Nextgen takes aim at Asia, unveils expansion plans

Nextgen takes aim at Asia, unveils expansion plans

Enterprise software distributor will enter regional market on 1 January 2021

John Walters (Nextgen)

John Walters (Nextgen)

Credit: IDG

Nextgen has unveiled plans to launch operations in Singapore to expand distribution capabilities across Asia, backed by a portfolio of value-added channel services.

Channel Asia can exclusively reveal that the Sydney-based business will enter the regional market on 1 January 2021, with a technology focus spanning enterprise software, cloud and software-as-a-service offerings, in addition to data management and cyber security.

Expansion efforts will centre around the creation of Singapore as a regional hub, supported by the recruitment of a local leadership team before progressively opening additional countries in response to market opportunity and vendor support.

“This is a very exciting opportunity that we have been considering for a while,” said John Walters, group CEO of Nextgen. “We needed to get our business model and our balance sheet to the right maturity, so we could launch the full Nextgen model into Asia.

“All the analyst reports show that the adoption throughout Asia of enterprise technologies, especially cloud workloads and cyber security, will be massive over the next five years. Our vendors are wanting Nextgen to play a big part in that.”

Launched in 2011, Nextgen operates as a leading distributor of enterprise software in Australia and New Zealand (A/NZ) with revenues in excess of US$100 million, housing 80 staff and 25 vendors. Key vendors include Oracle, Micro Focus, Rubrik, Automation Anywhere, Okta and Cybereason, as well as GitHub, SolarWinds, Cloudian, Paessler, Netskope, Imperva and Darktrace among others.

In addition to distribution, the wider group offers a range of channel services including Stratus, a cloud centre of excellence; CyberLab, a proof-of-concept cyber training and solution facility and Optima, a software advisory firm.

Other offerings span Bang, a creative digital marketing agency specialising in MDF and pre-sales consulting services; Connect, a carrier-grade cloud provision, billing and ISV platform and Orbus Capital, a payment solutions platform designed to increase partner cashflow and deal sizes.

“Most people might be asking the question, why start up a business in Asia during the worst pandemic in 100 years?” Walters acknowledged. “Nextgen is known for its innovative and energetic approach to the market, so what better time to bring a fresh business model to the Asian market.

“Like we’ve done in other places, such as New Zealand, we’ll look for local talent that understands the inherent relationships, culture, opportunities and issues to be successful in the enterprise software market.”

Advancing in Asia

Expanding into Asia amid a global pandemic, closed borders and struggling economies naturally presents additional challenges to any business, especially one built on A/NZ foundations. Launching into a new territory is one thing, but doing so in such a volatile environment is another matter entirely.

For Walters however, the upside far outweighs the downside.

Speaking to Channel Asia via video link from Sydney, the industry executive pointed to Nextgen’s unique channel model, core technology portfolio and commitment to localisation as key market differentiators.

“We don’t have to go and build a warehouse, this isn’t a ‘clip the ticket’ type of arrangement,” he qualified. “This is very much a value-added model in which we work with partners in a collaborative manner.

“Enterprise software sales are long sales cycles spanning anywhere from three to 18 months meaning it’s crucial we work together in a partnership to help vendors and partners close opportunities. Our approach will be to tweak our business model to each local market, running them through local leadership teams to better understand the industry, culture and ways of engagement.”

With local considerations in place - supported by a modernised distribution strategy - the enterprise technology stack will prove equally as crucial to future access, aligned to increased demand for cloud, security and as-a-service offerings.

“Given what is happening in the world, investment is enterprise software, cloud, data management and security is going through the roof,” he added. “Enterprise customers and governments are doubling down to ensure services become much more efficient.”

In such a varied channel ecosystem, market health assessments vary depending on technology, partner type and location. But despite such diversity of opinion, a clear pattern is emerging - cloud-based offerings are outshining traditional products.

With Covid-19 accelerating customer appetite for digital technologies - to ensure business operation resiliency - key verticals such as banking and finance, healthcare and manufacturing are witnessing a surge in demand for cloud-based solutions, backed by public sector investment.

