Global shifts slow Insight Enterprises' NZ growth in 2018

Global shifts slow Insight Enterprises' NZ growth in 2018

In the era of on demand services, key partner Microsoft is shifting its focus to consumed revenue

Dean Graham (Insight Enterprises)

Dean Graham (Insight Enterprises)

Enterprise technology reseller Insight Enterprises has seen strong local growth stall over the past two financial years.

The company, which specialises in software licensing and hardware sales to large enterprises, reported $19.8 million in sales in the year ended 31 December, up from $18.4 million in 2017 and $18.6 million the year before.

Insight is the world's largest Microsoft large account reseller.

Country manager Dean Graham said Microsoft shifted its focus from invoiced revenue to consumed revenue particularly around Azure last year, meaning they were not providing incentives for big up front commitments.

"Therefore most of our Azure clients let their agreements drift into the pay as you go model where we are charged quarterly and invoice in turn," Graham explained.

That made for a substantial shift in the cadence of revenues. 

"In truth is was a great result to produce growth at all," Graham said. "The good news for us is that the revenue was not lost but merely moved into our new year so we have had a strong Q1 and are looking at continued strength into Q2."

Because Insight's local hardware sales have initially been a result of global customer relationships that income was quite lumpy. 

"We’d see a global refresh land one year and nothing the next," Graham said.

Hardware, however, is winning local investment, with hardware presales support executive Zamaan Ali, formerly of HPE, hired at the end of last year.

Services growth is a core focus globally and has been the reason for an acquisition drive around the globe. 

"For the NZ business the initial focus has been around our license optimisation services and our managed software asset management services offering but it is a big year for us in this department as we are launching our digital innovation/cloud and infrastructure/data and AI practice into NZ this year."

Globally, Arizona-based Insight reported US$7 billion in revenues. 

It noted that it operates in a highly fragmented and competitive market. Competitors includes solution providers, value-added resellers and direct marketers as well as systems integrators and specialty retailers, aggregators and distributors.

It also competes at retail with some of its own suppliers. In hardware these include manufacturers, such as Dell, HP, IBM, Lenovo and HPE while in software it cited IBM, Microsoft and Symantec.

"Purchases from Microsoft accounted for approximately 26 per cent of our aggregate purchases in 2018, the company reported.

"No other partner accounted for more than 10 per cent of purchases in 2018. Our top five partners as a group for 2018 were Microsoft, Cisco Systems, Tech Data (a distributor), HP Inc and Ingram Micro (a distributor), and approximately 60 per cent of our total purchases during 2018 came from this group of partners."

During the same year, sales of Microsoft, Dell and Cisco Systems products accounted for approximately 18 per cent, 11 per cent and 11 per cent, respectively of consolidated net sales. 

"Sales of product from our top five manufacturers/publishers as a group (Microsoft, Dell, Cisco Systems, HP Inc and Lenovo) accounted for approximately 56 per cent of Insight’s consolidated net sales during 2018." 

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