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PARTNERS MUST BET ON EMERGING TECHNOLOGIES TO KEEP THEMSELVES RELEVANT

Elaborating on the need to focus on the entire integrated systems family, software-defined infrastructure and cloud, Naveen Mishra, Research Director, Gartner, spoke to Amit Singh on why channels which is not offering cloud solutions and not focused on services-centric business model will see decline in margins

How is IT infrastructure expected to drive real business value for IT channel over the next few years?

Naveen-Mishra---Research-Di
Naveen Mishra, Research Director, Gartner

The IT infrastructure market, which comprises of server, storage, and networking, is close to $3 billion and this market continues to hold potential for channel partners including resellers.

However, we should also consider some fundamental changes in the market:

  1. The software is becoming important and we see more discussions around software-defined compute, storage and networking. In fact, now the conversations are shifting toward software-defined data centers. There is definitely a lot of buzz and hype created by providers for each of these technologies. Lots of customers are still experimenting with one or the other form of software-defined infrastructure. For example, we are seeing high traction on software-defined storage and technologies like HCI. Hence, the rules of the infrastructure game are changing and are now shifting from hardware product-centric to more software-centric. All of this is closely driven by the fact that IT is increasingly needing an infrastructure that is digital-ready. And that digital-ready infrastructure requires software as a key differentiator.
  2. We are seeing a shift from on-premise infrastructure to off-premise across the globe and in India. We expect that in next 2-3 years at least 5-10 percent of the infrastructure spending will be in the form of cloud. This clearly suggests that not only the large enterprises but also mid-market customers are investing in the public cloud. These figures are bit conservative and is expected to grow rapidly. Partners need to realign themselves with the cloud business model, which is not necessarily the same that they have experienced in their traditional hardware-oriented business.

These are the two basic changes in the IT infrastructure space, which is going to change the way end-users consume infrastructure technology. It’s anyways happening right now and in 2018 partners who embrace cloud as a critical part of their business model have a bright future for the next decade or so, versus partners who still resist the change and don’t align themselves with the cloud and software-centric model.

How will emerging technology trends affect/drive IT infrastructure market in India?

There are new use-cases emerging in India that’s driving infrastructure spend; IoT is one of them. Whether we talk of Smart Cities, Smart Governance or other projects, IoT is cutting across both businesses and government. It is definitely an infrastructure-intensive area and hence this is an area where partners must build their core competencies on.

On the other hand, BI and analytics have been there for the last few years and is #1 CIO priorities for 2018 in India and globally. It means that the infrastructure which responds to the needs of BI across the organization will see huge growth. BI has both infrastructure and software layers, hence partners who could align their competencies around BI will definitely be able to address customer demands.

Further, AI is still in its early days in India with exploratory discussions happening. There is not much spending happening in AI right now in India but there are few pilot projects going on. AI will definitely be the bedrock of future innovations for the next 3-4 years in India.

Have you seen the contribution of IT hardware to channel’s revenues declining over the last few years?

Yes, channel which is not offering cloud solutions and not focused on the services-centric business model are seeing the decline in margins. Many of the partners work with mid-market customers and we have seen them struggling big time with the cloud, specifically in the IaaS space.

Many customers are using the cloud for use-cases like backup, DR, and are now getting into the public cloud with email and other office productivity applications. As things unfold and start moving towards public cloud, partners who were selling infrastructure to support these applications are seeing a decline in their revenues.

During the last 3-4 years that has been a disappointment which even some of the large OEMs are affected with. Hence, they are trying to come up with new ways of engaging with partners and trying to train and skill them for trends driven by software-defined infrastructure and cloud.

What are the technology areas where partners must bet on?

Infrastructure partners must bet on emerging technology areas to keep themselves relevant for the next few years. They must focus on the entire integrated systems family (specifically HCI), software-defined infrastructure and cloud.

Partners must invest in building on their skills around software-defined infrastructure. For instance, partners who have invested in virtualization (software-defined compute) must start investing into software-defined storage. Similarly, partners with a background in networking must start investing in SDN.

On the cloud front, partners should focus on IaaS by tying up with any leading IaaS company and provide it as an option to their customers for cloud-based infrastructure consumption. Further, they can add value by building solutions over the IaaS.

Within cloud space, partners can pick any of the models depending on their skills sets and develop themselves. Partners who are pure resellers can offer IaaS to their customers who want to have some infrastructure off-premise. In addition, partners can take IaaS from large cloud OEMs and build a variety of services on top of it. In fact, this is quite relevant for many of the partners who can build solutions on IaaS, for instance, a business-continuity solution. Many enterprises are looking for solutions around backup and DR.

Further, partners could become cloud broker by not only selling cloud-based services but also managing the cloud services as well as integrating the on-premise and off-premise infrastructure under a hybrid cloud setup.

What do you suggest partners to increase margins on infrastructure?

While we know that margins are thin on hardware and products with huge competition among the OEMs. Hence, partners who have been only selling products are advised to start building some services skills starting from maintenance support to professional services.

If we talk about professional services, we foresee humongous growth in the IoT space with the current pilot projects in India. BI and analytics is another area of growth where we are already seeing business happening. Further, we are seeing increased projects on infrastructure modernization and transformation. All of this is driven by the fact that enterprises want to be digital-ready and infrastructure is potentially the first bottleneck. Hence, there is lot of services opportunities here along with the hardware products.

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