Discussing key problems in a fast-changing world

17 july 2018

CRN/RE editors published an article to cover the highlights of the annual round-table conference. Among other speakers, MERLION CEO Dmitry Vinogradov.

Discussing key problems in a fast-changing world

As usual, CRN/RE editors invite the general managers of companies that have taken the highest positions in “The Best Russian IT Distributor” ranking for a round-table discussion. The participants who have not only enormous experience, but also comprehensive understanding of the global trends and the situation in the Russian market are gathered to share opinions on the current situation. Dealers and vendors always study reports on such panel discussions.

That is why today we will be focused on the issues that the round-table discussion participants consider to be the most critical.

On results and revealed trends of 2017

Before retelling the discussion of IT companies’ executives, we should note that the panel participants were satisfied with the results and looked like the hunters depicted in V. Perov's painting "The Hunters At Rest". All in all, 2017 was a success for them.

<...> Dmitry Vinogradov, MERLION CEO: Despite the fact that 2017 was the period of potential threats, and many companies were expecting a negative pace of development, fortunately, market players’ worse fears were not borne out. Besides, as for 2018, expectations are much more positive, probably, because in 2017 we did not observe any critical turmoil. That’s is why the market players lifted in spirit and believed in the restored, may be, just for short time, stability and now hope for the better.

<...>Dmitry Vinogradov: Moreover, it is not possible to aggregate all competences needed for the development of IT infrastructure, as well as the expertise relating to all available cutting-edge technologies within a single company, in particular, the experience in application of innovations at different companies. This experience helps properly implement any IT project. To provide the desired pace of development in any industry, the collaboration with task-oriented system integrators, vendors and distributors is the only way out.

<...> As for the trend that customers more often establish in-house IT departments with the number of staff exceeding the staff of any system integrators.  Dmitry Vinogradov: Moreover, it is not possible to aggregate all competences needed for the development of IT infrastructure, as well as the expertise relating to all available cutting-edge technologies within a single company. In particular, the experience in application of innovations at different companies. This experience helps properly implement any IT project. To provide the desired pace of development in any industry, the collaboration with task-oriented system integrators, vendors and distributors is the only way out.

On striving for a mature market

Marina Nikitina, Import and Distribution Commission Coordinator, Association of Computer and IT Enterprises (APKIT): As long as the distribution exists, we are talking that our market is not sufficiently mature and civilized. But if we compare the market that was in Russia 15 years ago and the actual market, we can estimate the progress we’ve achieved. Even in the past three years, while APKIT together with distributors have been involved in “whitewashing” of import, we have considerably advanced to a mature and civilized market: distributors did a lot to change themselves, first of all. Now we are talking not only about reworking logistic chains: in the legal sense, companies' business management was changed; by the way, this allowed to solve some problems that distributors and their partners had to face. Those changes become evident even abroad. For example, the Global Technology Distribution Council (GTDC) has always been an exclusive membership club with the largest distributors from the western countries as its members. It always takes a lot to become a club member, not only due to very high requirements for applicants by the sales volume,

but also because club members always are very careful when reviewing applicants. As in the past years the association executives stated that they knew our market, its players, but respectful legal companies would never deal with shady businesses, now they come up and propose to extend their association by inviting Russian distributors. Moreover, they know there is a big business in Russia they are interested in for some reasons, and they understand that today Russia is a country suitable for companies with absolutely transparent business operations and that such companies may be accepted by an exclusive business society. That is why I believe that the steps we are making to shape a mature market are quite successful. The wish to see this trend is that what matters. As for a mature status of the market in terms of “reselling hardware components or technologies”, distributors will be able to find their place in new conditions. Such companies have certain values for the market, which cannot be delivered even by vendors.

