ARN Magazine - September 2018 by ARN - Tech Channel News

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SEPT 2018 | Vol. 23 No.6

IN THIS ISSUE ANDREW FOOT CHRIS GATFORD CHRISHAN MENDIS

CUSTOMER VALUE

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Contents

Sept 2018 VOLUME 23_ISSUE 06

Thought Leaders 8

Thriving in the partner ecosystem Insights from Matt Chamley of VMware.

Enabling the channel to provide great value Insights from Shant Soghomonian of

Dell EMC.

Insights from Marina Fronek of HPE.

Employee centricity key to customer centricity

Nancy Rademaker has always and

Partners must abandon archaic sales and marketing methods

above all passionately focused upon

Acquiring net new customers

people: how technology influences

has always been a top priority for

their behaviour, how it helps them

the channel, yet partners remain

share knowledge and how it enables

painfully unable to execute on such

them to create and innovate.

strategies.

New buyers equal new rules

Market heating up as infrastructure investments increase

The channel

A sizeable customer shift in

is trapped in a

spending during the past 12

continuous cycle

months has placed infrastructure

of acknowledging

technologies at the heart of the

change yet failing

buying cycle.

to respond.

34 How the channel needs to change

MSP of the future: solving the problems that didnâ&#x20AC;&#x2122;t exist in the past Insights from Rob Rae of Datto.

Analysis 04

Accelerating enterprises toward being edgecentric, cloud-enabled and data-driven

Today, most IT-related buying decisions are made by nonIT staff. At the same time, most technology solution are moving to cloud-delivered models.

34 Columns 52

Channel Chat with Google

Capital Gains

Channel Confidential arnnet.com.au Sept 2018

02 Editorial AD INDEX

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PRESIDENT AND PUBLISHER susan searle susan_searle@idg.com.au

EDITORIAL editorial director: james henderson james_henderson@idg.com.au

head of news: samira sarraf

s the final strips of red and orange flickered over the horizon, and the last of the 300 technology leaders departed, EDGE 2018 came to a close. Stretching five days, the expanded destination conference continues to transform at pace, mirroring the breakneck change which continues to engulf the channel. This year, customer value was centre stage, front and centre in a market reacting to new buyers and behaviours. Yes, partners have craved the acquisition of new business since time began, this concept in isolation is nothing new. But as EDGE 2018 uncovered — during thought-provoking sessions, in-depth local research and high-level networking — providing a roadmap to the promised land of customer acquisition is what gets the channel cooking. Partners know that spend is moving away from the CIO; partners know the DNA of new technology buyers and partners know they must communicate differently to attract new business. But, and it’s a big but, they are simply not transforming at pace. “New buyers equal new rules,” observed Mark Iles, executive analyst at Tech Research Asia. “This is a trend we’ve been seeing for a while and for partners, they already know this. “But, knowing this and actually acting on this represent two different behaviours entirely.” As outlined via EDGE Research, customers remain frustrated by a channel still talking technology speak, still selling product features and still offering general answers to specific problems.

Sept 2018 arnnet.com.au

“Partners say they are changing, but they’re actually not,” said Iles, in a direct challenge to the channel. Hence EDGE 2018, designed to provide tangible steps for technology providers seeking innovation but lacking direction. In this issue — encapsulating key takeaways from Hamilton Island — we document what customers want from partners, where customers find partners and how customers buy from partners. Spanning sales, marketing and technology, alongside leadership, operations and recruitment, a checklist for customer value is now available for the channel. “With the smartphone as the most powerful tool ever, customers have literally put themselves in the centre of the world and if you don’t follow them into this new reality, chances are you become obsolete,” said Nancy Rademaker, during the opening keynote address. Adhering to the concept of “engage individually, connect to many”, Rademaker stressed the importance of new thinking through the supply chain, in a bid to “survive the digital tsunami” ahead. With EDGE 2018 over, and the data clear, the onus is now on partners to act. This issue, and the customer value checklist within it, can help in the first step.

JAMES HENDERSON EDITORIAL DIRECTOR – ARN

samira_sarraf@idg.com.au

journalist: julia talevski julia_talevski@idg.com.au

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N ow Av a i l a b l e t h r o u g h o u r A u t h o r i s e d D i s t r i b u t o r s , We s t c o n a n d V E x p r e s s

04 Keynote EDGE 2018

S olu

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tio n a n d c o n c e p ts

a n d p ro c e s is ti c s ses M an ag e m e nt

m p a n y c u l t u re

riv e n b e h a vi o ed ur c u d s t. e ire xp es D

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I had the honour of delivering the opening keynote speech at EDGE 2018 on Hamilton Island, where I talked about extreme customer centricity and the fact that companies need to embrace this to survive the digital tsunami. With the smartphone as the most powerful tool ever, customers have literally put themselves in the centre of the world and if you don’t follow them into this new reality, chances are you become obsolete. In his book Managers the Day After Tomorrow, my business partner Rik Vera uses the customer centricity model (right), showing that you must build a strategy that really starts with the desired customer experience. It requires full adherence to new principles to enable a truly customer-centric operation mode: a shift to value-driven behaviour, an accompanying culture with new KPIs, a new management style and an organisational structure that allows for more self-steering and working in teams.

CEX-EX The desired customer experience (CEX) should be the starting point in everything a company does. The first and most important interface — hence the next circle — is the employee. As every customer and every desired customer experience is different, the employee can’t be framed by top-down processes.

EMPLOYEE CENTRICITY KEY TO CUSTOMER CENTRICITY WITH OVER 20 YEARS OF EXPERIENCE IN IT AND TRAINING, NANCY RADEMAKER — PARTNER AT NEXXWORKS — HAS ALWAYS AND ABOVE ALL PASSIONATELY FOCUSED UPON PEOPLE: HOW TECHNOLOGY INFLUENCES THEIR BEHAVIOUR, HOW IT HELPS THEM SHARE KNOWLEDGE AND HOW IT ENABLES THEM TO CREATE AND INNOVATE.

Sept 2018 arnnet.com.au

Instead, employees need to be really empowered to help, serve and delight customers always and under all circumstances. So, processes need to be replaced by value-driven behaviour. Employee centricity is a natural result of really putting your customer in the centre, as digital processes and procedures will never delight the customer.

EDGE 2018 Keynote

Figure 1 Rik Vera’s model of extreme customer centricity

(below and right) Nancy Rademaker (Nexxworks) delivering the EDGE 2018 keynote

Value-driven behaviour? But what really is value-driven behaviour? As human beings, we always have a strong urge to know and measure if we are doing things right. Employees have the tendency to look towards their organisation to measure or judge them, hence organisations tend to put extensive performance management systems in place.

Companies build scenarios: if A happens you need to do this, if B happens you need to do that. The big question is, if it is not processes and procedures, what is it that makes employees know whether they are doing the right thing or not? How do we really know we are doing the right stuff? The answer is simple: it is value-driven behaviour. Zappos (an Amazon company) is a perfect example of a value-driven company; people are trained for four weeks on the values of the company and how these translate into value-driven behaviour. Two of their most important values are “deliver WOW through service” and “have fun and create a little weirdness”. This means that employees are empowered to decide for themselves what it takes to WOW the customer, they are even stimulated to colour outside the lines to achieve this, no matter how much time, energy or even money is involved. How to sustain a business model like that? If you go back to the model, one of the outer circles is logistics, which needs to be of the highest level to support this customer-centric behaviour. At Zappos, only three per cent of all transactions need customer service support. Next to that, their famous customer support is not being considered a cost centre, but as a non-expensive marketing tool. Zappos is known as a very customer-centric company that is fun to do business with. Although traditional companies refer to their employees as “human resources”, the rate of disengagement amongst employees is sky high. According to the Worldwide Employee Engagement Crisis research, it is as high as 87 per cent. No wonder! Their idea of an employee is still close to that of a robot: someone who does what they are being told, who works on similar tasks every single day, and is completely interchangeable. It is easy to understand that employees at a value-driven company like Zappos feel

“If A happens you need to do this, if B happens you need to do that...”

CHRISTINE WONG

much more engaged. First their behaviour is more about why than about what, second their reward is variable since it is outside-in, coming from a happy customer. Not unsurprisingly, research has shown that there is a very strong linkage between employee behaviour and attitude and customer satisfaction. High time for companies to change their perspective on employees and regard them as their most important assets!

Culture is eating strategy for breakfast In one of my blogs (Why Digital Transformation is useless without a Cultural Shift), I discussed the need of a strong culture to accompany this new value-driven customer-centric approach. Culture nourishes this behaviour; it stimulates, rewards and keeps inspiring people to continue to satisfy customers. You need to be persistent in doing this, the temptation is strong fall back to the ‘good old recipes’ of strict processes and procedures. You need to move from a traditional culture of control to a culture of trust.

Management for the new normal The most important task for the manager is not to run ‘checklist management’, but to keep the culture alive. You can’t go on being a process-driven top-down organisation anymore. If people understand the values, if

arnnet.com.au Sept 2018

06 Keynote EDGE 2018

you empower and trust them to do so, they will do what they need to do. There is no standard recipe for companies on what their organisation should look like. We all start from employee centricity and our core values, and of course these are very specific to every organisation. And with these different ‘ingredients’, a single recipe is just not feasible.

Organisational structure is people-to-blueprint Your core values are not just nice slogans to hang on your office walls, they are non-negotiables, they are your culture’s foundation. Every single value comprises desirable behaviour and employees need to be fully aware what type of behaviour is aligned to the set of core values. And yes, in the end this behaviour results into new customer-centric KPIs.

Sept 2018 arnnet.com.au

Values and behaviour shape your culture and as we learn from Zappos CEO Tony Hsieh, it is what you should hire and fire upon. The recruiting process will change dramatically as well. It is no longer about merely having the right diplomas or experience, you want to hire people that first and foremost fully support all the company’s values. That’s exactly why Zappos offers $2000 after four weeks of on-boarding not to come working for the company if one doesn’t feel comfortable with the core values. Traditional companies start from the blueprint. Employees are trained to fit within this framework and are hired based on blueprint’s criteria. In an employeecentric organisation, people are hired based on companies’ values and should be able to develop their own very specific talents. Employees should no longer fit the blueprint; the blueprint should fit the

employees. Let employees develop themselves in what they are good at, not just in what they may lack. The blueprint will no longer be something employees are forced into, the blueprint will be the resultant of all combined talents within the organisation.

Technological and physical environment Which collaboration tools you are going to use, to what extent you allow flexibility of work in time and space, results from extreme customer-centricity, employeecentricity, culture, management style, blueprint and how we implement that blueprint. They are NOT the means to get there, they are the tools to shape it. Culture decides the tools, not vice versa. The right tools ENABLE customer-centricity, tools never CREATE customer-centricity.

EDGE 2018 Keynote

“Leadership is more challenging than it has ever been”

Engaged customers bring profit. Employees are given all opportunities to develop their specific talents and the company takes on the responsibility to maximise the impact of those developments on the results. Needless to say, leadership needs to change as well. The true new leader is a guiding steward. They do not assign topdown tasks, they support employees to live the values and creates and supports the customer-centric culture. This true leader ACTS:

A C

Nancy Rademaker (Nexxworks) delivering the EDGE 2018 keynote

New leadership

Figure 2 adapted version of Rik Vera’s model from the perspective of employees

ch Te

lo no

gic a

they are Coaching, they move from ‘command and control’ to ‘inspire and engage’, establishing a move from assignments to commitments they are Transparent, and transparency creates trust they are Sharing, and when information is shared freely, a truly collaborative culture is supported

l a n d P h y sic al E n

is a tio n al S tr u c t u gan

viro

d i n g S t e w a rd s h i p G ui a n y C u lt u p m re Co n e b v i e r hav d io lu e ur Va c u d s e t r . i e s xp e D

What does all this mean for you as a business leader? Leadership is more challenging than it has ever been. And it is different from what it used to be. Management and organisational structure are a result of a customer-centric culture. Profitability in the new normal is to move away from traditional KPIs to customer-centric ones. Your highest assets are not just customers, they are the SATISFIED customers: they buy more, they buy more often, they buy at a higher price and they serve as your sales and marketing department. It is the good old balanced scorecard, but with new elements. The value-chain is simple. Employees fit the core values of an organisation, they do understand the higher purpose and behave according to the values. They feel engaged and can engage customers.

T S

they are Authentic, they cannot pretend to live the values, they need to BE the values of the company

arnnet.com.au Sept 2018

08 EDGE 2018 Thought Leader

Own your customer’s outcomes Partners that take a customer centric perspective and integrate the needs of their customers with their own agendas, are on

Matt Chamley (VMware) and James Henderson (ARN)

the right track towards placing the building blocks of trust in their relationships. Let me clarify – there are still quotas and targets to achieve, but partners need to ensure that of their customers come first. The equation is simple – when a customer knows a partner has their best interests at heart, agreements are forged with trust, relationships are strengthened, and sales quotas are met with greater ease. I experienced this in a previous customer role, where limitations to our system capacity was impacting business. One of my partners at the time, VMware didn’t just seek a short-term solution, they wanted to find one that was flexible enough to meet the need of future growth. In demonstrating an understanding of my business, the partnership became strategic and their counsel was sought due to the trust that had been built.