Take the Infocomm Media Development Authority of Singapore (IMDA) as a case in point, introducing GoCloud to support SMEs when migrating from legacy software development procedures and architectures to cloud-based applications delivered as cloud native applications or services.

Delving deeper, public cloud is expected to lead the market in Singapore, growing by 3.7 per cent compared to 2019. According to GlobalData findings, enterprise customers across the city-state are likely to continue to invest in public cloud, owning to high infrastructure cost, data privacy and security and operational performance.

Across the Straits of Johor into Malaysia, a similar story is emerging with public cloud viewed as a silver lining amid declining technology investments. Spending is forecast to drop 8.3 per cent overall across the country, driven by a sharp fall of 9.1 per cent on hardware investment. Cloud on the other hand, is expected to increase 3.5 per cent.

Likewise in Indonesia - buoyed by the recent launch of a Google Cloud region in Jakarta - spending declines will be offset by a slight rise in cloud investment, up 3.3 per cent compared to 2019. This is despite overall Indonesian rupiah spend decreasing 7.5 per cent, with hardware falling by 7.7 per cent.

“Asia is yet to reach maturity in terms of moving workloads to the cloud but it’s starting to kick-in and follow the more mature markets,” Walters observed. “We want to play a central role in helping partners help customers migrate workloads from on-premises to the cloud across Asia.

“As Nextgen, if we’re not adding value in the cloud or SaaS supply chain, then we won’t be in the supply chain. Hence why we focus on driving value and offering additional expertise in the enterprise software market. Our approach is to provide enterprise-class technology to enterprise customers, which can also lend itself to the mid-market.”

Not forgetting security - and the fact that 80 per cent of Singaporean businesses suffered a breach in 2019 - and it appears Nextgen is entering an area of the market open for business, despite the economic downturn.

“We also work closely with large GSIs which accounts for approximately 30 per cent of our business,” Walters added. “This represents a natural extension to continue those strong relationships across the wider Asia market.”

Value proposition

As the Nextgen business approaches the 10-year mark, Walters said the “time was right” to expand capabilities outside of A/NZ and into Asia, a decision motivated by vendor support.

“Our vendors asked if we could represent them in Asia because of our unique distribution and additional offerings,” he added. “We previously held back on launching because we wanted to build on our trans-Tasman model first, but we are now at the stage to tackle the opportunity of Asia head-on.

“Through our Optima, Orbus, CyberLab, Stratus and Bang services, we are creating a ‘Distribution 4.0’ approach to the market. We’re building the plan as we go and we want to ensure that the Asian market can also take advantage of these offerings.”

From a logistics standpoint, Walters said a local leadership team - supported by back-end systems and operations - will be established to ensure the business is ready to transact from 1 January 2021 in Singapore.

“That’s the milestone and all plans and business models are built around that but if we can start earlier because of an opportunity we can move earlier,” he said. “Covid-19 is obviously a factor but we’re flexible and nimble enough to move when ready.”

Going forward, Walters expects Nextgen to be appointed on a multi-distributor basis at least during the early launch phase, acknowledging the difference of adding value in Asia compared to A/NZ.

“A lot of vendors we first started the business with - such as Oracle nine years ago - began with Nextgen being appointed number two distributor,” he recalled. “For Oracle, we’ve been number one distributor for seven out of those nine years so we’re used to quick growth and are flexible enough to double down on these intimate relationships.

“More recently, a number of our vendors - especially in the cyber security space - have appointed us as sole distributor but we’ve earned our stripes in A/NZ. We haven’t earned our stripes in Asia, nor do we have the reputation so we have to be sensible, non-arrogant and enter the market with a lot of humility and respect.”

Alongside representing tier-1 titans such as Oracle, Nextgen has built a reputation for acting as a launchpad for emerging vendors in the channel, such as Nimble Storage, GitHub and Automation Anywhere among others.

“We carry out a study visit to Silicon Valley every year with our CTO to consistently assess what’s coming down the line in enterprise software,” Walters said. “We also work with large private equity firms which house a conglomeration of software vendors and for those wanting to launch in A/NZ, we can facilitate that.

“We have a long history of bringing next-generation vendors into market but we can’t be all things to all people - we must have deep expertise across select offerings to be a true value-added distributor.”

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