Glimpse into the future

Dmitry Vinogradov: Nonetheless, the Russian market is now ready for some XaaS. IaaS was the initial driver, but now we see a growing demand for other types of services such as SaaS or PaaS. Local partners are also ready to promote these “aaS”. But, to enable the market development, we need a convenient showcase and an efficient and extended sales channel.  That’s why we've made a decision to develop an in-house platform in order to promote cloud solutions, i.e. such a platform that will be suitable for global and Russian software developers, for partners rendering cloud services, and for their customers as well. An if we are talking about the distributor's status within the XaaS sales channel, we see the solution – to combine all required resources such as  equipment for DOD, software, billing, consulting, including assistance in certification, customization, selection and access to services.

Marina Nikitina: As for me, major consumers for such services are those companies which share a new vision and have just appeared in the market. Despite the fact that most of cloud-based companies are system integrators, and there are just a few customers who share this vision, there some potential clients. Of course, everyone wants a large market instantly. But, in order to make clients purchase such services, they must change their way of thinking. For example, here is my own experience: I would never believe that I would ever buy software as a service; just want to have my own software copy on my own PC. Now I use a subscription for Office 365, and feels good, man:  timely updates, no faults.  I think resellers who are seeking new development trends should help clients change their vision. Neither a vendor, nor a distributor could reach those small-scale customers who are now ready to pay for the above-mentioned services. But resellers have such an option, and they can always consult a vendor who is interested in pushing its own services.

On partners

Dmitry Vinogradov: Every reseller (retailers, corporate sector, regional resellers, and those who are working in the capital) has to face tough times, in particular, those who have been involved in supplies to small regional retailers, which, in their turn, are under meaningful pressure by nationwide networks. Companies which have managed to build up an extended region-oriented logistic system and to develop the reputation as a reliable partner of a big distributor are now in a more privileged position.  They are able to sell in their own region either new hyped products or

 just popular high-quality goods at the right time at prices similar to current prices in Moscow.

Marina Nikitina (APKIT): I think that those companies which are only able to relocate packing boxes are now leaving the market is the natural process, as customers used to buy something only at local companies. Now they can order what they need though an online shop with suitable delivery terms; and the most important thing is the price which will not be higher, and sometimes, it will be even better than local reseller’s prices. That is why they have to think about the future, about competences they need to improve in order to attract customers. To survive, they must do something.

Anyway, local customers are available in regions. These are small companies, and resellers do not want to work with them. But it not like that noone can find such customers. There were some businesses that could operate without IT, but now everyone needs IT: Any individual entrepreneur needs some minimal automation, software, in order to operate with a tax service, with a bank, etc. Not every individual entrepreneur is able to master such techniques without help.

In case some business is a bit larger than an individual entrepreneur, someone must come, adjust something or render a service. This is the real line of business for resellers. That’s not just like reselling a computer, that an option to establish a permanent connection with the customer. I wish everyone is ready for that.

But if you continue to deliver packages and you do not want to change anything in your business, it is not an option. Just look at distributors who have recently changed their businesses. That seems obvious that they do the same sort of thing, but they don’t. In fact, the main difference was companies’ individual features relating to the structure of logistic chains which allowed to optimize the entry cost. Now, from that point of view, all distributors are on one footing, and they compete against each other, offering different financial services, dealer support levels, etc. And their partners keep monitoring the situation and choose the most suitable distributor in the short-term or long-term run. To be honest, I like that. Look how partners conferences have changed! As distributors used to hold some small-scale seminars, using their own resources, but now such events are turning into real meaningful support to partners. Every conference is a powerful stream bringing technological knowledge to be redirected by distributors to the channel.  The level of competence of conference participants is constantly growing. That is also one of the distributor's values, which, firstly, allows companies to differentiate from competitors, and, secondly, to invest in their partners. If distributors had continued to move boxes just like resellers, it would be very difficult to survive in a variable market environment. For a vendor, the distributor’s value is at least the ability to build up the sales channel: now we are talking not only about the physical delivery of the product, but also about the channel that allows to deliver knowledge and to develop partners.

For the full version of the article with participation of all speakers, read CRN/RE.

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