Thriving in the partner ecosystem through new channels of success MATT CHAMLEY — DIRECTOR OF TECHNOLOGY ACROSS AUSTRALIA AND NEW ZEALAND AT VMWARE — REFLECTED ON PAST EXPERIENCES AS A CUSTOMER TO DRAW UP A BLUEPRINT FOR FUTURE PARTNER SUCCESS DURING THE THOUGHT LEADER TRACK AT EDGE 2018.

Sept 2018

arnnet.com.au

Diversify your metrics of success Ask yourself this: Does your team place sales meetings over and at the expense of relationship-building ones? Whereas I’m not discounting the importance of sales, partners should understand transactional success isn’t the be-all end-all for their success. Partners should seek to position themselves as thought leaders and subject matter experts within their relationships. Their teams in turn, must be empowered to invest the time and focus required to provide advice and technology recommendations that would benefit a customer – even if it doesn’t result in a sale. Of course, not all customers appreciate such proactiveness, and partners should adapt accordingly. Sales teams should be incentivised to pursue such avenues while removing perceptions that success is primarily equated to direct sales numbers. Building a meaningful relationship not only helps in the short-term but is ultimately an investment in future sales opportunities. Is it really worth building a closer relationship with our customers? The answer is a resounding yes, not just because of the ease of clearer lines of communication between partner and customer, but because a partnership that is based on an effective and mutually beneficial relationship is what sets a partner apart from the rest. In today’s business world, where competition grows tighter by the day, that advantage itself is worth all the effort it takes to get there. 

PHOTO | CHRISTINE WONG

Prior to joining VMware, my previous roles in other organisations have exposed me to a wide spectrum of industry partners and the experience has taught me the importance of building strong, trust-centric relationships. For any organisation, the benefits are two-fold: besides improvement in service, a closer relationship with partners avails customers to expertise that bolsters strategies and boosts operational efficiencies across the board. As partners, the greatest value lies in knowledge of the industry and vertical markets. This value elevates partners above mere vendors and service providers, turning them into trusted advisors who are indispensable experts and unique solution providers for their customers. This pays off in the long run – customers that trust the words of their partners are also more inclined to accept their solutions. But this level of interaction is only possible when time, effort and resources have been spent on both sides, creating a two-way conversation that transcends the average transaction-based relationships most of us have with our customers.

10 Customer EDGE Research

NEW BUYERS EQUAL NEW RULES CHRISTINE WONG

THE CHANNEL IS TRAPPED IN A CONTINUOUS CYCLE OF ACKNOWLEDGING CHANGE YET FAILING TO RESPOND, WITH EDGE RESEARCH UNCOVERING MISALIGNMENT BETWEEN CUSTOMER DEMAND AND PARTNER ACTION — JAMES HENDERSON SHARES KEY FINDINGS.

Sept 2018 arnnet.com.au

The emergence of new technology buyers within organisations is nothing new, but the channel’s inability to act on change continues to hamper partner progress. Because as the grip of the IT department loosens, technology providers are failing to capitalise on the influx of sales, marketing, HR and finance personnel taking control of the purse strings. Sentiment among the channel differs however, with the supply chain confident that change is in the air and transformation is underway. But as EDGE Research highlights, a sobering picture for partners is emerging. “New buyers equal new rules,” observed Mark Iles, executive analyst at Tech Research

Asia. “This is a trend we’ve been seeing for a while and for partners, they already know this. “But, knowing this and actually acting on this represent two different behaviours entirely. We find that when partners are presented with such data, the response is almost always ‘yeah, yeah, we know’. “When we speak to the customers however, the common line is that technology providers are still talking in technology speak.” In short, Iles said new-look buyers are struggling to understand or engage with partners, due to the channel’s inability to change the lines of communication. “Partners say they are changing, but they’re actually not,” Iles cautioned. “Partners say they know the line of business buyer and that they

EDGE Research Customer

What do customers want from partners?

Customer

Partner

They understand my customer

Easy to engage / do business with

They understand my business

Comprehensive end-to-end support

Deep solution expertise

They understand my business

Mark Iles

“Partners should be hiring staff from the customer side”

Tech Research Asia

are focused and speaking the right language, but our customer data challenges this. As outlined via EDGE Research findings — profiling customers, partners, distributors and vendors across Australia and New Zealand (A/NZ) — 65 per cent of partners claim to be “ready and selling” customer experience solutions, highlighting misalignment between channel expectations and market reality. “Are they really?” questioned Iles. “Because customers don’t agree with this statement.” Specifically, and according to findings, buyers want partners to “understand my customer”; “understand my business” and provide “deep solution expertise”. Such demands differ to those viewed by the channel however, who consider the key

hallmarks of customer value to be centred around an ability to be “easy to engage and do business with”; to provide “comprehensive end-to-end support” and to demonstrate “understanding of a customer’s business”. Delving deeper, changing buying patterns demand a change in behaviour and approach, with customers encouraging partners to start “actually talking to us instead of telling us”, while also housing the flexibility to “go off script” and present new ideas and strategies. Therefore, customers are marking partners down for “not understanding the business problem”; “poor account management and communication” and “not providing business case support”. And in a market filled with newlook partners — spanning specialists, developers, agencies and consultancy firms among others — the traditional channel

crop can ill afford such mistakes. “There’s still a difference between what partners say they’re doing and what they are actually doing,” Iles acknowledged. “The ability for partners to change how they speak and communicate with buyers is difficult. “And this issue comes back to the fact that partners still employ the same sales people. Traditional partners are unlikely to fundamentally change so they either need to re-skill their current base of sellers, or bring in new blood. “Partners should be hiring staff from the customer side, it’s crucial to have a different perspective in the business.” For Iles, re-skilling and recruitment will form crucial factors in a partner’s ability to engage with new customers in new ways — resulting in some difficult internal conversations, if required.

arnnet.com.au Sept 2018

12 Customer EDGE Research

Top mistakes partners make

2017

2018

1 Selling product features not business value

1 Not understanding the business problem

2 Not understanding the business problem

2 Poor account management/communication

3 Not providing sufficient business case support

4 Poor account management/communication

4 Selling product features not business value

5 Not providing competitive pricing

6 Not providing suitable customer references

6 Not understanding our timing for procurement

Customer usage of partners

44%

Partner satisfaction: Up over last 12 months

43% 40%

of customers will increase the number of partners they use in next 12 months “Looking for specialists with proven experience”

15% 2% Increased significantly

Increased slightly

Sept 2018 arnnet.com.au

Stayed the same

Decreased slightly

0% Decreased significantly

“The lens partners should put on their staff is that, can you charge for your sales people today?” Iles explained. “You might not want to or plan to do, but if you did charge, would buyers pay for it? That will be your answer as to whether you need to re-skill or replace staff. “Can your staff speak this new customer language? Do they know enough about a particular solution or industry? Once you’ve worked through this filter, the people that don’t talk the traditional technology speak will become the hires of today and the future.” Of encouragement to partners however is news that 44 per cent customers are planning to increase the number of providers they use within the next 12 months. Specifically, 15 per cent of end-users plan to up the partner ante “significantly”, with only two per cent of customers expecting to reduce the number of outsourcers in the business. “The market is buoyant and budgets are increasing but spending patterns and decision makers are changing,” Iles added. “Traditional IT buyers are being surrounded with decentralised technology business representatives with a focus on operational outcomes. “Specialisation by industry and/or solution continues to be more important than product expertise.”

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14 Customer EDGE Research

What customers want partners to START doing

“Provide advice and recommendations, with insight into your needs

“Actually talking to us instead of telling us”

“Go off-script and just talk to me normally”

“Talk directly when they have a problem”

Investment Priorities: Emerging Tech

Customer 2018 1

Automation

Chatbots

AI / ML

Partner 2018 1

Automation

AI / ML

Chatbots

Sept 2018 arnnet.com.au

“More face to face”

“Understand our business” “Provide various price models”

“Be more proactive and innovative”

“Price on results”

“Better communication”

Specialise at the front-end, automate at the back-end During the next 12 months, 25 per cent of customers plan to deliver more projects and programs of work than the year previously, placing partners in pole position to capitalise. Yet to maximise end-user appetite for innovation — and crucially, differentiation — the channel must look from within to instigate change. In short, partners must specialise at the front-end and automate at the back-end. “Specialisation at the front-end is not just the service offering,” Iles explained. “It’s not just what you build and how you take it to market. “It’s how you build and the messaging from your website and the voice of your sales team.” For Iles, the ability to specialise and essentially “know what you’re talking about” is now of fundamental importance to partners,

echoing earlier findings centred around speaking the new language of the customer. “This is an ongoing trend that we’re starting to see,” he added. “Now’s the time for partners to really start thinking about what they offer on top of a vendor product. Simply reselling the technology is no longer enough, and I think the channel is starting to grasp that. “The play now for partners is around providing real differentiated solutions in the market, solutions that only they do and solutions that will ensure they stand out for the customer.” But while specialisation is key, Iles cautioned against partners executing such an approach in isolation. “Automation at the back-end has to also be in play for this entire model to work,” he said. “Automating processes is key because every

EDGE Research Customer

AI / Machine Learning Use cases • • • • • •

Data Security Personal security Marketing personalisation Financial trading Healthcare Fraud detection

39% We have plans to evaluate in the next six

23% We are already evaluating it

months

8% We have no plans to evaluate at this point

10% We have no plans to evaluate in the next 13–24 months

customer a partner acquires, should now be seen as a customer for life. “This is the only way for partners to think about their business operations moving forward. It’s imperative to automate at the back-end because partners can’t be having excess costs. “If you’re adding a customer at the frontend, you must be able to do this without adding any human resources at the back-end.” Iles said that on balance, partners acknowledge this but overall, the channel continues to be driven by “very manual” processes. “There’s an acknowledgement but little change,” Iles said. “Partners add a customer and then add a support engineer or perhaps even 20 per cent of a support engineer. “But that equation doesn’t work and it unravels pretty quickly as a strategy. The goal for partners must be using technology smartly at the back-end to automate everything and turn staff into billable resources. “Partners have to start looking at ways to better automate processes but as history shows, the channel isn’t very good at this.

“Of course, this isn’t an easy process otherwise everyone would already be doing it, but the use of artificial intelligence [AI] and automation could be a crucial differentiator for partners. “The benefits of these technologies could be huge to the channel because partners can’t continue with current processes and systems.” Within the context of emerging technologies, both partners and customers are aligned in prioritising automation as a key offering in 2018 and beyond. Likewise, further alignment comes through the planned deployments of AI, machine learning (ML) and chatbots — ranked within the top three leading investment priorities in the years ahead. For customers, 89 per cent of businesses believe that AI and ML will have some kind of impact on operations within the next 12 months, emphasising a shift from blue-sky ideas to realtime deployments. Specifically, 23 per cent of customers are “already evaluating” the use cases, with 39 per cent “planning to evaluate within the next six months” — spanning data security, marketing

20% We have plans to evaluate in the next 7–12 months

personalising, financial trading and healthcare solutions. With the penny yet to fully drop among the partner ecosystem however, Iles urged the channel to adopt such an approach more “aggressively” in the future. “Partners have always been too focused on the top line rather than the bottom line,” he added. “Automation should take care of the bottom line and investing in technology in the long-term should be a priority. “Because partners can then lower the costs of doing business with the customer and lower the costs of delivering a service to that customer.” Tech Research Asia, in conjunction with ARN and Reseller News, created three unique and correlated surveys to analyse trends and alignment between customers, partners and vendors in Australia and New Zealand. 286 respondents including IT decision makers from a broad range of industries and business sizes, traditional and ‘new’ partners and a broad mix of vendors and distributors took part in the online survey from May through to July 2018. 

arnnet.com.au Sept 2018

16 EDGE 2018 Thought Leader

Shant Soghomonian (Dell EMC)

they’re equipped for the challenge. In the last financial year, more than 20,000 partners earned 100,000 credentials across topics like high performance computing, data analytics and security. We provide partners the same access to the training modules as Dell EMC’s internal sales team because it’s important to work together as one team.

Looking for a trusted advisor?

Enabling the channel to provide great value SHANT SOGHOMONIAN — GENERAL MANAGER (ACTING) OF CHANNEL AUSTRALIA AND NEW ZEALAND AT DELL EMC — OUTLINES HOW PARTNERS CAN DELIVER ON THE PROMISE OF CUSTOMER VALUE. The rapidly evolving pace of technology and the surge in the amount of data we have is creating new challenges for the modern business environment. Many leaders are now looking to emerging technologies to solve these problems. Our Realise 2030 research shows that business leaders want these technologies such as artificial intelligence, virtual reality and software-defined to become a standard business tool. They can help predict customer demands, provide immersive customer experiences and reduce outgoings. With digital transformation top of mind for every business, it was no surprise that it was a hot topic at EDGE 2018.

