2011 has been notable because, in spite of the so-called global financial crisis, the New Zealand IT business has been ticking along quite nicely. New Zealand technology companies had a five percent increase in revenue in 2011 and passed the $7 billion revenue mark for the first time, according to the Technology Investment Network (TIN). The technology sector is now New Zealand’s second largest exporter, behind dairy. On top of that, a Market Measures survey of 158 domestic technology firms, released in October, found that companies that sell direct miss out on the growth potential provided by distributor and reseller channels.
So there you have it. We’re in the second largest export earning sector and a strong distributor and reseller model virtually guarantees continued growth. And we can expect more of the same in 2012 as an increasing number of customers move their applications, processing and storage off premises and into the cloud.
But behind the big picture is all of the hard work that goes into a $7 billion industry: experienced people moving up, new talent entering the market; new solutions to be tested, promoted and implemented; evolving relationships among vendors and distributors and the vast majority of resellers installing smarter solutions that help kiwi businesses compete successfully both in domestic markets and globally.
The cloud moves to mainstream
The big buzz for 2011 has to be the condensation of the cloud. Indeed, the effects of the February 22 Christchurch earthquake were mitigated for a number of IT providers because they had earlier moved some of their business processes to the cloud. Intergen’s Christchurch office is a prime example. “Our move to the cloud in 2010 has meant that we have suffered minimal disruption,” said CEO Tony Stewart. Fronde’s CEO Ian Clarke concurred. “The cloud helped hugely,” he said. “There was no disruption for business in the cloud. It’s a tremendous asset.”
And the cloud is good for business across New Zealand. IT infrastructure provider Revera announced in November that it was pushing forward their fifth datacentre by about six months on the back of a government IaaS (infrastructure as a service) contract. Revera is embracing a hybrid cloud strategy: in April they signed up with VMware’s service provider programme (VSPP) that gives service providers a cloud-ready commercial model. “VSSP is a natural complement to our IaaS capabilities,” says Gael Hargreaves, Revera’s CEO.
VMware itself is taking advantage of the cloud’s popularity. In April VMware put out the word that it was looking to hire a number of tech staff to help local partners develop business for end users progressing to the cloud. By September it had doubled its head count in NZ to 20 and had signed up 300 resellers.
The market is becoming much more competitive. Dell is hard at work finalising its IaaS initiatives, IBM announced that it would be looking to the channel to resell VSS (virtual server solutions) services supported by its $80 million East Tamaki datacentre. Albany-based Entrada is establishing a channel strategy to sell its ‘lower cost’ IaaS solutions. HP, as part of a US$2 billion cloud push, is offering finance options for its cloud-based services and will be encouraging partners to become ‘centres of excellence’ in order to increase sales for their converged infrastructure solutions.
A local survey by Unisys, released in August, suggested that some 66 percent of businesses contacted were already using the cloud to a certain extent and 75 percent were planning to in the near future. “Incorporating cloud-based services into IT operations is fast becoming business best practice in New Zealand,” said Brett Hodgson, MD of Unisys NZ. IDC predicted that by 2015 the cloud will be well on its way to be the ‘third platform’ of IT following mainframes and the client-server model. And The New Zealand Computer Society is hard at work developing an independent code of practice for cloud services, which it aims to release it in 2012.
Exeed is tapping into cloud-based services for small business. Its ‘App Store’, which opened last week, focuses on SaaS for small and medium businesses, for the most part tightly integrated with kiwi success story Xero. Resellers are almost spoilt for choice when it comes to advising their clients which particular datacentre, IaaS, SaaS and cloud service is best for them. Never before has product knowledge been so important.
But the cloud isn’t the only driver behind IT’s growth. Systems integrators, infrastructure vendors and applications specialists showed that high-tech skills are always in demand. Juniper Networks, which grew some 23 percent globally in 2010, brought on new staff in anticipation of similar growth here. UPS vendor Eaton racked up impressive growth as a direct result of its new in-country sales manager Chris Westall who was credited with ‘getting in resellers’ faces and getting them more confident in adding a UPS to a service sale’. UPS is always popular, especially in the aftermath of a power-cutting event. Rival UPS vendor Emerson Network Power also upped its game with a partnership with Express Data for distribution and IT Power for service provision.
