Partner success in the months ahead will centre around helping customers reduce costs while strengthening internal security capabilities, as the channel attempts to kick-start recovery efforts across New Zealand.
Initially optimistic after marking 100 days without community spread during early August, the emergence of a second wave resulted in a fresh round of lockdown restrictions and a pausing of progress from a technology investment standpoint.
Yet despite the setback, the ecosystem remains aligned in helping businesses work within restricted budgets, prioritising the deployment of security, cloud and software-defined networking (SDN) solutions to strengthen end-user resiliency while driving future growth.
With delayed projects resuming amid an unpredictable economic outlook, the channel remains cautiously optimistic that commercial opportunities will continue to emerge in 2020 and beyond.
During the launch session, featured providers included Connect New Zealand; Datacom and Enterprise IT, alongside SecureCom; Softsource, SSS - IT Security Specialists and TIMG.
Unveiled in early August, Advance is a centralised editorial resource designed to help partners access forward-looking content as the Kiwi market attempts to reposition for growth. Delivered on-demand, the platform facilitates channel collaboration through access to real-time, relevant and local analysis, complemented by virtual events and research.
Despite ongoing Covid-19 challenges – triggered by the uncertainty of lockdown measures, government stimulus packages and customer budgets – partners are seeking to move the conversation forward to focus on short- to medium-term priorities.
Hence Advance, launched with the aim of helping partners search for pockets of opportunity – and revenue – in the months ahead.
“The second wave has shown that businesses are more ‘match fit’ than before and most have certainly found it easier to adapt this time around,” observed Greg Mikkelsen, director of SecureCom. “That said it has also impacted confidence as customers understand that the return to long-term business confidence is a marathon not a sprint.”
In assessing the impact of Covid-19 on customer investment, Mikkelsen acknowledged that the concept of ‘normality’ is now difficult to define given the increased volatility of the Kiwi market.
“Projects were put on hold during the pandemic partly because of an inability to efficiently deliver through lockdown and partly to conserve cash, but most of these projects have been reinstated quickly,” he explained. “The majority of our customers are now heavily focussed on cost saving initiatives and the implementation of technologies that reduce the dependency on people. But that is very dependent on which sector customers are exposed to.
“A return to pre-pandemic normality is unlikely to eventuate in the short-term however. We anticipate that most projects will focus on cost, security and a flexible and scalable approach allowing customers to flex up and down in line with macroeconomic drivers.”
According to Pablo Garcia-Curtis - director of Softsource - technology spending is expected to stabilise in the months ahead, offering new pockets of growth as end-users realign investment to different business priorities.
“The focus will be more about improving efficiencies by fine-tuning, automating and accelerating outcomes,” he outlined. “There are a number of predictions that hardware sales will be impacted by as much as seven per cent across the industry but I think these investments will be redirected into other areas, those that have tangible and repeatable outcomes that can be measured.”
As a result, Garcia-Curtis accepted that short- to medium-term customer priorities will now centre around working within restricted budgets, in addition to a heightened focus on governance, compliance and staff cutbacks during a “less buoyant” market period.
“Most importantly, overcoming caution and confidence challenges will be key as businesses still need to grow as they pivot into new markets, or otherwise adjust to restricted supply from overseas,” he added.
“The closure of the New Zealand borders, whilst a feat in public health terms, will progressively place the economy increasingly under strain and this will have a broadening impact across many businesses, particularly those in the hospitality sector both in terms of supply and services. It is of course early days, so our focus remains on listening to our customers and helping them to achieve more with less.”
Speaking as general manager of Wellington-based SSS, Ashton Jones assessed that despite the exception of a select number of impacted customers, a “return to normality” is starting to emerge across the industry. Yet such optimism comes with caution.
“In some ways it's busier as people are looking to complete projects now that where parked during lockdown,” he said. “But I think the real impact is yet to be felt. I believe we will start seeing less investment in new projects as the reality of a recession hits client budgets.
“There is a lot of work left evaluating the tools and technologies that have been implemented and putting policy and governance in place around these. This also includes planning for another lockdown with updated business continuity plans.”
Consequently, Ashton said customers are prioritising the completion of paused projects during the coming months, albeit adjusted to accommodate new ways of working.
“All of the projects, assuming they didn't get cancelled, are now progressing again,” he outlined. “In terms of the newer community transfer, it doesn't seem to have had the same impact on our clients and largely things are carrying on as they were. It's obvious that for the most part the learnings from March and April have been applied effectively.”
For Zabeen Hussain - head of Cloud at TIMG - a 6-8 month timeframe appears most realistic when assessing when customer spending in relation to new projects will return to pre-pandemic levels.