Sept 2018 arnnet.com.au

During the conference the Dell EMC channel team had many conversations about the important role of the channel to drive this change. For our partners to succeed we need to enable them, whether it’s through a range of financing options, technology training or one of our specialised partner programs. With these elements in place, it’s easier for the channel to become the partner the modern business environment requires.

From technology to business Digital transformation is speeding the pace of technology, yet two thirds of business leaders say they’re held back by the need for more digital vision and strategy. For them, the race is on to implement solutions that will solve an array of problems. The knock-on effect for channel is they need to quickly get up-to-speed with new offerings and be able to show customers what their future could look like. We’ve seen a shift as partners evolve from technology advisors to business advisors and Dell EMC is here to ensure

Programs like the Enterprise Preferred Channel Program, which will soon roll out to our commercial partners, couple partners with a trusted advisor. This technical expert is available to work with the partner on strategic planning and throughout the sales journey as we target new customers and drive growth. By identifying areas of opportunity, we all have a clear path to travel. The feedback we received from partners drove this program. We’ve listened to what the channel wants; this includes competitive pricing, compensation protection and backend rebates.

Accessing funding to transform Becoming an expert in the technology is only half the battle for a partner to convert a successful sale, which is why we offer the channel access to Dell Financial Services (DFS) with financial options to suit every size of business across the full Dell Technologies portfolio. And the best news is that partners financing through DFS grow their business up to two times faster. With uncertainty of where the world is heading and what technology is needed to succeed, obtaining upfront investment to start digital transformation can be difficult. By being able to provide a financial plan, we are giving our partners another boost to convert the sale. This combination of technical training, specialised programs and financial support means Dell EMC is in a unique position to be able to provide partners with the skills they need to support digital transformation. As we head into the future, we will continue to foster our relationships, drive sales and add value to our partners. 

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18 Partner EDGE Research

PARTNERS MUST ABANDON ARCHAIC SALES AND MARKETING METHODS CHRISTINE WONG

ACQUIRING NET NEW CUSTOMERS HAS ALWAYS BEEN A TOP PRIORITY FOR THE CHANNEL, YET PARTNERS REMAIN PAINFULLY UNABLE TO EXECUTE ON SUCH STRATEGIES. CITING EDGE RESEARCH FINDINGS, JAMES HENDERSON UNCOVERS A DEEP-ROOTED DISCONNECT BETWEEN PROVIDERS AND BUYERS.

The sales and marketing methods that have dominated the channel for decades are outdated, archaic and bordering on obsolete, with customers turned off to traditional techniques. A damning assessment of partner capabilities perhaps, but EDGE Research findings highlight a growing disconnect between how partners attract, acquire and engage with end-users. Driven by disconnected yet longestablished practices, customer dollars are being diverted away from partner purses through legacy sales tactics and a perpetual cycle of marketing mediocrity. “Customer acquisition and engagement is the new sales and marketing,” said Mark Iles, executive analyst at Tech Research Asia. “Partners must rethink how they go to market because so far, they haven’t reinvented themselves. “Most partners have head of sales and head of marketing roles but today, those titles make no sense. They shouldn’t have either because they are very traditional approaches, the focus should instead be around creating customer acquisition and

Mark Iles (Tech Research Asia)

Sept 2018 arnnet.com.au

EDGE Research Partner

engagement positions. “This isn’t telesales, partners should be doing very specific targeting of customers with content that is directly relevant to them. And then once in a sales situation, ensure you have people capable of understanding the solution.” According to Iles, partners must deepen focus on customer acquisition, alluding to EDGE Research findings which emphasise a longer engagement cycle between the channel and the end-user. “When partners acquire a customer, this customer must be seen as a customer for life,” added Iles, referencing earlier findings. “Partners must look at customers through the lens of a telco — think about the cost of acquisition and the life-time value. “If a partner adds a customer, it might take them nine months to get them onboard. But they will be with you for five or six years, perhaps even life, and they will be paying $10,000 per month. Those are the numbers that are important because this is a new game the channel is playing.” Therefore, and in acknowledgement of such a shift, Iles advised partners to stop

“Customer acquisition and engagement is the new sales and marketing” thinking about sales and marketing in conventional manners. “Once you’ve acquired those customers, partners must ensure they have an ongoing engagement strategy in place,” Iles said. “So, stop thinking about sales and marketing and hammer home the values associated to customer acquisition and engagement.” As outlined via EDGE Research, 65 per cent of partners claim to be “ready and selling” on the promise of continued customer experience, with one provider leveraging management tools to gauge enduser loyalty and satisfaction levels. “Last year we implemented NPS [net promoter score] in our organisation to measure client experience for all our projects and managed services,” said one partner during the survey.

A further 16 per cent of partners are “ready and discussing” ways to improve customer experience, with 11 per cent expected to follow suit within the next 12 months. “This is a great example of partners thinking about their customers differently,” Iles said. “Every partner should implement some kind of NPS because this will impact whether your customer retention will increase or decrease. “If you’re moving towards customer lifetime value and not just banging deals out, you must also focus on customer engagement. Partners must assess how they communicate with customers on an ongoing basis and communicate much more like a vendor does. “There needs to be a much stronger lens on that lifetime journey element of the customer, rather than just driving sales. It

How do partners acquire customers? Referrals from existing customers Our own website/SEO/ SEM content marketing Our own events e.g. seminars, roundtables Direct sales Leads from your key vendors Referrals from other partners 3rd party events e.g. vendor events, industry conferences and trade shows Telesales

#1 Priority #2 Priority #3 Priority

arnnet.com.au Sept 2018

20 Partner EDGE Research

has to be a more considered approach.” In looking back on more than 30 years of market disruption, Iles acknowledged that historically, partners have been strong in servicing customer accounts. For many in the channel, such strength is a badge of honour, a key differentiator in an ecosystem bursting at the seams. “Account shouts spring to mind,” Iles recalled. “Basically, whoever shouts the loudest picks up the work but the approach has to be much more considered now. There’s more to it than simply closing deals.” Because according to Iles, having a strong reputation and a core customer base “doesn’t count for much today”, in a market made up of new buyers with new priorities. “Unless partners are relevant today, that’s no longer important,” Iles warned. “Being relevant forces partners to focus more than they ever have done previously, assessing what they do well, what market they want to aim for and which customer they want to target. “Partners might be looking to add 10 new customers each year and each one of

Mark Iles (Tech Research Asia); Frazer Scott (Plan B) and James Henderson (ARN)

those customers is significant. Then that might be all you need to do each year. “Customers should look a certain way, a strategy to chase them down should be in place and the result is that they will stay with you for the long-term. More customer obsessed behaviour is required from the channel to trigger this change.”

Findings customers Across the channel, partners prioritise referrals from existing customers when acquiring net new business. Such an approach is also complemented by leads generated through a partner’s own website, search engine optimisation and content marketing, ahead of events such as

How do customers find partners? 24%

Web search / Word of mouth / Peer referral

27%

They contact us pro-actively

21%

They are referred by one of our other partners We see content or marketing from them regarding a specific area of interest

13% 7%

We run our own events and invite them Attending industry forums, roundtables and conferences Other

Sept 2018 arnnet.com.au

6% 1%

EDGE Research Partner

Anatomy of a partner

10%

Business operations (HR, finance, admin)

Senior management

9% Technical

(software development)

25%

Sales (inc. telesales)

seminars, workshops and roundtables. Yet as EDGE Research findings show, misalignment exists between a partner’s ability to hunt for new customers, compared to an ongoing reliance on leads from key vendors. “Partners have to be able to acquire customers themselves, they can’t simply rely on the vendor,” Iles explained. “Some forward-thinking partners are also grading customers today, through an A, B and C ranking system. “That’s a great approach and helps focus on customers that the business actually wants. There might be much more profitable customers in your business that can be replicated, meaning you can remove unprofitable customers in a considered and structured way. “Ultimately, partners must have a clear vision of what their ideal customer looks like by ensuring they are profitable and in their sweet spot.” Too often, Iles said partners bundle customers together due to the misplaced belief that more customers mean more money for the business. “More of the right customers is always good,” Iles cautioned. “But I get it, nobody turns down a customer and it’s very hard to turn down a deal. “But sometimes, you might need to because it’s either not a profitable customer for you or because you’re not focused in

42%

Technical (pre-sales,

Marketing

consulting and support and support)

that particular area. They are either not paying you enough money, or are not in your sweet spot.”

Finding partners On the slip side, 24 per cent of customers find partners through web search, word of mouth or peer referral, while 27 per cent are contacted proactively by the provider. Delving deeper, 21 per cent of customers said partners are referred by one of the organisation’s other partners, while 13 per cent consume content or marketing within a specific area of interest. Meanwhile, a lowly six per cent of customers find partners from attending industry forums, roundtables or conferences. “Partners can no longer think about sales and marketing as different disciplines because they are not anymore,” Iles added.

“We think about customer acquisition and engagement as different concepts but again, they’re not anymore. There’s a huge role that content plays in that.” According to EDGE Research findings, the current anatomy of a partner aligns to the traditional make-up of a reseller. Specifically, 42 per cent of a partner business is made up of technical expertise, spanning pre-sales, consulting and support services, followed by 25 per cent within sales, 10 per cent across business operations — such as HR, finance and administration — and nine per cent specialising in software development. Furthermore, eight per cent make up senior management leaving six per cent of the organisation focused on marketing. “Every partner must sit down, spend time offsite and out of the business to assess — what is their real differentiator?” Iles

arnnet.com.au Sept 2018

22 Partner EDGE Research

What skills are most lacking when looking to engage external partners?

29%

Digital transformation / customer experience

24%

Cloud: migration and management Program management / business analysts

13% 12%

Security

New technology: automation, AI / ML

11%

Application development

10%

Other

asked. “What’s the magic that they have? “And everything needs to come from that, especially around how they market themselves and the content that they put together.” Delving deeper, the skills most lacking for customers when looking to engage with external partners centre around digital transformation and customer experience, impacting 29 per cent of end-users. In addition, 24 per cent of customers seek cloud expertise across migration and management, alongside 13 per cent searching for skills across program management and business analysis capabilities. Rounding off the list, businesses seek security (12 per cent); emerging technologies such as artificial intelligence and machine learning (11 per cent) and application development (10 per cent) as current gaps within an organisation, gaps the channel is well placed to fill.

Sept 2018 arnnet.com.au

But according to Iles, most partners remain challenged to identify a standout segment of market differentiation. “Most partners still don’t know what they’re really good at,” he said. “It’s often better for partners to do that with external help but it’s crucial for partners to go through this process. “Once you have this, bring sales and marketing functions together and think of that acquisition journey.” Specifically, Iles asked, what’s the beginning of such a journey? “Work on the language around what you do in the market and the solutions you provide,” Iles added. “Create content and thought-leadership papers and reach your target audience. Then, enable your sales team “Progress customers through the pipe and then someone can engage with them on a new level. But who is that person in your business? What’s their skill-set? What do they do?

“Most partners still don’t know what they’re really good at” “Too often partners are simply sitting around with an account list cold calling potential customers. “That may have worked in the past but that’s not the way of doing things anymore.” Tech Research Asia, in conjunction with ARN and Reseller News, created three unique and correlated surveys to analyse trends and alignment between customers, partners and vendors in Australia and New Zealand. 286 respondents including IT decision makers from a broad range of industries and business sizes, traditional and ‘new’ partners and a broad mix of vendors and distributors took part in the online survey from May through to July 2018.

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24 Interview CIO

he first year is the honeymoon period. The second year sees the strategy and planning work done. In the third year comes the implementation. By the fourth year the executive and board realises the execution is not going well and by the fifth year, the CIO starts seeking another job. Jokes aside, the five-year term remains typical globally. But in Australia it has not been the norm for some time. Analysis of available data suggests that, locally, CIOs are facing tenures of well under half a decade, and the average stint time is in rapid decline. This might sound like bad news. But according to industry experts now is a great time to be a CIO; they can choose when they jump and where to, way before being pushed.

WHY CIO TENURES ARE GETTING SHORTER THE TYPICAL CHIEF INFORMATION OFFICER TENURE, OR SO GOES THE NOUGHTIES C-SUITE FOLKLORE, WORKS TO A FIVE-YEAR CYCLE. BUT THE AUSTRALIAN MARKET IS CHANGING — GEORGE NOTT INVESTIGATES.

The numbers Every year Gartner conducts a major survey of more than 2,500 CIOs for its CIO Agenda report. As part of the survey, CIOs are asked how long they have been in their current role. In 2013, CIOs globally reported they had been working where they were currently for 4.6 years. In Australia, the average was slightly lower, at 4.2 years. In the most recent 2018 survey, the global average had gone up to 4.48 years. But in Australia it had dropped significantly to 3.42 years. A global survey by recruitment consultancy Harvey Nash had similar findings. Asking a slightly different question – ‘How long do you expect to stay in your current role from this point forwards?’ – in 2013 CIOs around the world said 40 months. In 2018, globally the answer had risen on average to 52 months, or 4.3 years. But extracting the Australian figures tells a different story. In 2013, Australian CIOs said they expected to be in the same role for another 3.3 years.