Virtualisation software provider Red Hat opened its first New Zealand office in April and appointed a country manager. The company will use this base to grow its channel. Storage and data management solutions provider NetApp opened an Auckland office in March and staffed it with a channel development manager, account manager and pre-sales engineer, all focused on building its channel profile. Specialist security software distributor SecureSoft also beefed up its local presence with a new office in Auckland headed by the very experienced Ivan Rasquinha. Within the first six weeks it had signed up 40 resellers to sell its German security solutions.
Oxygen, which celebrated its tenth anniversary this year, also added three new staff due to an increase in uptake on its SAP business and business intelligence. Wellington-based Intergen, also turning ten this year, is similarly growing…they hired at least eight people early in the year and anticipate a total head count of 90 by the end of the year.
Datastor is also on a roll. The company brought on three new staff in June — all former employees — in anticipation of what CEO Dave Rosenberg predicts ‘good growth indicators’. Rosenberg says that Datastor has “some good strategies and it is all coming together nicely.”
Business as usual
As always, distributors refined their channel strategies with new vendors, services and partner programmes. Connector Systems added Clearswift security products and Aastra SIP phones to its line-up and purchased OrderWare Solutions, an Auckland-based business processing solutions company, to help enhance logistics. Synnex was also active, signing up Lenovo in September and bringing on new staff; its headcount is now 30. And Acronis and Ingram Micro have signed a distribution deal that will see Ingram Micro selling and supporting Acronis’ product suite of disaster recovery and data protection solutions.
Elsewhere, MPA has signed up digital identities security provider Entrust; Express Data is targeting mid-sized and larger corporates with IP phone services company ShoreTel; Point of sale distributor Skyzer Technologies has inked a deal to take Toshiba Tec POS solutions to the local market; and Soft Solutions increased its product line with the 3CX Phone System for Windows and Zenprise’s mobile device management (MDM) solutions, MobileManager and Zencloud.
Closer to home
And here at Reseller News there have been a few changes as well. Long-time editor Amanda Sachtleben handed the reins over to Simon Eskow in February when she moved across to sister publication Unlimited. Eskow has settled in nicely and has continued to report the facts and figures. Another Fairfax veteran, Michael Foreman, is back on the Reseller masthead as senior journalist. He will be following trends across the channel as well as IT in general. And Leonie Smits, Reseller’s Sales Manager since March 2009, was awarded the prestigious MPA (Magazine Publishers Asssociation) Advertising Sales Achievement Award in July for ‘innovative additional income streams, increasing sales revenues and delivering an increased page yield over last year.’ Congratulations, Leonie!
Stability and continuity
2011 also showed that IT is a stable industry with lots of continuity. A number of companies, in addition to Intergen and Oxygen, celebrated milestone birthdays. SnapperNet celebrated ten years of business in the value-added distributor space as did solution provider BTG which also moved to larger offices to house its 55 (and growing) staff. And a few companies celebrated their silver anniversaries. 25 years in any field is an accomplishment but in the IT biz it is exceptional. Hamilton-based HTC not only hit that impressive milestone but it grew its sales by some 37 percent last year. The company employs 27 staff with 150 clients of all sizes. Epson’s local office celebrated 25 years in New Zealand with a party in September. And Reseller’s sister publication, Computerworld, hit 25 years in December. When the magazine started Telecom’s 025 mobile service was still a year in the future!
So what will the future hold in 2012? Business as usual for the most part. More emphasis on the cloud, more people using smartphones to tap into the datacentre, more scrutiny on network security and, probably, shortages for skilled people as the market heats up.
Hopefully we’ll see more investment in R&D as IT represents a great export market. One of the significant points about Exeed’s new App Store is that the majority of solutions have been developed here in New Zealand and all have tremendous potential to tap into global markets, just like Xero, SMX and Mako.
Exporting our IT IP is sustainable, profitable and green. This market can have a huge impact on reversing the brain drain across the ditch. Of all the trends that we’ve seen over the years, the steady growth of IT as a keystone industry in New Zealand has been the most impressive. All of you have been doing great work and it is paying off. So keep the momentum growing and we as a nation will benefit.