers from various industry verticals, the event was hosted at Techlink’s Andheri (in Mumbai) office. The next-generation cloud computing platform from Microsoft in the software-as-a-service stable, Office 365 comprises Exchange 2010, SharePoint 2010, Office Web Apps, Web-based MS Office, Lync Server and Office 2010 Professional Plus on desktop. Explained KR Chaube, Director, Techlink, “Office 365 productivity tools are delivered through the cloud enabling anywhere access to email, Web conferencing, documents and calendars. It is designed to meet the needs of organizations of all sizes and is the most trusted product with business-class security. We wanted to talk about the features and benefits of Microsoft Office 365 to our existing customers, and therefore invited Suresh Ramani, CEO, TechGyan as a guest speaker.” Ramani, in his trademark style, made the 1-hour session interactive, and took queries from interested customers during and after the event. The presentation was followed by a live demo of the advantages of the cloud, especially Office 365, and how it has improved productivity within his organization. Ramani, who at the onset admitted to being a hardcore Microsoft partner, zealously responded to questions comparing Google Apps
n Suresh Ramani, CEO, TechGyan, and KR Chaube, Director, Techlink Infoware at the event
and Microsoft Office 365. Said an impressed Ramkrishna Yeole from Infomedia 18 who attended the session, “It was a very good session. We learned a lot about the Microsoft cloud today.” A proud Chaube added, “Very few customers were on the cloud. But after the event 70 percent of our customers are in favor of the cloud and 30 percent are more favorable. 90 percent of the customers changed their minds after the event and will probably subscribe to Microsoft Online Services. 75 percent customers are likely to select Office 365, 50 percent are likely to select Microsoft Exchange Online and Microsoft SharePoint, while 30 percent have shown an inclination for Microsoft Lync.” n
Jayant Shete is new CMDA-Pune President
T
he Computers & Media Dealers Association (CMDA)Pune recently conducted its twentieth annual general body meeting in Goa which was attended by close to 120 members. The highlight of the event was the ushering in of the new CMDA President, Jayant Shete, who
replaced Yogesh Godbole. Shete presented the CMDA budget for FY2012-13. He informed that the association will focus on the business improvement forum, distributor forum, family events, sponsorship, charitable activities and e-waste. “The committee will have to work harder to retain the
n The Secretarial Report for FY2011-12 being presented by outgoing Secretary Ratnesh Rathi
n CMDA members visit Digisol’s manufacturing unit in Goa
association’s top position and make it stronger. I thank all the members and past presidents for giving me the opportunity to serve CMDA,” he said. Another highlight of the event was the visit to the Digisol factory where CMDA members were shown the state-of-the-art machines used to manufacture motherboards. Bharat Gopujkar, Treasurer, presented CMDA’s balance sheet for FY2011-12. Ratnesh Rathi, outgoing Secretary, CMDA, presented its Secretarial Report for FY2011-12. A brief was also provided to members about the total number of projects and events conducted by the association last year. n
To feature your company’s events in CRN, send write-ups with photographs to editor@ubmindia.com 42
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new products ZyXEL home entertainment media server
Z
yXEL Communications has launched a media server—the NSA300 series. The server allows home users to store and retrieve multimedia content. It offers HD multimedia streaming. The zMedia feature, exclusive to NSA325, is a mobile cloud designed for mobile users. With the mobile app, tasks such as configuration, playback and download can be performed remotely. The server also works with the Dropbox service to backup files or send torrent files from mobile devices (such as smartphones and tablet PCs) anywhere on the road to the NSA325–your proprietary mobile cloud. The product is priced at `17,500, comes with a 2-year warranty, and is available with ZyXEL authorized distributors. n
Transcend SSD diagnostic and maintenance tool
T
ranscend has launched SSD Scope—an advanced diagnostic and maintenance tool that helps SSDs to run fast and error-free. Developed for use with Transcend SSD products, SSD Scope can determine the condition and optimize the performance of an SSD into a single user-friendly tool. The software monitors the SSD’s health status and includes smart technology to detect possible drive failures before they occur. Users can also perform a diagnostic scan of the drive for a more in-depth analysis. The Secure Erase function erases contents and also ensures that previously erased data cannot be retrieved even with sophisticated recovery tools. For Windows 7 users, SSD Scope includes a tool for enabling TRIM to maintain optimum write speeds and prevent long-term SSD wear. Moreover, the SSD Scope software suite includes a firmware update function for continued operation. The product is available with Transcend SSD products, and can be downloaded online for free. n