Sept 2018 arnnet.com.au

This year, they had hopes of sticking around for, on average, for only another 1.7 years. The declining Aussie CIO tenure cannot be explained by shortening C-suite tenures overall. At last count, the shelf life of Australian CEOs for example was 5.5 years, representing a steady rise since the 4.2 average of 2012, according to a PwC study. CEO average tenures are at their highest since 2008 and in 2016 beat the global average (5.3 years) for the first time.

Transformative times One of the biggest factors in the tumbling tenure trend locally is the widespread appetite for digital transformation among Australian businesses, according to experts. Businesses need to rapidly digitise core platforms and processes, and the customer experience, to remain relevant let alone successful. As Forrester principal analyst Tim Sheedy put it in January: “you’re

dead or dying if you don’t respond”. Those that do transform can ensure increased profit margins, productivity improvements and cost reductions as a result. “Over the past couple of years these transformational efforts have stepped up and swept across Australia, hence the CIO career movement we are seeing in the local market,” Bridget Gray, APAC managing director of global executive recruitment agency Harvey Nash, told CIO Australia. “It has been an exciting time of transformation and business model reimagination in Australia, which has brought about an abundance of opportunity to transformational leaders, but equally with any change opportunity, comes disruption.” The available opportunities in the market means CIOs can more easily make the switch to another company. “Many a transformation CIO can be lured from their current CIO

CIO Interview

“IT professionals are quickly moving from a CIO role in one organisation to another”

The trend has also been observed by Jason Pope, the CTO of CA Technologies in A/NZ, who regularly meets with CIO customers. “Changes in the market, increasing business demands and trends in technology have led to a faster shift in the market, across all industry sectors. IT professionals are quickly moving from a CIO role in one organisation to another,” he told CIO.

Stabilisation coming position, to truly transform a new business from traditional silos into a future ready state,” Gray said. “These mandates are often hard to refuse as they are career defining not just from an IT leadership perspective but also a great trajectory for those aspiring for CEO roles in the future.” There’s also been the rise of the transformation CIO, who works to three-year cycles before they begin to “crave a new challenge,” Gray added.

According to some analysts, Australian organisations are somewhat behind the US, China and Europe when it comes to digitally transforming their businesses. “They see it [digitisation] as something that has to happen and they are going to start making their changes quickly. I guess many of them are in industries that are being disrupted more so than our comfortable duopolies down here in Australia,” Forrester’s Sheedy said. The digital transformation of

Australian companies has been characterised elsewhere as “lagging behind” overseas efforts, and “too slow”. In those markets, since the big digital overhauls have already happened, CIO tenures are dilating as a result. The same is predicted to happen here too. “More mature markets like the USA and UK are in some cases ahead of Australia with regards to digital and transformational initiatives and in the next phase of change, where the heavy lifting and major disruptive phase has already taken place, and they are experiencing more stability, and as such CIO’s in other markets are enjoying slightly longer tenures,” Gray said. “I am confident we will start to follow global trend over the coming years as the stabilisation of these programs in Australia occurs, as it has in other mature markets,” she added. This article originally appeared on CIO Australia

arnnet.com.au Sept 2018

26 EDGE 2018 Thought Leader

Accelerating enterprises toward being edgecentric, cloud-enabled and data-driven MARINA FRONEK — GENERAL MANAGER OF CHANNELS AND ALLIANCES SOUTH PACIFIC AT HPE — DETAILED THE POWER OF THE PARTNER ECOSYSTEM IN HELPING CUSTOMERS INNOVATE FOR THE FUTURE DURING THE THOUGHT LEADER TRACK AT EDGE 2018.

At Hewlett Packard Enterprise (HPE) we understand that the way we create value to our customers is by providing solutions that creates value for to their customers. We know what it takes to be an enterprise of the future, and together with our partner ecosystem we provide innovations and solutions that are edgecentric, cloud-enabled and data-driven, and ultimately enables our customers to be leaders in their field. We believe the rise of the intelligent edge is the next great market transition with billions of people and places and trillions of things intersecting at the edge generating unimaginable amounts of data. HPE has the model to accelerate enterprises from the edge to cloud, helping them connect all of their data, edges and clouds everywhere so they can pinpoint the right information for the right problem anywhere. With a modern customer at the centre of the decision-making process, HPE has the newest technologies and the strongest portfolio in the market to deliver value in new ways. Our commitment to this belief is supported by a $4 billion investment in the intelligent edge over the next four years which will be channelled into R&D to advance and innovate new products, services and consumption models across

Sept 2018

arnnet.com.au

“HPE has the model to accelerate enterprises from the edge to cloud” Marina Fronek (HPE)

a number of domains including security, artificial intelligence and machine learning, automation, and edge computing. We also believe in a hybrid world with the “right mix” of environments for different workloads and data, implemented in the right way. HPE helps organisations develop secure, high velocity hybrid operating models that deliver a common experience across all edges and clouds. 

28 Technology EDGE Research

MARKET HEATING UP AS INFRASTRUCTURE INVESTMENTS INCREASE A SIZEABLE CUSTOMER SHIFT IN SPENDING DURING THE PAST 12 MONTHS HAS PLACED INFRASTRUCTURE TECHNOLOGIES AT THE HEART OF THE BUYING CYCLE — JAMES HENDERSON OUTLINES THE IMPACT FOR PARTNERS.

Customers are increasing investment around data centre migration and expansion, as end-user money floods into the infrastructure market. From a technology spending perspective, EDGE Research findings show customers doubling down in a market disregarded by partners as not core to growth, creating further disconnect between buyers and providers.

Specifically, customers ranked data centre migration and expansion as the second most important investment priority in 2018, behind cloud migration and ahead of security. On the flip side, partners rank security, managed services and customer experience as the three leading priorities of 2018, moving into 2019, followed by cloud migration and investments focused on

digital transformation. Delving deeper, data centre migration and expansion, in the eyes of the channel, ranks as the sixth most important investment priority. “Infrastructure is sexy again, it’s that simple,” observed Mark Iles, executive analyst at Tech Research Asia. “There’s money in tin right now and there’s nothing wrong with that. “Customers are moving to a hybrid environment aligned to the approach of right workload and right environment, and that’s good news for partners. “If partners can overlay services and provide value on top of the infrastructure, then there’s good money to be had.” The shift in focus for customers represents a change in priorities since 2017, when customers ranked data centre migration and expansion as the fifth most important investment priority - behind cloud migration, security, end-user computing and customer experience. Such a shift has caught the channel unaware, creating a need for partners to plug the gap during the year ahead. “It was clear that the market was moving but I’m surprised that data centre migration ranked that highly,” acknowledged Iles. “But the market is hot right now and it’s a good time for partners to get involved

Investment Priorities: Alignment

Customer 2018 1 2 3 4 5 6 7 8 9

Cloud Migration Data Centre Migration/Expansion Security End User Computing Customer Experience Managed Services #3 Packagaed Business Apps Digital Transformation Big Data / Analytics

Sept 2018 arnnet.com.au

Partner 2018 1 2 3 4 5 6 7 8 9

Security Managed Services Customer Experience Cloud Migration Digital Transformation Data Centre Migration / Expansion Find User Computing Big Data / Analytics Packaged Business Apps

EDGE Research Technology

What partners want from vendors TO MEET THE CHANGING DEMANDS OF THE CUSTOMER, PARTNERS AND VENDORS MUST TRANSFORM EXISTING RELATIONSHIPS, AS OUTLINED DURING EDGE RESEARCH FINDINGS – JAMES HENDERSON EXPLAINS.

PHOTO | CHRISTINE WONG

because customer demand is strong. “And this links into a wider discussion which should be taking place already between partners and customers. “There’s money in partners helping customers within the areas of migration, re-architecting cloud applications, cloud management and orchestration tools. It’s a strong and timely conversation to have with customers today.” More broadly speaking, 74 per cent of customers increased IT budgets during the past 12 months, compared to 32 per cent in 2017. Furthermore, 62 per cent of customers stated that a third of increased investments is focused on projects to “transform existing systems”, while 38 per cent are spending half on new projects “using new technologies”. From a consumption perspective, 24 per cent of partners currently have less than 10 per cent recurring revenues in the business, while 47 per cent have more than 40 per cent. “There’s money to be extracted because it’s a booming market for partners,” Iles added. “As customers move towards this hybrid cloud world, it’s time for partners to play a more important role.” But despite such buoyancy in the market, Iles was quick to issue a word of warning for partners. “We’ve asked partners again what they think customers are looking for and they got it wrong, again,” Iles cautioned. “The customer wants partners to understand their business and have deep solution expertise, but partners have missed the point as our findings from this year and last year highlight. “Customers keep telling partners but they are not getting it. We’re seeing disconnect, disconnect and disconnect. “This misalignment and disconnect was the same as last year so while the market is positive, partners have to start listening to the customer. Perhaps this sounds obvious, but currently, it’s not happening.”

Mark Iles (Tech Research Asia); Matt Wynn-Jones (Counterparts Technology); Scott Green (Aportio Technologies) and James Henderson (ARN)

Partner satisfaction with vendors How has your relationship with your key technology vendors changed during the last 12 months 2017

40% 28%

34%

2018 31% 22% 20% 7%

Improved significantly

Improved slightly

Stayed the same

Decreased slightly

10% 3%

Decreased significantly

“Getting better engagement on multiple levels and touch points” arnnet.com.au Sept 2018

30 Technology EDGE Research

New vendor criteria

Alignment to your customer focus / market Clear articulation of business opportunity

Competitive differentiation of the solution Vendor’s commitment to building the market Ease and cost to get skilled up

“A vendor needs to be easy to do business with, not too many barriers and a consistent channel strategy. They also need to promote their own products into the market so there is solution knowledge when we come around to selling. ”

Vendor’s reputation in the partner community No. of other partners the vendor works with

Vendor alignment

What are your plans for the vendors you will work with over the 12 months?

“Vendors have dictated margins and markets direct to customers. This has restricted which vendors

52%

Looking to take on some new vendors in areas where we don’t currently have solutions

22%

No changes

we engage with.” “There continues to be a need to collaborate more strategically with vendors and build true partnerships.” “Technology vendors are struggling to stay relevant in this changing market, and they are not adapting quickly enough.”

26%

Looking to replace some of our existing vendors with alternatives Sept 2018 arnnet.com.au

“Have stripped back our vendors and tried to streamline what we are doing and who we are doing it with.”

EDGE Research Technology

Vendors: Please do less

Contacting our clients directly

Squeezing margins

Direct selling

End of quarter incentives

Less product roadmap, more biz solutions

Setting unreachable targets

Compliance

Meetings to tick corporate boxes

Sitting back and expecting magic to happen

Coming with PPTs about their world

Vendors: Please do more

Manage channel sales conflict

Understand our business

Show how products fit into a solution for the customer

Joint lead generation

Listen – don’t tell

Understand what ‘fair’ margin is

Reduce the red tape

Tech Research Asia, in conjunction with ARN and Reseller News, created three unique and correlated surveys to analyse trends and alignment

Treat us as customers

Drive market awareness

between customers, partners and vendors in Australia and New Zealand. 286 respondents including IT decision makers from a broad range of industries and business sizes, traditional and ‘new’ partners and a broad mix of vendors and distributors took part in the online survey from May through to July 2018. arnnet.com.au Sept 2018

32 EDGE 2018 Thought Leader

MSP of the future: solving the problems that didn’t exist in the past

need. This will remove any duplication, centralise application controls, and create the prospect of a virtual chief information officer role for MSPs.

3 Home office in a box

ROB RAE — VICE PRESIDENT OF BUSINESS DEVELOPMENT AT DATTO — OUTLINED KEY MARKET OPPORTUNITIES FOR THE CHANNEL DURING THE THOUGHT LEADER TRACK AT EDGE 2018.

Understanding the complex challenges faced by small-to-medium-enterprises (SMEs) as they strive to keep up with the pace of customer demands and the rise of new technologies is vitally important when it comes to the relationship managed service providers (MSPs) have with the SME community in this increasingly complex business environment. Here are five ways MSPs can support SMEs to solve new business challenges:

1 Predictive IT resource planning For SMEs, IT services tend to be largely reactive. Typically, an end-user submits a ticket to have an issue resolved. These

problems faced by end users are often not unique to one user. Rather than an SME’s IT department solving the same problem over and over again, MSPs are well-placed to help track and collate ticket data into predictive analytics, enabling SMEs to proactively identify pitfalls in their IT infrastructure.

