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Resilient Channel Heads into Another Uncertain Year

By Mike Vizard  |  Print this article Print
 
 
 
 
 
 
 

SaaS, endpoint management and digital transformation initiatives have been strong, but the economy and pandemic remain wild cards.

As the channel heads into 2021, there's a lot of concern over what might be in store, as the number of COVID-19 cases continue to rise. Despite the arrival of COVID-19 vaccines, it may be mid-2021 or later before enough of the population is inoculated to consider returning to business as normal.

The channel itself, however, has shown itself to be surprisingly resilient in the face of the pandemic, thanks mainly to organizations that invested heavily in cloud applications and endpoint devices to enable employees to work from home.

Less clear right now is how IT strategies might evolve going forward. There's a lot of enthusiasm for digital business transformation initiatives that organizations will continue to invest in. Many organizations will also likely invest in zero-trust networking initiatives to both better secure those processes, especially now that employees will be working from home more frequently even after the pandemic is contained.

There may also be a wave of endpoint upgrades in the future. Many of the endpoints employed during the pandemic were actually acquired by employees. As 5G wireless services become more widely available, it's expected that many organizations will soon be upgrading their endpoints to connect end users directly to those services.

Solutions and server spending strong

IT spending is starting to return to pre-pandemic levels, says Cheryl Cook, senior vice president of global channel marketing for Dell Technologies. Overall, the revenue that partners drove on behalf of Dell increased one percent on a year-over-year basis. Much of that increase was driven by a six percent increase in client solutions revenue and a six percent increase in server sales.

On the other hand, storage sales through the channel were down 10 percent. That decline, however, reflects Dell's transition to a next-generation PowerStor storage platform for the mid-market, says Cook.

The increase in server sales is most surprising given the shift towards the cloud and the inability of many IT teams to physically visit local data centers during the pandemic. In fact, VMware sales via Dell channel partners declined one percent for the quarter.

"We view these results as being pretty positive," says Cook. "Partners have shown how resilient they are."

Downturn tough on small partners

Smaller partners in general may have struggled more than larger partners that could absorb the initial downturn brought on by the pandemic, notes Cook. In addition, partners that are heavily dependent on a vertical such as the hospitality sector are likely to have suffered more than partners that service multiple verticals, adds Cook.

No one in the partner community should expect 2021 to be easy. COVID-19 infection rates are spiking again and many of the digital business initiatives being launched by end customers are experimental. As such, the chances those projects will be abandoned at some point are high.

SaaS still strong

Regardless, the channel overall will benefit from increased reliance on software-as-a-service (SaaS) applications, as more organizations realize that being able to access applications in the cloud enables the business to respond better to any disruption. However, while that ongoing shift bodes well for channel partners, it also means existing streams of revenue might also soon be disappearing as well.

If there's one constant in the channel, it's change.