OCZ Agility 4 SSDs
O
CZ Technology has launched the Agility 4 SSD series that delivers 6 Gbps SATA III interface speed. It is powered by an Everest 2 controller platform. The series delivers transfer rates of up to 400 Mbps, and up to 85,000 random write IOPS. In comparison to the first-generation Everest controller platform, the transactional performance of Everest 2 doubled under typical use case scenarios. The Agility 4 SSD series offers endurance and reliability without internal data compression. The dual core controller architecture also includes an advanced error correction code engine and wear-levelling auto encryption. It is available in a boot-drive sized 64 GB model, with up to 512 GB capacity for mass storage. The product is priced from `8,000 to `35,000, comes with 3-year warranty, and is available through OCZ authorized distributors. n
Elecom multi-function Bluetooth keyboards
E
lecom has launched multi-function Bluetooth keyboards, the TK-MBD041 series for Apple and Android devices which allows typing, talking and listening in one device. It has an in-built mike with speakers to receive incoming calls and talk, and an external Bluetooth headset. The product is compatible with a hands-free speech profile, and has a Receive Call and End Call button. There is an Organic EL display which shows the battery level and wireless pairing status, and also displays the number of incoming calls. Besides, it displays volume levels as well as play/ pause in the music mode. There is also a vibration function for call alerts. It has an in-built lithium ion battery which can last for about three days. The product is priced at `11,899, comes with a 1-year warranty, and is available with Elecom distributors. n
The products featured here have not undergone any benchmarking or testing. The trailers contain information provided by vendors and distributors. To feature your company’s products in CRN, send write-ups with photos to editor@ubmindia.com
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43
shadow ram GET
The mother of all tenders
T
he Uttar Pradesh government is expected to float a tender for around 18 lakh notebooks and 26 lakh tablets this month. The more interesting news is that some resellers are trying to influence the powers in Lucknow to make it a tablet-only tender. “We would prefer a deal where the government buys tablets. It is likely that the deal will be won on price, and that the supplies would be some cheap tablet that is likely to fail sooner than later. But what would happen is that a lot of students will get exposure to computing technology—and will get hooked,” explained a partner from Delhi who is closely following the developments. “A lot of families in UP have buying power but do not invest in PCs or laptops,” he added. He cautioned that the laptops could be misused and sold through backdoor channels without reaching students. This would be dangerous for partners in Delhi, Rajasthan, Haryana and other neighboring states. Akhilesh Yadav, the UP Chief Minister, has requested the Central Government for a package of `90,000 crore to fund development projects in the state including the laptop-tablet purchase scheme. The government has sanctioned `45,000 crore so far. n
Personal
“I’d make education mandatory” Naved Sayed Shafi is currently Vice-president, SME & Channel Business, AGC Networks. He has 18 years experience providing strategic planning, product marketing and channel management leadership
Naved Sayed Shafi
If not in the IT industry: I would have worked with a private airline or been an Indian Air Force pilot. Biggest passion: Good food
and singing. Behind the wheels: Skoda Laura AT. Gadgets I can’t live without: iPhone and iPad. Weekends are for: Family and friends, sleep and rest. Favorite holiday destination: Goa. Hate the most: Hypocrites and dishonesty. Favorite movie: Scent of a Woman. Favorite stars: Dilip Kumar, Al Pacino, Daniel Day Lewis, Dev Anand, Jack Nicholson, Amitabh Bachchan, Russell Crowe, Madhuri Dixit and Meg Ryan. Role model: All exceptional people in my family, friends, supervisors and colleagues. Ultimate ambition: To explore the people, culture and history of as many countries in the world as possible. Wildest thing I have ever done: Deep-sea diving up to 30 feet without formal training. Thing I most want to do in life: Contribute something worthwhile to society. If I became the PM: I would make higher secondary education mandatory, change the archaic laws with respect to citizens’ welfare, and flush out corrupt people. Celebrity I would like to spend a day with: Angelina Jolie, to ask her how she balances showbiz, family and society so effectively. One person I would like to meet and why: Warren Buffett, to learn the art of making a fortune while keeping things simple. Deepest and darkest fear: Loneliness. n
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