INDUSTRY ANALYSIS Squeeze forces change
Larger resellers, integrators and solution providers have been hit hard by economic and industry forces battering the UK market, reports John Garratt, Editor of sister publication IT Europa.
John Garratt
£42.1 billion as weakening public sector demand and confidence problems in both corporates and SMBs hit home in terms of investment. Behind the figures, the patterns are changing: In 2008, the top 15 companies accounted for just over half of all the business; by 2011, this had risen to over 76 per cent. The top three firms did a quarter of the business in 2008, around a third in 2011. The bottom 230 firms – those outside the top twenty, did just over 25 per cent of the business in 2008. In 2011, this was still at exactly the same figure.
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So while the downturn may be having a continued effect and increasing the concentration in the
evenues of the top 250 resellers fell by an average of 6.04 per cent in 2010 to
industry, the balance of the industry outside the top few looks the same.
So there is still a very long tail of smaller companies. And as we move into that tail the generalists give way to specialists, although another clear effect is for firms to expand their capabilities outside their traditional core. Consolidation among vendors is giving them a reduced choice in this as well, and the total number of different accreditations is now much lower, with resellers focusing on a core few, and adding others as required.
The rising star among accreditations is VMware, which has started to appear more regularly on resellers’ returns as an area of expertise since 2008, particularly among the smaller firms. SAP has also
emerged strongly in 2011. Of course some names have disappeared, like Nortel which was merged into Avaya, or lost their apparent value to the channel, like Novell. Some, like Sun, have been absorbed by giants such as Oracle, though the Oracle brand doesn’t appear in resellers’ accreditation lists anything like as often as some of the other names.
Looking at certifications more closely, the patterns have changed very little: Microsoft is still most popular; Cisco and HP are held by around half the top resellers, and they tend to be held by the same companies. There are dozens of other different qualifications, ranging widely across networking, storage and security.
The channel customers’ pattern has changed very little. Three quarters of the resellers sell to banking and finance, a similar proportion to the public sector, and this hasn’t changed much in three years. Healthcare is the rising star: Where just over half the resellers sold into healthcare in 2008, it was pushing 60 per cent three years later. And there was a correlation between healthcare sales and networking vendors such as Cisco, Avaya and Citrix, showing how advanced
solutions are playing in this market. Sectors like construction and retail have their own issues, but even in 2011 the resellers are reluctant to abandon them, and are keeping their interest declared and accreditations, even though sales are slowing.
Success factors What are the fastest growing resellers doing right? Most are at the smaller end of the list, obviously. A look inside their numbers shows diversification and increasing staff numbers as they raise their game. Looking down the lists, there are others such as Unisys and Kelway who as larger firms have both slipped a few places over the years. Among the mid-range networking and comms specialists, Reading-based Ultima Business Solutions is probably typical with a turnover that has risen a little in three years at around the £60 million level (£47 million in 2008), at position 56 in 2011, up from 60 in 2008. And it has added staff – 260 up from 180, and holds a wide range of certifications.
But possibly the real eye opener is the difference in the lists – names that are no longer there, and others who have changed names though merger and
acquisition activity. It works at both ends, with HP Services jumping into fourth place in the top ten in 2011 on the back of its take-over of EDS. Before that it was fighting to stay in the top ten. And even the big names have changed what they do. Among the structural changes that have impacted the sector over the period has been an increase in divestments, such as Computacenter’s sale of its distribution business to Ingram Micro at the end of 2009.
Around 15 per cent of companies in 2008 are no longer around in 2011. Some have been merged, some failed, others moved into new business areas. And of course, that means 15 per cent of the 2011 names are new. Some have renamed, some are absolutely new to the UK. n
These are some of the conclusions drawn from the 2011 Premier 250 – Top UK ICT Resellers & Solution Providers database report, which is published by IT Europa. The report has been researched over the last three months, based on detailed interviews with the organisations involved and is available now from IT Europa (www.
iteuropa.com) at £1495.
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32 COMMS DEALER DECEMBER 2011
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