2 SaaS administration With the rise of shadow IT, it’s more difficult than ever for SMEs to retain control of what SaaS applications are being used within their organisation and by which teams – be it Slack, Google apps, or Office 365. MSPs can be working with SMEs to draft up a strategic map that outlines what SaaS assets the business does and doesn’t

Sept 2018

arnnet.com.au

PHOTO | CHRISTINE WONG

Rob Rae (Datto)

Employees working from home or on the road is uncharted territory for many SME IT departments. However, this way of working is where many SMEs are headed. A common frustration faced by end-users when they are working offsite is not being able remotely access applications and files. For SMEs, the concern is security-related. MSPs have the capabilities to deliver a complete set of secure tools for SMEs, so their staff can have the same experience as if they were in the office. This will give end-users the ability to work productively and efficiently offsite, without the risk of compromising the SME’s network.

4 Physical and digital security With so many reported online attacks, digital security is already front of mind for many SMEs. However, that doesn’t mean that physical security should be neglected. MSPs can assist businesses connect both their physical and digital security together, so they can manage all aspects of their security needs – from IT to facilities security. New regulations will also demand more of SMEs when it comes to security.

5 User-based back-up across all platforms Data back-up used to be much simpler; it happened locally and was always stored on a single device. In today’s environment, data back-up occurs across multiple verticals. In the event of an outage, restoring any data from the company’s infrastructure in today’s world is a lot more complex. MSPs have the opportunity to deliver a comprehensive set of technologies that allow SMEs to protect and restore individual user data from physical and digital platforms. In today’s market, SMEs need to change and adapt. With the latest technologies built into their product and service offering, MSPs will be well-placed to support SMEs in the future. 

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34 Channel EDGE 2018

HOW THE CHANNEL NEEDS TO CHANGE TODAY, MOST IT-RELATED BUYING DECISIONS ARE MADE BY NON-IT STAFF. AT THE SAME TIME, MOST TECHNOLOGY SOLUTION ARE MOVING TO CLOUD-DELIVERED MODELS — GARY MORRIS, CEO OF SUCCESSFUL CHANNELS, EXPLAINED THE IMPACT TO THE CHANNEL AT EDGE 2018.

CHRISTINE WONG

Gary Morris (Successful Channels)

With these two forces at play, IT is getting squeezed out of many technology decisions and is sorting through their role with these new market realities. EDGE 2018 focused on teasing out the implications of each of these trends to partners, vendors and distributors. Each industry participant has a set of complementary changes they need to make to meet the challenge of these market changes. There is a blueprint of actions defined for each aspect of the channel.

Partners Line of business buyers need expert advice to help them find solutions to their business problems. Knowledge of the technology is not nearly enough. Business

Sept 2018 arnnet.com.au

buyers (e.g., accountants, sales executives, marketers, operations managers) are looking for full implementation support. Rather, customers today are instead looking for complete, turn-key solutions to business problems. Partners that invest in building deep functional or vertical expertise to complement their technical capabilities are in the best position to win more deals.

Vendors But partners can’t do it alone. Vendors need all the help they can get to meet the needs of new business buyers. Vendors have an excellent opportunity to build deeper relationships with their partners if they can step up and provide even more expertise and resources to help partners meet buyer needs. But vendors need to change also.

EDGE 2018 Channel

Three Big Trends in Information Technology

The majority of Technology solutions are moving to the cloud IT is looking to redefine its role in business decision-making

Business buyers are making the majority of IT decisions

How Partners Need to Change: Positioning is Sacrifice DESIGN

EVALUATE

PROJECT MANAGEMENT

ANALYSE

Even more consultative: provide business advice and services to help solve business problems

Even more specialised: develop deep industry and sub-industry expertise areas to more highly target services solutions

Even more services: create attractive targeted services for segmented business users

Even more implementation support: provide even more implementation support for all solutions

Pre-packaged due diligence: help business buyers become better IT buyers

DEVELOP

arnnet.com.au Sept 2018

36 Channel EDGE 2018

How Vendors Need to Change Only Win if Partners Win

Business solution gocused: no ‘speeds and feeds’. All solutions are customer needs / solution & outcome-focused

Prototype partner services: show partners how to deliver profitable services ‘wrapped around’ the sale of your service

Model partner profitability: simulate total partner profitability working with your brand

Resource for customer needs: provide detailed insights into customer needs and how you’ll address them

Deliver a motivating partner value proposition: nring the solution all together in a unified value prop for your partner

Partner Business Consultants

How Distributors Need to Change Need to Improve Buyer & Partner Relevance Professional Services Distributors There are equally large opportunities for distributors with changing buyer expectations. Technology distributors have deep relationships with a broad range of vendors and are in the best position to piece together multi-vendor solutions for partners and customers. Business buyers want complete solutions to their business needs that often require greater cross-vendor collaboration.

Sept 2018 arnnet.com.au

Provide more partner services: add more value to partner businesses with consulting and technical support services

Be a vendor match-maker: help package cross-vendor solutions to specific industry and business functional need areas

Extend partner solutions: provide an extension of partner-delivered services to help differentiate partners

A virtual partner marketplace: help partners extend their services simply and effectively to their clients

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38 Channel EDGE 2018

We All Have To Pull Together To Help Partners Succeed

VENDORS

PARTNERS

Services: Fill key gaps to meet buyer needs

CAMs: Dedicate team to help partners meet the changing business buyer needs New Partners: Find parnters that meet these needs

Meet Needs of Business Buyers

Channel The move of technology decisions away from IT to business functional areas has dramatically changed the way all channel participants need to support each otherâ&#x20AC;&#x2122;s success. Vendors, distributors, and partners need to pull together to reach and meet the needs of business buyers. Business buyers are focused on their needs as they should be. They have very specific needs based on their micro vertical segment (e.g., mid-sized accounting firm, health care insurance provider, or hardware manufacturer) and are looking for partners that understand the key issues within their industry. They also have unique requirements within their specific business function (e.g., operations, logistics, finance, or human resources) and want to work with partners that appreciate the unique needs for improving

Sept 2018 arnnet.com.au

DISTRIBUTORS

Systems: Provide tools to fill partner gaps

workflow productivity within each role. This is a lot of additional expertise that must be developed to serve as a valued provider for business buyers. One key theme from EDGE 2018 was the need for all channel participants (i.e., vendors, distributors, and partners) to work together to provide this expertise and knowledge to better serve business buyer needs. Vendors that do the best job enabling their partners to meet business buyer needs are the ones that will close more deals and win in the changing business buyer marketplace. The great news for everyone in the channel is that there are huge growth opportunities with this shift happening. The vendors, partners, and distributors that work to address these changes will be in the best position to succeed. ď&#x201A;˘

40 Elevate Security

Below (L-R): Rema Lolas (Mimecast); Chris Gatford (HackLabs); Lisa Sisson (Somerville); Duncan Thomas (Cofense); Luke Francis (CrowdStrike); Darren Fowler (Oracle); Jarred Flanigan (Sophos); Michael Demery (SeccomGlobal); Dane Meah (InfoTrust); James Henderson (ARN); Rick Baird (Hotline IT) and Noel Allnutt (Solista)

WHY PARTNERS MUST

WIDEN THE SECURITY NET TO SAFEGUARD CUSTOMERS

Sept 2018 arnnet.com.au

CHRISTINE WONG

THIS EXCLUSIVE ARN ELEVATE CUT THROUGH COMPLEXITY TO PROVIDE A FRAMEWORK TO COMBAT FAR-REACHING AND WIDERANGING SECURITY THREATS, OFFERING INSIGHT INTO THE PARTNER OPPORTUNITIES AHEAD IN 2018 â&#x20AC;&#x201D; MATTHEW SAINSBURY REPORTS.

Security Elevate

little over six months ago, the Australian Government enacted strict data protection laws that impact all businesses, requiring local companies to notify individuals and the government if they believe a data breach has occurred. The impact of this law could have serious ramifications for an organisation in terms of reputational risk for compliance. A data breach is a PR nightmare, and an organisation can lose many customers simply by reporting to them that a breach has occurred – even if what was compromised was not significant data. However, for non-compliance, the financial penalties can be severe; an organisation can be fined as much as $1.8 million for each failure to report. Given that Australia is one of the top countries in the world for data breaches, with reports claiming that more than half of all organisations experience such a scenario, improving the security standards should be a priority for most local companies. According to Noel Allnutt – cofounder and director of Solista – these new laws around data breaches, and the increased awareness of how frequently it happens, are combining to force customers to take security more seriously. “If organisations are going to give you an hour to meet the CIO, the assumption now is that you know the threats and the compliance that they’re up against,” Allnutt said. “It’s really only in the last two or three months that I can say people have genuinely started ordering technology and services that are designed to solve these specific problems.” Though organisations are increasingly aware that action is required, Lisa Sisson – sales director at Somerville Group – said that despite the many high-profile examples of data breaches in recent

“If you ask companies what the last major breach before PageUp was in Australia, it’s hard to remember...”

years, most organisations are still lacking guidance. In short, Australian businesses are still unaware of the specifics of what they need to do to improve security, and the implications that such an investment would have back to the business. “There’s still a lot of confusion around it,” Sisson explained. “There’s this perception, especially with SMEs for some reason, that when they go to the cloud they’re safe, for example. That’s it’s all good and everything is taken care of. “I have seen many enterprise organisations have to delay their execution of projects because what they needed to be ready for wasn’t quite in play. They needed to be sure from a governance and legal standpoint, what it all actually means to the organisation.” While business, industry and government are increasing efforts to raise awareness, one of the issues that Australian organisations, legislators, and industry bodies face in improving security standards is what can only be

called ‘goldfish memory’. This centres around the inability to really remember the impact that breaches in the past have had. Furthermore, this is in part because Australian organisations haven’t experienced anything to the degree that organisations like Experian, Target, or Sony have in the US, and as such it’s hard to ‘shock’ organisations into understanding the local risks that they face. “There is more board-level interest,” acknowledged Chris Gatford, director and founder of HackLabs. “For example, AICD has actively been trying to educate and train directors on cyber security over the last six months. “They’ve revamped their course twice, and I reviewed the material myself with the Institute. But at the same time, if you ask companies what the last major breach before PageUp was in Australia, it’s hard to remember. “We don’t typically remember them very well, especially at the IT and board levels. I think we almost need something of the scale of what happened to Target here in Australia

ELEVATE | Cofense Cofense, formerly PhishMe, is the leading provider of human-driven phishing defence solutions worldwide. Our collaborative approach to cyber security enables organisation-wide engagement to respond to active email threats instantaneously. Our mission is to operationalise the intelligence we derive from our human sensors to stop phishing attacks in their tracks. We change user behaviour by building a reporting culture, giving customers the automation tools required to mitigate cyber-attacks within minutes. This year, Cofense moved to a pure channel model, allowing partners to provide CISO’s the missing piece to a robust security framework.

arnnet.com.au Sept 2018

42 Elevate Security

ELEVATE | Mimecast Mimecast’s cloud-based security, archiving and continuity solutions provide businesses with comprehensive security controls before, continuity during and automated recovery after an attack or outage, in a unique fully-integrated service. Email remains the most common vector for security compromise — with 91 per cent of attacks beginning in email — and Mimecast safeguards businesses by offering a complete cyber resilience for email strategy. This includes cyber security and awareness training, continuity services for uninterrupted access to current and historic emails, and defence against malicious emails and attacks. Mimecast’s services include dedicated local support and customer experience teams to ensure organisations stay ahead of attackers through a new approach to email security.

to really shock local directors and executives into recognising the threats facing them.”

Education Another issue facing the Australian market in its efforts to educate customers on security is an undercurrent of overconfidence that some organisations have in their technology solutions. As Rick Baird – solution architect at Hotline IT – shared of a one customer: “I remember one organisation was quite confident that there were no issues with security, but then one of the audits that we ran revealed a $12.6 million credit risk, which would have been against the director’s liability. “This shocked the directors, and you could see their jaws drop, because the risk wasn’t because of the technology. It was simply behavioural; one of the users from the last eight years had stored 50,000 credit card numbers on a text file on a desktop. “The greatest security weakness often sits with the end users themselves, so the education around security that we’re trying to bring to organisations really has to be brought into all levels of the employee, so that

Sept 2018 arnnet.com.au

people understand what they need to be mindful of as well as having the technologies to be able to support it.” Such an example raises the question around who is ultimately responsible for building and then maintaining an organisation’s security profile. Increasingly, products are being offered on service models; for example, hosted in the cloud. Despite some market criticism, the strong selling point of cloud services is that they take the management, maintenance, updates and infrastructure spend out of the hands of the client. The customer pays for the

Rema Lolas (Mimecast)

“Whilst security awareness is important, it’s equally the vendors that need to raise their game”

consumption of the end solution itself. So, does this not mean that it’s also the vendor behind the cloud solution that is responsible for enacting security policies on it? Risk and responsibility have never been more important in the channel. “Having dealt with some large healthcare organisations, they often say users aren’t like corporate users, you can’t teach them about cyber security awareness,” added Dane Meah, CEO of InfoTrust. “They’re simply jumping on a machine that’s set up in the hospital ward, so they can do their actual jobs. “They’re not thinking about cyber security while working, and they’re not like a corporate user. But they’re using technology provided by vendors that understand how the technology will be used. “So, whilst security awareness is important, it’s equally the vendors that need to raise their game.” In assessing the changing security landscape, Michael Demery – managing director of Seccom Global – said the vendor part of the equation continues to improve with regards to providers meeting such obligations and responsibilities. But given the rate in which new

44 Elevate Security

threats emerge, security is an ongoing race that all involved need to keep pace with. “A lot of the vendors are getting much better in the technologies they’re delivering, and much better around cyber security,” Demery said. “I don’t think users aren’t aware of security – in fact, I’d say they’re becoming smarter about being personally aware of security. “But on the other side, social engineering is also getting so much more sophisticated. When we started 15 years ago security was quite easy. “You’d put a firewall in place, carry out a bit of monitoring and you had the security covered. Today the footprint is so big, and it touches so many different areas.” One of the ongoing challenges impacting the security market today – and something which is incumbent on the end-user to fix within an organisation – is the tendency to wait until it’s too late to take security seriously.