“This is real-time feedback we’re receiving from clients and stakeholders in terms of where they are thinking of spending their money,” she added. “We have not yet seen progression in existing contracts and activities but for new projects, in terms of signing up or implementing services there has been delays for some major and small to medium-sized enterprise [SME] clients.
“Customers are prioritising reducing the cost of running current infrastructure while also reducing cost with supplier vendors. They are also focused on running remote working and having robust business continuity services should another wave occur.”
Tech investment priorities
As reported by Reseller News, technology spending in New Zealand is expected to reach the equivalent of roughly US$9.5 billion during 2020, according to new findings from GlobalData.
Following an initial investment increase estimate of 9.6 per cent before Covid-19, the latest forecast - unveiled pre-second wave in late July - has placed growth in negative territory to the tune of 6.3 per cent. As a result, collective spend across all infrastructure segments, which includes hardware, services and software, is expected to decline as enterprises defer purchase decisions.
Likewise, government services are also forecast to cut back on IT spending in 2020, at a rate of more than eight times the global average. Spending on IT by the government is predicted to decline by five per cent year-on-year, to $1.2 billion, according to Gartner. This is opposed to global government IT spending, which is estimated to drop just 0.6 per cent year-on-year.
On the flip side however, public cloud is set to become a bright spot in the local market, driven by software-as-a-service (SaaS) and platform-as-a-service (PaaS) demand as customers seek to effectively manage processes such as the recovery of data and safe back-up systems.
Furthermore, lockdown drove heightened demand for PCs - particularly notebooks - in New Zealand with the market up by nearly 40 per cent during the second quarter. According to IDC, shipments of both commercial and consumer PC devices grew respectively by 61.5 per cent and 13 per cent year-on-year during the three-month period.
Delving deeper, the recent high-profile crashing of the New Zealand stock exchange (NZX) - triggered by connectivity issues relating to multiple “offshore” cyber attacks - has placed security at the top of the boardroom agenda across the country.
“Security is king at present,” outlined Garcia-Curtis of Softsource. “It has always been a key factor in business priorities but with legislation changes and the massive increase in cyber activity during the Covid-19 period, there has been a resurgence in action.
“Artificial intelligence is now also now becoming mainstream alongside the use of tools such as the Power Platform and Office 365. We are now delivering solutions to our customers that can leverage these capabilities at a price point that they can afford in surprisingly short-time frames. Our aim here is to ‘under promise and over deliver’ and this year more than ever, it seems to be winning hearts and minds as the pandemic continues to place many businesses under strain.”
Of note to the channel, managed services is expected to account for the “largest and fastest growing” segment of the security market during the next six months, triggered by heightened customer demand for protection amid a sustained shift in remote working.
Billed as ‘single-tenant solutions operated by third-party providers and residing on customers' premises’, increased end-user appetite for managed security offerings delivered via the channel comes in response to the continuation of wide-scale lockdown measures which in turn have prompted a significant rise in cyber threats.
According to IDC findings, such demand is followed by integration services and consulting services, with the overall security services market accounting for approximately half of all security spending in the short-term.
Looking ahead, security services investment is expected to increase at a compound annual growth rate (CAGR) of 10.5 per cent during the next five years, with managed services in particular set to outpace the market at 13.6 per cent.
“Remote access, cloud security and incident detection and response technologies are high priorities for customers,” said Jones of SSS. “We are seeing an increased level of interest in tools that provide a unified view of cloud and on-premises environments, alongside security automation tools.
“In addition to technologies, clients are now, more than ever, looking for managed services outcomes. We acted on a number of these areas some time ago and are now focussed on cementing these relationships going forward.”
At SecureCom, Mikkelsen reported a growth increase related to the provider’s hosting business, with a specific focus on customers seeking to move older applications to the cloud.
“We have also seen accelerated demand for SDN solutions replacing expensive legacy multi-protocol label switching [MPLS],” he added. “The main driver has been lower costs, a richer feature set and more control. SDN offers much more value with significant increases in technology capabilities and a reduction in price – this has high interest for customers.”
Other key trends emerging include a reliance on business continuity and digital services, in a move designed to ensure operational resiliency during such a period of uncertainty.
“We are helping get customers back online as soon as possible,” said Hussain of TIMG. “These are the short- to medium-term goals for customers, to become operational again without further delays or revenue loss. We are working closely with partners and suppliers to close deals centred around providing a cost saving model for customers.”
Reseller News Advance is a centralised editorial resource designed to help partners access forward-looking content as the New Zealand market attempts to reposition for growth.