Comms Business Magazine talks to Shaun Lynn, CEO of Nottingham based IT reseller Agilitas about the challenges facing the IT Channel and the importance of remaining relevant for customers.
In the 28 years since Agilitas was formed the company has appeared in many guises.
CEO Shaun Lynn, “We began in 1990, as a products sales firm, became a second user reseller and eventually a vendor agnostic services and solutions business. Today we have around 80 employees and deploy a partnering based model to around 6000 people across the globe.
So, what the challenges Agilitas faces today?
Lynn says that speaking to people in the industry, the top challenges seem to consistently be surrounding skills, finance and technology.
Questions are raised such as, ‘Will I be able to hire the right people? Will disruption in the market make budgeting contracts more of a challenge? What new technology is about to reduce the need for my operation?’
To be blunt there are two main challenges: making money – the overall profit – the top 100 VARs are making just about 4% on average, and secondly, customer loyalty. I believe that too many of the top IT channels are vendor aligned rather than focussed on outcomes and listening to clients.
Have we reached a tipping point for Anything as a Service (XaaS)? There is a number of things driving such a commoditisation of products tipping point and the impact it has on margins – you have to be able to differentiate your offerings. Add to this the economic factors caused by Brexit where most vendors raised prices and access to capital became difficult in finance markets.
20% of our business is based in France so we are acutely aware of Brexit and are just starting to see an impact. It has been different to initial expectations; not many people thought there would be so much of an impact on the value of Sterling. However, we deal with the top 100 VARs in Europe and not one of them has raised a Brexit concern to me. All French VARs just want to know is what we thought about Macron and Trump – nothing about changes to policy.
It is naive to think not much will change in our lives and one thing we have noticed due to drop in sterling is the number of US firms coming to our markets.
What about your relevance in the market and the value you can add?
Our research shows a need for innovation and to be more service centric – putting customer needs first.
For example, selling vendor support. The vendor may not be as responsive as the user wants whereas a reseller’s own flavour service is more end user focussed on the criticality of the services and build loyalty. Too many resellers limit themselves to just a couple of vendors instead of finding partners with service at their core that can add real value and be disruptive.
We take our own medicine and actually follow the advice we give others – it dictates our company strategy and as a result profit, EBITDA and loyalty increase dramatically. VARs should be more disruptive, more collaborative and find the partners that can offer the best.
Unless you have massive sales volumes, you can’t exist on commoditised products. Instead you must focus on services, outcomes and value – really delivering value. It’s what the difference is between VAR and resellers.
Any more challenges resulting from market trends?
The market is talking about a lot of tech’, for example AI, but the reality is there are not a lot of sales in these areas, it’s a distraction. The key factor is to manage the move from CAPEX to OPEX and embrace the on demand world – learn how to purchase the services and outcomes. A new SME born in the cloud just gets XaaS and on demand straight away. A more established firm thinks CAPEX in the first instance.
Increasingly there is a need to just add value to end customer; more and more value. Remove cost and improve service – think outside the box.
Today you must innovate or die. We have a nice profitable business but realise we must also change to survive and thrive. Recruiting people with skills is more challenging since Brexit. We focus heavily on developing our own people and still have employee #1 and a lot of people with 10, 15, 20 years’ service.