ELEVATE | Sophos In the current climate of increasing advanced threats and regulatory compliance, we are at a point where the most trusted member of an organisation can land on the front page. Traditional security solutions cannot keep pace with unknown or unseen threats, leaving endusers to lean on their partners as trusted advisors and as the security guard that understands their environment from back to front, to stay protected and focused on their core business. Our partners rely on Sophos in the same way. Our breadth of solutions allows them to provide complete and simple solutions to their customers, backed by over thirty years of industry expertise and product development.

Sept 2018 arnnet.com.au

Jarred Flanigan (Sophos)

“A lot of people have been educated and want to have a look at cyber security and/or resilient solutions in the market,” outlined Rema Lolas, channel director of Australia and New Zealand (A/NZ) at Mimecast. “But at the same time, they don’t really believe that they’re actually going to fall victim to any of those attacks.” As explained by Lolas, even despite the increased pressure through legislation, and the heightened efforts by all parties in the technology value chain to improve education, too many executives adopt a wait-and-see approach to security. And when that happens, even the best efforts by the technology vendor can be compromised. “Sometimes users will delay, and then suddenly, a few months later you hear from them because they’ve got to feel a little bit more pain before they’re willing to do something,” Lolas added. Echoing Lolas’ observations,

Luke Francis – channel director at CrowdStrike – suggested that the key driver of this attitude of denial among customers could centre around an issue with compliance. “I still think there are a lot of customers out there that are more orientated towards compliance than security,” Francis explained. “And that is collectively our issue. “We need to find those people in the organisation that are focused on security and willing to champion it beyond the goal of achieving compliance. Lots of the people that we do speak to are customer-based and are simply looking to tick a box and move on.”

Customer conversations Effectively communicating with the customer is clearly key to not only raising awareness on the security challenges facing Australian organisations, but also ensuring that the end-user approaches security for the right reasons. This includes taking a serious interest in delivering objectives, and not just a bare minimum solution to compliance. One option, as outlined by Chrishan Mendis – director at Deloitte Australia – is to highlight the commercial benefits inherent in taking security further than minimum compliance. For example, an increasing number of SMBs are looking to win work in the public sector to further build their business. The government has mandated an ISO 001 requirement for businesses

“We need to find those people in the organisation that are focused on security and willing to champion it beyond the goal of achieving compliance”

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46 Elevate Security

that want to work with government in the IP space. Therefore, adopting robust security practices can become a business opportunity for the organisations that take that step. “As a partner, there can’t be a straightforward, template conversation that we can have with customers,” Mendis said. “It just depends on where that business is looking right now, and how much money they have to spend to achieve that goal. Depending on that you need to tailor the conversation.” For Duncan Thomas — sales director at Cofense — the biggest challenge is overcoming the desire that people must absolve themselves of personal responsibility; in other words, check box security. “One of the most frustrating things

ELEVATE | CrowdStrike CrowdStrike is the leader in cloud-delivered endpoint protection. Leveraging artificial intelligence, the CrowdStrike Falcon platform offers instant visibility and protection across the enterprise and prevents attacks on endpoints on or off the network. CrowdStrike Falcon deploys in minutes to deliver actionable intelligence and real-time protection from day one. It seamlessly unifies next-generation AV with best-in-class endpoint detection and response, backed by 24/7 managed hunting. Its cloud infrastructure and single-agent architecture take away complexity and add scalability, manageability, and speed.

Specifically, this includes providing outcome-based information that partners can leverage to articulate the customer benefits of security, ensuring such information flows through an end-user organisation. This is because the IT team will need to ultimately “sell” the solution internally, so they need to have the presentation material that will be compelling to a director or executive that might not be so aware of technology. “Ultimately, if you’re a board executive who hasn’t read the document and doesn’t understand how subjective technology is, you would always ask ‘why am I continually getting more and more requests for IT security spend’.” Flanigan explained. “So, the onus is on educating IT

“As a partner, there can’t be a straightforward, template conversation that we can have with customers” Luke Francis (CrowdStrike)

is when you’re talking to someone and then you realise that their interest is just in checking boxes,” he said. “This is because all they feel they need to achieve is being able to be the person that can point to the paper and say, ‘I ticked the box’. “It’s everyone’s problem when that happens, because ultimately it means there’s less on the table for our partners.”

Sept 2018 arnnet.com.au

Channel play Taking the conversation one step further, Jarred Flanigan – national account executive at Sophos – believes the key to ongoing success within the ever-changing security market is partner enablement. In other words, equipping the channel with an end-to-end solution, backed up by support extending before the technology offering.

managers to ask for the right things, and giving them the tools to be able to educate the board as well.” On the other side of the coin, channel partners also need to reevaluate how they talk to customers, because they’re not talking to the same executives they once did. “I once saw the HR director buy an entire HR system for the whole company with his corporate credit

COLLECTIVE DEFENCE IN ACTION.

48 Elevate Security

card,” added Darren Fowler, security solutions director at Oracle Australia. “And they only told IT about it later. “When we talk about education and why nothing has changed in the last five years, it’s because the person that we were talking to was once the CIO and now we’re talking to the CMO instead. “Because that’s the role that now has so much of the organisation’s IT spend. There’s a new audience there for us, and that means we need to educate all over again.” According to Sophos’ Flanigan, all of this ultimately boils down to relationship building. Security, for all the images that it conjures of being a cold technology and a grudging expense that decision makers would rather spend elsewhere, is also critical to the health of the business, so the customer needs to hear it from a partner that can demonstrate their own skin in the game. And, in turn, the vendor needs to demonstrate faith in the channel partners and be closely aligned enough to understand the custom nature of each project. “People buy from people,” Flanigan said. “Success in a relationship is in being able to demonstrate how you fit into a partner’s business. “The challenge for us is that we have such a breadth of solution that any one given channel partner might have on-boarded us for user

ELEVATE | Oracle We live in a post perimeter world. Firewalls and perimeter-based security technologies are no longer effective, nor can they keep up. Instead, identity is the one constant across the different deployment models for application usage. Based on this, what Oracle offers is an intelligent, context-aware, machines against machines, approach to better prevent probable threats, help detect those that get through, enhance the response and gather intelligence to more effectively predict potential threats before they occur—all based on the context of the user, and without the need for human intervention.

Duncan Thomas (Cofense)

Darren Fowler (Oracle)

education, encryption, endpoint, firewall, or whatever it may be, and then building the relationship with broader channel partners. “We have a large range of partners and we need to work to build that relationship to see where we are truly aligned.” In agreement, Mimecast’s Lolas said that the most effective channel play for organisations in the security space is to be focused and have deep knowledge on partners and solutions at each step in the value chain. “We want to go deeper and

“Success in a relationship is in being able to demonstrate how you fit into a partner’s business” Sept 2018 arnnet.com.au

invest further in a smaller group of partners,” Lolas added. “We’ll recruit, but there will also be partners that will de-vest over time because they’re not necessarily the partners who are helping us have those conversations and reach the market that makes sense to us as well.” The solution to Australia’s gaping security challenge is clearly around raising awareness and education with those who aren’t currently aware of the breadth of security threats out there, and then convincing those that a ‘check list’ and compliance-first approach to security is insufficient in mitigating security risk. In short, though there is new legislation aimed to force Australian businesses to take security more seriously, there’s still plenty of work to be done across the channel in helping businesses to shape their security practices. This exclusive ARN Elevate was sponsored by CrowdStrike, Cofense, Mimecast, Oracle and Sophos. Photos by Christine Wong.

CONGRATULATIONS EDGE 2018 SPONSORS APC by Schneider Electric Arrow ECS ANZ Autodesk Cisco Commvault ConnectWise Continuum Cylance D-Link Datto Dell EMC Delta Dicker Data DNA Connect DUO Exclusive Networks F5 Networks

Google HP Hewlett Packard Enterprise Huawei Ingram Micro Intel iasset.com Kaspersky Lab KEMP Technologies Lenovo LogMeIn MicroFocus Mimecast NBN Co. NEXTGEN Nitro Orbus

rhipe Ring Central Soft Solutions Sophos STM StorageCraft Synnex Symantec Telstra Thycotic Toshiba Veeam VMware WatchGuard Wells Fargo Westcon-Comstor (AU) Westcon-Comstor (NZ)

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CUSTOMER VALUE

50 Interview CIO Summit

IOs need to put aside the Hollywood-induced fear that machines will take over the world and that humanity’s days are numbered, according to AI expert Toby Walsh. “We’re a long way from building machines that match human brains,” said Walsh, UNSW professor and research group leader at Data61 (CSIRO), during his keynote address at the CIO Summit in Sydney. “We can build machines that do narrow focused tasks — and they can do those tasks often at super-human level — but it’s yet to be (maybe 50 or 100 years, or ever) before we can build machines that match the full capabilities of humans. And we certainly don’t build machines that have any consciousness, sentience, or desires of their own. “They do exactly what we tell them to do. That’s the problem in

“We’re a long way from building machines that match human brains”

fact,” he said, explaining computers are frustratingly literal devices. “There are far more pressing problems facing the planet, like climate change, that we really need to deal with before we have to worry about the existential threat that artificial intelligence might pose.” That said, Walsh said he’s thrilled the topic is now on the radar of the CIO community and starting to

DON’T WORRY ABOUT EXISTENTIAL THREAT AI MIGHT POSE AT THE FLAGSHIP CIO SUMMIT IN SYDNEY, PROFESSOR TOBY WALSH REVEALED FOUR BIG REASONS WHY ARTIFICIAL INTELLIGENCE IS MAKING PROGRESS TODAY — JENNIFER O’BRIEN REPORTS.

Sept 2018 arnnet.com.au

show up in strategic business plans. “AI is everyone’s favourite subject these days. It was pretty much my favourite subject since I was a young boy. I was reading too much science fiction and dreaming about a future full of intelligent computers and robots. “And that future seems to be arriving rather rapidly, so it’s great the rest of you are catching up to that dream I had as a young boy reading people like Arthur C. Clarke and Isaac Asimov.”

Four key trends Walsh said there are several reasons why AI is making progress today and happening at this point in history. “AI is starting to invade our lives in some way, sometimes good and sometimes bad,” he said. “So why is it happening at this point in history? Not ten years ago and not ten years in the future.”

CIO Summit Interview

Walsh said the answer lies with four exponential trends. The first exponential trend is Moore’s Law, which is officially dead because of technical issues like physical quantum limits. “Intel has declared they are not going to double transistor count every two years going forward,” he said. “I’m not worried that’s going to hold back the field. “Chip designers have been pretty lazy over the last 20 years. They have mostly been just shrinking the 806 architecture. There has not been so much innovation in the design of chips and we’re starting to see that with DPUs. “We’re going to see a lot more interesting things in specialised hardware to do particular tasks like machine learning, which will give us more compute with the same transistor count. “Whilst Moore’s Law is technically dead, there’s enough innovation that’s going to happen that will give us ever-increasing compute power.” The second exponential is the ever-escalating amount of data. “Corporations are discovering one of the most vital things they have in their business is the data they have, about operations and about ustomers. “The data that’s available has been doubling and that’s very useful for artificial intelligence because a lot of what we do these days, particularly machine learning, is training on data,” he said.

