Channel leaders urge risk management amidst currency fluctuations

On Monday, the pound reached an all-time low against the dollar and discussion of ongoing market turmoil has dominated headlines this week.

Leaders from across the Channel in the UK have highlighted how channel partners can manage the risk posed by this uncertainty.

Rob Mackle, director and co-founder, Assured Data Protection, highlighted the impact currency fluctuations can have on costs for a channel company. He said, “The weakened pound against the dollar has a material effect on our business. Nearly all hardware and software costs have increased which means two things, either we pass the costs on to our customers or reduce our margins.

“For existing customers, we feel we must maintain our pricing structure and reward them for their loyalty, new customers will have to pay the market price. We hope for a swift recovery to ensure businesses get the data security services they require, so that they aren’t left exposed due to tightening budgets.”

Pricing impact

Darren Garland, managing director, ProVu Communications, had a similar perspective. He said, “The fall in the UK pound against the US dollar, unless quickly reversed, will inevitably mean increased supply prices for equipment and services being imported by IT and telecoms businesses into the UK.

“Whenever prices increase, it causes problems in our marketplace, not just from a pricing impact but also the additional administration and uncertainty that it creates. That said, the Channel is resilient and although this will make things more difficult, I have no doubt it will not stop them selling and growing their businesses.”

Garland added a focus on the bigger picture is essential, with stability the end goal. “Although I believe the sharp drop in the UKP over the weekend had as much to do with the strengthening of the USD and not just the government implementing its new growth strategy as some commentators have implied. The government must now provide a stable economic environment to allow the Channel and its customers to get on with growing their businesses and supporting the UK economy.”

Robert Pritchard, senior analyst, Global Data, explained that, unless the value of the pound rises, any imported equipment is going to become more expensive. There could also be an impact on government plans to ramp up full fibre deployments, with plans to recruit broadband engineers from abroad less likely to succeed as their pay will not be worth as much when they return home.

Managing uncertainty

Clive Hailstone, managing director, Westcon-Comstor UK and Ireland, urged channel companies to remain pragmatic whilst acknowledging factors they cannot control. He explained, “It’s hard to manage economic uncertainties, but it’s important to remember that the financial market isn’t within our control, and neither is it the channel’s role to play the game. The best way to react to the strengthening dollar is to mitigate any additional external risks and to remain honest and open with customers about currency fluctuations.

“For distributors, this means communicating price changes to partners as they happen, updating online figures and correcting any out-of-date marketed content. This will help partners safeguard relationships with their end customers as they are in turn able to communicate the same to them.”

Vendor support

Hailstone pinpointed how vendors can play a part in managing this uncertainty. He said, “Many vendors are also managing external risks by bolstering their software offerings and moving away from traditional hardware solution. Prioritising cloud-native solutions allows vendors to continue to enhance their portfolio of services without relying on external suppliers for hardware components.”

He added distributors also have a vital role. “At the end of the day, price isn’t the only metric that customers use to judge a product. In fact, they care much more about the value solutions bring. Distributors can add real value to partners through their consultancy – taking the time to understand the risks that end customers are carrying in their tool base and offering them the best solutions in response. Ultimately, communicating more, removing external risks, and offering strong value-based solutions will help channel players remain an invaluable asset regardless of the economic circumstances.”