“It’s starting to invade parts of our lives — and we’re not even aware of it”

Professor Toby Walsh

But there’s one limitation worth pointing out about AI today, he noted, explaining machines are incredibly slow learners. “Unlike humans, you can all learn from a single example. Machines and state-of-the-art machine learning still needs hundreds of thousands, sometimes millions of examples to learn from. But the good news is that that data is often being collected and we’re often having datasets that we can do that number from.” The third exponential trend is the progress being made on the algorithmic front. “In the last few years, with things like deep learning, we’ve been seeing in some cases exponential improvements in the performance of those algorithms.” The fourth exponential trend is the amount of money flowing into the field, he noted. “With this you can measure the amount of venture capital flowing into the field. You can see the activity, the amount of people,

the number of companies and the number of start-ups — all of these sorts of things have been doubling again every two years or so,” he said. “Put those four things in a pot together and that is the recipe, largely speaking, for making significant progress.” But while progress is being made, Walsh cautioned there’s still a long way to go before the industry can build machines that can perform a broad set of tasks that humans can do. “We can build narrow-focused tasks. We can teach them to do narrowfocused things like play Go, read x-rays, diagnose eye disease. So, there’s a lot we can do, but there’s a lot still we can’t do and a number of challenges.” Given the ongoing limitations, he said AI today can do tasks that require a ‘moment’s thought.’ “You can recognise faces with a moment’s thought and that’s what we can teach computers to do. We can teach computers to do it, but we should be very careful that when we do so, they may very well have the same biases that we have,” he said. “So, what will be get machines to do? The goal ultimately is what we call the 4D’s: the dirty, the dull, the difficult and the dangerous. All things that we don’t want humans to do. So, in that sense we should be happy that we get machines to take over these jobs.” Already, some of these jobs today involve increased amounts of automation and AI. Chatbots are a good example of a practical use of AI. “It’s starting to invade parts of our lives — and we’re not even aware of it.” AI is much more than just machine learning, he added. “AI is about also getting computers to make the sorts of decisions that humans make. And do that in a much more thorough, systematic and optimal way.” This article originally appeared on CIO Australia

arnnet.com.au Sept 2018

52 Channel Chat

Channel Chat with

GOOGLE

JAMES HENDERSON CHATTED WITH GOOGLE CHROME CHANNEL MANAGER OF JAPAC, KATHERINE BINKS. Katherine Binks | Google Chrome Channel Manager

From a channel perspective, what are Google’s top priorities during the next 12 months? My priorities fit under the three-stage strategy to recruit, enable, and engage through the channel. During my first six months in the role I have been building internally what the Google Chrome Partner Program should look like in Australia and New Zealand, and now we’re focused on the recruitment — getting out there and telling folks about it. Whilst getting the programs in place I’ve also been building a team, with dedicated OEM, distributor and reseller account management capabilities. What are the major trends currently impacting the market? The top three trends centre around software-as-a-service, digital transformation and online testing. With the proliferation of software-as-a-service, for example, customers are taking the opportunity to rethink their endpoints to the cloud. Chrome Enterprise, that’s the Chromebook and management licence, is secure by design, cloud managed with granular and fully flexible controls. We think we have the perfect offering for a

Sept 2018 arnnet.com.au

cloud ready device in the market. Digital transformation is opening new opportunities for partners to put technology where it has never been before. In Australia, good examples are in the retail sector due to the driving demands of their customers, and manufacturing and logistics due to the pressures of competition. The third trend is online testing. As schools transition from paper assessments to digital assessments, they are looking for an easy to administer and secure solution for locking down devices for the duration of the test. We believe that Chromebooks are the best testing platform in the market today, and we are expecting huge growth in adoption in this area. How are the changing demands of the customer impacting the channel? Third party research tells us that 57 per cent of enterprises have migrated from a traditional IT infrastructure to the cloud, with a huge 26 per cent more expected by 2020. For many vendors, this is just a simple pivot, but for resellers they are having to drastically rethink their models to service

the cloud focused customer. Many vendors command change, but what resellers need is a true partnership with a vendor to make this change together. At Google, we work hand in hand with our partners to ensure they are ready for the cloud world through deep enablement and engagement. With customers also demanding end-to-end delivery we see a role for the vendor to help foster partner collaboration. We host many partner meet ups that bring the distributor, OEMs and resellers together and already we are seeing resellers working with other resellers to deliver a complete solution to the customer. What can the channel expect from Google in 2018? Lots of exciting new devices. Over the next few months our OEMs will be announcing their new Chrome products, many of which have been designed to service the enterprise customer. These include detachables, tablet, touch and non-touch in some really sexy designs. We are also putting a big focus on educating the end-user so for the remainder of 2018 you’re going to see the Chrome family everywhere. What does a successful Google partner look like? Our partners look towards the future and embrace new technology. They embrace fully what it means to be a Google partner and leverage all we have to offer. I love it when I come to the office and see a reseller hosting customers in our lab. In one word, how do you think channel partners describe your company? Innovative.

54 Roundtable Storage

CHRISTINE WONG

STEPPING UP THROUGH STORAGE: THE NEXT MOVE FOR PARTNERS Sept 2018 arnnet.com.au

THIS EXCLUSIVE ARN ROUNDTABLE OUTLINED HOW THE CHANNEL CAN STEP UP THROUGH STORAGE, ASSESSING THE MARKET STATE OF PLAY TO PROVIDE THE NEXT STEPS FOR FUTURE PARTNER GROWTH — MATTHEW SAINSBURY REPORTS.

he storage market is booming, according to IDC numbers from the first quarter of 2018. Research showed that enterprise storage systems factory revenue grew by 34.4 per cent, yearon-year, reaching US$13 billion worldwide, with total capacity shipments rising 79.1 per cent to 98.8 exabytes. Such a spike is due to the demand for public cloud resources and a trend towards infrastructure refreshes across the globe, which is trickling down to the Australian channel through vendors, distributors and partners, onto customers. “There’s significant growth in and around hybrid cloud and the market is healthy from the top end of

Storage Roundtable

L-R: Craig Humphreys (IQ3); Nick Verykios (Arrow ECS ANZ); Denis Valente (Exclusive Networks); Sean Murphy (Nexus IT); Lisa Umlauff (Meridian IT); Andrew Foot (Dell EMC); George Mpliokas (Olympus Technology Services); John Martin (NetApp); James Henderson (ARN); Craig Somerville (Somerville); Rodd Jefferson (Telstra); Mark Gluckman (Regal IT); Rodney Hamill (Cisco); Dushern Pather (Tech Specialist) and Preyesh Odhavjee (Correct Solutions)

CHRISTINE WONG

enterprise, and public sector, right through to the verticals such as health and education,” said Andrew Foot, general manager of modern data centre at Dell EMC. “There aren’t many sectors in which companies are not open to conversations, so we’ve all got a great opportunity if we can harness it.” The opportunities presented by the cloud as-a-service delivery model are driving increased interest in storage within the industry, said Sean Murphy — managing director of Nexus IT — with technology now helping to make the movement of data much more efficient and effective. “The data must be secured and encrypted,” Murphy said. “Alongside being able to take a dash-boarding view and to be intelligent about the storage.” Meanwhile, Nick Verykios — managing director of Arrow ECS ANZ — outlined that for the channel, the opportunity no longer centres around the provision of storage for data to be collected for the sake of collecting. That’s a past practice, with organisations now favouring strategic data acquisition strategies. “If you look at what also is growing, it’s in capacitors, resistors, sensors and memory,” Verykios said. “Anything that has been driven by some kind of intelligent application, such as the Internet of Things [IoT]. “This is what people are finding useful, so they’re using the zeros and the ones to execute on those specific

applications. The point is that data is being used and it’s active, so traditional storage is irrelevant.”

Strategic selling For the channel, while there is a clear appetite to buy data and storage solutions, the ever-persistent challenge is in presenting solutions to customers that directly meet business requirements. According to Dushern Pather — CEO and founder of Tech Specialist — this involves understanding in the first instance what the customer wants to enable within their business — and from there an outcome-based solution can be developed. “If we’re talking about value to the customer we need to look higher up at the application level,” Pather said. “They are buzz words but big data and IoT is where customers are at. “That’s where the value is for the customer and that’s what’s driving the growth. In the channel, we need to be answering what actionable insights can they gain from that data. “How can we help to drive efficiency and growth in the business?” That’s a perspective that Lisa Umlauff — client executive of Meridian IT — shared, in suggesting that bringing data conversations to the application level represents an important step in being able to sell to the executive layer within a customer. “If we raise the conversations to the application level, we are granted an audience with the CIO or the

Above: Craig Humphreys (IQ3); Andrew Foot (Dell EMC) and Dushern Pather (Tech Specialist)

CEO,” Umlauff said. “They are then more likely to say, ‘yes, I think we’ve got something here, so how do we do it?’ “While a lot of my conversations are currently with IT, the goal is to ensure that the department is the champion again. For too long IT has been in the back blocks as something that’s seen as a cost centre, rather than something innovative. From a partner perspective, being strategic in the approach to storage remains critical in getting projects over the line. Customers want to have current challenges resolved, but also require more strategic conversations to better understand the environment five or ten years later. One common thread is a return in balance between cloud-based storage and on-premises storage. After

arnnet.com.au Sept 2018

56 Roundtable Storage

a period where cloud was pushed heavily, channel organisations are starting to see a hybrid state of play emerging. “Conversations around the public cloud focus on it being easy move in, but very hard and expensive to come back out,” added George Mpliokas, marketing manager of Olympus Technology Services.

New approach Another opportunity that the channel has in the storage space centres around the concept of future-proofing. Currently, organisations are looking to business transformation exercises, billed as large, multi-year transformations that replace old and traditional architecture with more nimble and modern environments. Storage has a huge role to play in this, and according to Craig Somerville — managing director of Somerville — it’s important that partners recognise where trends will take data storage in the years ahead. “Five years ago, everyone said businesses were going to go to the cloud,” Somerville said. “And yet here we are years down the path talking about how our traditional, onpremises business is growing. “We need to look forward as well. Object storage is a holy grail for us, where you take a file, one file and put it in place and not have to worry about it. Don’t back it up. Don’t wrap anything else around it but expose it so people can use it. But we’re not there just yet.”

It’s a perspective that Craig Humphreys — CEO of iQ3 — shared. “Why fight the converging role?” he said. “There’s so many angles in this conversation, because we’re at a point in the market in particular where we’re talking about the consumption of infrastructure. “As Australians, we believe that whatever hits the market here is already everywhere else in the world. We had better jump on board as well. Okay, if something makes sense and it adds up then we’ll adopt it. We’re not afraid to go and adopt new technology.”

(Cisco)

Benefits of cloud According to Rodd Jefferson — general manager of cloud and data centre solutions at Telstra — the strategic value in the public cloud as a storage solution for customers focuses on key capabilities around bringing discipline, policy and security to the environment. “If you ask most customers ‘why

“I’ve had conversations with the people who are transforming businesses today, and they just don’t care about the specific technology words” Sept 2018 arnnet.com.au

Rodney Hamill

Denis Valente (Exclusive Networks); George Mpliokas (Olympus Technology Services); Lisa Umlauff (Meridian IT) and James Henderson (ARN)

are you doing this,’ in terms of the data that they’re storing most of the time the response would be ‘just because’,” Jefferson said. “So, there’s very little discipline and thought that is given to critical areas, such as how the business will classify and protect its data. “The benefit of the cloud model is that we’ve got all of those normal controls around how we make sure that our data is actually being backed up and that it can be recovered, replicated etc. “But the ‘aha’ moment for many people is when they’re asked what the value of the data is.” Taken further by Verykios, it ultimately doesn’t matter whether the solution is based on-premises, in the cloud, or hybrid environments. “I’ve had conversations with the people who are transforming businesses today, and they just don’t care about the specific technology words,” he said. “They didn’t have a conversation that had anything to do with storage or data or servers or AI. “They just care about the transformation, and the caution in my head is if we don’t get our act together, we’re going to be left behind by those organisations who are having conversations about transformation.” Meanwhile, Denis Valente — Bigtec vendor manager at Exclusive Networks — said that must bring storage selling into the wider customer conversation, as opposed to in isolation. “We have a conversation around what the customer is trying to do,” Valente added. “From there, the

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58 Roundtable Storage

solution is tailored around that, and storage is just a part of that. It’s not the focus. “What matters is solving the customer issue and helping them do something different; for an example, look at Facebook. The storage requirements of Facebook are huge, because there’s so many photos and videos on the platform. “But collecting all that data isn’t the point. It’s what Facebook does with that data and how it turns it into advertising dollars. That’s the solutions that we should be looking at. “Turning the data they have into something that generates revenues, that’s really what customers care about.”

Storage roadmap Because the requirements around storage are growing exponentially, customers are also struggling with the cost of the storage itself. Regal IT director, Mark Gluckman, said that one of the real opportunities for the channel is in helping customers find a balance between cost and meeting requirements in the most effective way possible. “Once you know your value that you’re looking for, you’ll then look for where you can get the best price,” Gluckman said. “It’s not always going to be the first solution that solves the issue. It’s going to be a fine-tuning process that the customer is going to run through at any stage. “But if you’re the first partner to get your value proposition in, then you’re going to earn a level of trust and you’re going to be the one who ends up getting the deal.” As outlined by Rodney Hamill — director of data centre and cloud of A/NZ at Cisco — the most significant ramification in the ongoing growth in demand for storage is that the industry has developed a large and healthy ecosystem of incumbents and

Sept 2018 arnnet.com.au

“Turning the data they have into something that generates revenues, that’s really what customers care about” Above: John Martin (NetApp)

challenger brands. Such competition essentially benefits the customer by allowing for highly tailored, customised, and innovative solutions. “It’s a long race and there’s a lot of horses in it,” Hamill explained. “There are the big hybrids who are going to keep on pushing ahead, but there’s still a lot of water to pass under the bridge, and a lot more emerging vendors that will come out. “We’re in for a highly disruptive next three or four years ahead. It should be interesting to watch.” Delving deeper, the storage industry is dominated by large incumbents, which makes it that much harder for start-ups to offer their solutions at a competitive price, as explained by John Martin, director of strategy and technology at NetApp.

“If you look at Silicon Valley, the emerging players are absolutely challenging the established brands,” Martin acknowledged. “But where they tend to hit a bump in the road is that yes, they have amazing technology but they have difficulties in delivering it. “They don’t have a mature channel, they don’t even have sometimes a mature mindset about managing a channel.” This makes the channel worth its weight in gold, according to Exclusive Networks’ Valente. “We’re having massive success with our emerging vendors,” he said. “The secret is building that channel relationship right at the point where the growth curve is still extreme, but the brand itself has built up a measure of respectability in the market. “Take Nutanix, they’ve reached the point where they are a trusted brand.” Furthermore, Preyesh Odhavjee — director at Correct Solutions — said there are ways to help customers who are circumspect about less proven technology. This is around leveraging the strength of the relationship with the channel partner, alongside expertise in more traditional technology. “Our customers traditionally wouldn’t take a risk,” Odhavjee said. “They would see one of the big guys in the market, and they feel comfortable with that. “So, we have a lab — a shared services thing and we use to play with all the new technology that’s out there. And if it passes the test and it does what it needs to do we then put that towards a customer. “But the customers themselves can’t be expected to play with the new stuff.” This exclusive ARN Roundtable was sponsored by Cisco; Dell EMC; Exclusive Networks and NetApp. Photos by Christine Wong.

60 What The Buyer Wants

The CIO behind the tech change at Bupa WHEN SAMI YALAVAC WAS PROMOTED TO CIO AT BUPA AUSTRALIA AND NEW ZEALAND HE FOUND HIMSELF HEAD OF A TECHNOLOGY FUNCTION DIVIDED INTO SILOED TEAMS THAT RARELY COLLABORATED AND LACKED END-TO-END ACCOUNTABILITY – GEORGE NOTT REPORTS.

Although some core services, including systems availability and service desk support, had been improved in recent years, the overall internal experience of the function that Yalavac inherited in February 2016 was poor. Senior executive stakeholders were even less satisfied, calling the tech division outdated, frustrating, unresponsive and disjointed. The IT team itself expressed a lack of morale and low engagement. “Most tellingly, due to a lack of credibility with senior executives and their belief that the function lacked the capability and experience to deliver, the technology function was sidelined in a major business transformation program,” Yalavac said. Having first arrived at the private health provider nearly 12 years prior, Yalavac stepped into his new role with a bold vision. “I set about transforming every aspect of the function — changing the operating model, injecting new roles and capabilities, and driving a program of strategic initiatives to move towards an innovative, efficient function that is fit for the digital age,” he said. “Most critically though, has been a relentless focus on people, culture and leadership.”

Health check At the very beginning of his tenure, Yalavac conducted in-depth interviews with more than 40 senior executives to get an understanding of their dissatisfaction with the technology function. He also spoke to his 500-strong team, generating buy-in for his plan. “I invested a significant amount of time speaking with my leaders, peers and my people about the vision,” Yalavac said.

Sept 2018 arnnet.com.au

“I knew that it was critical that members of the technology team understood why it was important that the function change and grow, and for everyone to be equally invested in achieving the vision.” The feedback was used to shape a threeyear technology strategy to ensure alignment to business expectations. To enact it, Yalavac helped to build leaders and brought additional capability and experience to the team, which was founded on “real trust and accountability” for achieving shared outcomes. “The core of the transformation of the function has been changing the mindset and culture so that we can deliver an extraordinary customer

What The Buyer Wants

experience, drive business growth and make it a place where people enjoy working and can grow — underpinned by collaboration, agility, efficiency and innovation,” Yalavac added.

Central role As a result of the transformation effort, and the rising status of the technology function within the company, Yalavac’s team has taken a central role in the delivery of Bupa’s multiyear Customer Transformation Program. “Where previously the function operated at the periphery with the significant technology delivery for the program outsourced, we are now leading the design and delivery of all technology components,” Yalavac said. “[We have] moved from being order takers to bringing innovations and new technologies to their stakeholders to drive business growth.” The new operating model — “we have the structure, roles, capability and culture to be thought leaders and influence our business colleagues, not just react to their requests,” Yalavac says — has given rise to a slew of innovations at the company. Earlier this year the tech team rapidly prototyped a chatbot solution for Bupa’s optical business, and conducted real

Sami Yalavac (Bupa A/NZ)

customer testing to gauge customer propensity to engage us through a chat-style interaction when booking appointments. In parallel, a chatbot solution is being rolled out to make it easier for internal users to get help via the IT service desk, complementing the existing web interface with a chat-style interaction. And after a successful proof of concept, a robotic process automation solution is being applied to automate several back of house, labour-intensive business processes to drive business efficiency. Bupa is also partnering with a Silicon Valley start-up in piloting several ‘minimum viable products’ for customers, including a maternity toolkit, medical fact-finding and video consultations. Another start-up collaboration is adding functionality to smartwatches to allow elderly people in Bupa’s residential care homes to request emergency help and services. “We have also delivered a voice-to-text platform that allows us to analyse customer sentiment through our contact centre and predict potential customer churn,” Yalavac said. “We are now working to deliver near real-time, trigger-based customer interactions to improve customer experience through proactive customer

“We have the structure, roles, capability and culture to be thought leaders”

engagement, for example outbound calls and push notifications to our customers.”

Changing culture Driving such a major cultural change is never easy. It takes strong leadership, and time, especially within a team of more than 500 people with multiple stakeholders across a complex business which turns over more than $8 billion annually and has over 20,000 employees. “Even with a brilliant vision or strategy, or when implementing a new practice that has been proven in thousands of other organisations (such as Agile), people and organisations won’t follow you without a very conscious and significant effort,” Yalavac said. “When I created the new vision and started redefining our role in the organisation, despite significant effort, it took a very long time to get our people, as well as our business stakeholders, to buy into it.” Throughout the process Yalavac has coordinated regular workshops and staff training sessions, including off-site Scrum days, and human centred design courses. The company ran its first ever hackathon event earlier this year. Yalavac keeps staff up to date with progress through the company’s internal communications channels and Town Hall events. Most importantly, via repeated electronic surveys and face-to-face meetings and interviews, feedback was gathered to check progress and adapt. Net Promoter Scores within and outside the technology function have rocketed, with a “clear shift in the sentiment” about IT. “Whenever you’re driving change, whether that’s changing people’s mindset or running a largescale transformation, focus on your change program, don’t just rely on your assumptions, and find a way to measure how effective your current approach is so that you can keep revising based on progress and feedback,” Yalavac said. “Any change will only be as successful as you are at getting people at both the heart and mind level.” Sami Yalavac ranked no.3 on the CIO50 list in 2017

arnnet.com.au Sept 2018

62 Capital Gains

Acting on expansion plans from ACT FROM THE HEART OF CANBERRA, NETIER IS ACCELERATING EXPANSION PLANS ACROSS AUSTRALIA, STARTING WITH INCREASED PRESENCE IN BRISBANE — JULIA TALEVSKI REPORTS.

L-R: Michael Wallace, Andrew Condon, Gordon Hayes and Tom Cumming

The meaning of netier is a play on the French word métier, meaning your calling in life, and for one of the company’s founders, Gordon Hayes, and the rest of the team, this was and remains true to this day. Hayes set up the business in 2009, with a partner, who has since left the company. “I started Netier because I saw an opportunity and wanted to work in the SMB market due to the relationships you can build with clients,” Hayes said. Netier, which has an office situated within the grounds of Canberra Airport, specifically focuses on mid-size enterprise private firms with a specialisation within

Sept 2018 arnnet.com.au

the transport and construction industries. “We are fortunate to work with local and national clients and we hope to continue growing at the considerable pace we have been for the last two years,” Hayes said. “Recently the SMB market has begun embracing IT as an asset rather than an expense, and there are a greater number of drivers within our customers’ business for change in technology. “Embracing these changes so our customers can evolve their IT systems has proven to be an exciting and new challenge.” The company also boasts a wealth knowledge in the aviation and construction sectors, supporting a mix of cloud and

hybrid cloud clients as well as customers with their own private infrastructure. Netier retains security and network specialists in house and supports a range of technologies spanning Microsoft, Nutanix, VMware, Cisco and WatchGuard. “We manage a large number of networks and systems for clients on Cisco and WatchGuard platforms, as well as Nutanix, Dell EMC and HPE infrastructure,” he said. Netier is also in the midst of filling up a second Canberra office, that will kick off at the start of 2019, with a new project team. The start of 2018 saw Netier branch out of the ACT market and into Queensland through establishing a new Brisbane office. “Netier’s plans for the next 12 months are to consolidate growth from the previous 12 months and build out our Brisbane office,” he said. “We have some new service offerings which we’re in the final stages of bringing to market and we’re looking forward to the next phase of these projects.” One challenge that Netier faces in Canberra is recruitment and Hayes pointed out it was extremely competitive due to the large Federal Government presence. Attracting new talent can be a difficult task and alongside the growth this is a challenge that the company faces monthly, Hayes said. “Netier is fortunate in its low turnover of staff however retaining has always been a huge focus for the company,” he added. “Hosting team events and dinners monthly, offering services such as free gym memberships and study opportunities — we find this boosts morale and team spirit within the office.” Hayes said the company’s success comes down to the whole team and their passion for their work. “Since inception we have had some amazing clients that helped us to set our own standards,” he added. “We’ve always viewed our clients as part of our team. “We’ve viewed our relationship with clients as being more of a consulting and advisory role, which has necessitated working with other vendors and sometimes competitors, to ensure our clients get the best outcome. “Part of our business ethos is to deliver the best outcome irrespective of our own preferences.”

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64 Channel Confidential

Can mega TPG and Vodafone merger compete with Telstra and Optus? GOING OFF THE RECORD TO REVEAL THE UNSPOKEN UTTERINGS OF PARTNERS, VENDORS AND DISTRIBUTORS.

This merger is a win-win for both companies. The merged entity, in which TPG shareholders own 49.9 per cent and VHA shareholders the remaining 50.1 per cent, will be able to compete more effectively with Telstra and Optus. As standalone companies, VHA and TPG will be competing against each other for the cost-sensitive segment of the market. As a single provider, they will have greater economies of scale and bargaining power with suppliers. TPG will get instant access to a nationwide mobile network to offer customers competitive fixed-mobile bundled services. VHA gets access to enterprise accounts, exposure to more SMBs and a solid fixed network infrastructure (better margin than buying wholesale NBN services). With the 5G spectrum auction around the corner, TPG will need to inject more cash to obtain 3.6GHz spectrum while it does not yet have paying customers on its mobile network. Moreover, joining forces with VHA gives TPG greater bargaining power with a smaller number of 5G equipment suppliers;

Sept 2018 arnnet.com.au

after the ban on Huawei and ZTE to supply 5G by the Australian Federal Government. From VHA’s perspective, it needs to start planning and implementing 5G to avoid lagging too far behind Telstra and Optus. The tie-up will benefit the two in terms of cost avoidance in network investment and speed up 5G rollout. VHA’s 5,000 mobile sites and TPG’s fixed assets (27,000 km+) for backhaul will enable the merged entity to accelerate 5G implementation. However, there are several challenges for the merged entity. TPG’s current management emphasises on keeping the organisation lean and compete on price while Vodafone is more about delivering solutions with greater business value on top of connectivity. VHA focuses on customer service and has 350 consultants to support business customers across its retail stores, and an account manager for businesses with 10 or more connections. TPG on the other hand, treats business customers the same as consumers and relies mostly on online channel, telephone sales and dealers. After the merger, Vodafone Group’s

ownership will be lowered to 25.05 per cent which throws into question the amount of influence the new entity and how much support it will offer going forward. The Internet of Things (IoT) business requires strong support from Vodafone and TPG’s enterprise sales team are not equipped to sell IoT solutions. The new entity will receive the have majority of its revenue from consumer and SMB, with the enterprise segment contributing less than 15 per cent. In the short-term, the merger could see the new entity focusing more on consumer and SMB, less on enterprise and government. Lastly, the merger is subject to regulatory approval as a standard procedure but this deal will attract greater scrutiny from the ACCC due to the impact on competition. Meanwhile, the announcement has brought some relief to the market since the merged company is unlikely to pursue an aggressive pricing strategy that will bring down ARPU. With the merger, TPG no longer needs to undercut competitors to gain market share and build scale. 

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