Financial analysts seem clear on one thing: Europe's largest economy is set for gloomy GDP growth projections.
The doldrums. Stagnation. Recession. These are all words now associated with Merkel's Germany.
Following another consecutive drop in German industrial orders earlier this month, the IMF went so far as to call on the German authorities to rebalance its economy, in an effort to decrease its reliance on engineering and manufacturing output.
Some fear that other parts of the economy will be infected, including the services sector, which is more reliant on domestic demand.
"Structural challenges are looming in the medium term. At the same time, external imbalances remain large, partly reflecting the uneven distribution of the gains from growth," the IMF said.
CPI has spoken to several European partners with extensive operations in Germany.
What is their view on how German customers are changing their strategies in response to the downturn?
What parts of the market are bucking the trend, and actually generating better numbers? In short, what does any vendor or partner need to know about Germany if they want to land and expand there?
The IMF predicts that this year's growth rate will come in at 0.7 per cent, rather than the two per cent of recent years.
One of Germany's home-grown names is Xantaro, a Juniper partner and VAR with a focus on networking and datacentres.
Its director of sales and board member Sonke R Weerts said that focusing on profits is the only way it is going to weather the economic storm.
Xantaro's view is that now is not the time for diversifying or trying to grab market share. The company's strategy is to work with fewer vendors and focus on a niche to build up profits.
"We're not focused on growing our top line, we are focused on becoming more relevant as the customer landscape changes," he said.
"So how do we improve our profitability? By increasing our service footprint and our customers' service in terms of maintenance services, as well as consulting services. So we have a very strong focus on professional education for engineers to make sure that our engineers really know the stuff they are going to be implementing for our customers."
Which segments are doing well?
CEO of security VAD Infinigate, Klaus Schlichtherle, told CPI that cybersecurity is still enjoying strong growth despite a growing concensus that Germany is heading towards a recession.
"I don't see a downturn in the market in Germany at all," he said.
"The reason is, from my perspective, cybersecurity is a little separate from macroeconomic issues. Whatever is happening in the market, companies need to secure their data and they need to protect their companies.
"It's also moving more into mid-sized companies. And the Mittelstand [the German SMB market] especially need to invest very heavily into their security area. They are the ones being attacked; they really need to stop people getting their IP.
"I see authentication, especially, as growing well across verticals."
Reiner Louis, MD at Computacenter Germany, echoed the view that security is robust.
"Security is very important for us because it's big business," he said.
"We have a really big consultancy area specialised on security, and this has been growing well for a couple of years now.
"The demand is being driven because customers are heavily under pressure to update their infrastructures, to get their end-to-end more secure… Especially in Germany, there is a lot of legislation around this."
For Computacenter, Louis points to the public sector as being the cause for most hope.
"It's the one part of the industry that is in better shape… It's where I see more investments coming through, where there is more demand coming from digitisation efforts. Public sector companies are mandated by legislation to digitally transform, so it is big business for us."
German wariness 2.0
Meanwhile, Sweden-based integrator Proact has a different strategy in response to Germany's data privacy-centric legislation.
"What is happening in the German market right now is very interesting," director of its West unit, Sander Dekker, told CPI.
"You're seeing some customers, because of all the privacy issues, move back from the cloud to fully private datacentres. So we've looked at the ideal segments and verticals [that we need in order] to have opportunities because of this.
"We can use our services in combination with our traditional offerings for on-prem. We have the knowledge and capability to help move their data from public and private spaces and that is a fantastic sweet spot because it is a very traditional market."
Last week the German state of Hesse (home to Germany's financial capital, Frankfurt) went so far as to ban Microsoft Office 365 from its schools.
It cited concerns that local data could be "exposed" to US agencies through Microsoft's public cloud servers.
Louis agrees that partners would do well to keep on-prem options available in their portfolio.
"You have to be able to address the security concerns a lot of people have in this marketplace. I think it's advisable to have both on-prem and public cloud solution available as a channel partner because some companies are still in this evaluation phase. And they are basically looking into both just to make sure that they are protected on all sides," he said.
However, don't buy into the notion of another wave of German wariness to cloud.
"I have seen two or three customers who are questioning if it is the right strategy to move into cloud. And they have also questioned the financial benefits because everybody knows public cloud is not a cheap solution. So some are thinking ‘Is this something I could do cheaper?'
"But there are other benefits that come with moving to the cloud, and many are seeing that. Therefore, I can't see that there is a big trend of customers moving back into building their own infrastructures.
"However, I can see a lot of customers questioning what the right strategy is to move into a multi-cloud infrastructure….That's a bigger conversation, I think."
When CPI asked local VAR Xantaro's CTO Gerold Arlheiger what important facet of the German market he thinks most outsiders wouldn't know, he responded with: "hidden heroes".
These are the dominant suppliers across the country that are unknown outside of Germany, but are "absolutely powerful" within Germany.
‘We have these hidden heroes, and international companies do need to have consulting partners here to find out about them," Arlheiger said.
"They give a top level of service here.
"We have a firm here, called Trumpf, which cuts metal sheets with lasers and water power. They are experts on that. Maybe not many know them outside Germany, but here they are really big in manufacturing. They have a leading position in the market."
Arlheiger went further, saying that channel partners can learn from their market dominance.
"It's something that we can learn from in terms of finding a niche, and developing expertise. Here you can be very successful because you build up trust with customers by being really professional at the top level - and trust is really valued here.
"Another lesson I've taken is around being an absolutely fundamental knowledge freak. So I request that everyone in our organisation, even every technical guy, knows his business from the very basic things to the top level. You need to have that understanding rock solid, otherwise you won't survive in this market."
Top three trends
The partners CPI has spoken to have identified three top trends that are influencing the German market today.
1) Windows 10
Like for many European markets, the move to Windows 10 continues to be a revenue spinner.
"The moves around Windows 10 have come to a really big point for us, and I think this will stay for a while," Computacenter's Louis said.
"Customers are having to deal with new versions of spam, deciding on what's going into the cloud… All these kind of things are going to be big business for us. We expected this but actually the move to Windows 10 from our customers has come earlier than we anticipated. So this is really relevant for us."
It's no secret that the automobile industry is heavily reliant on automation, but as partners have told us, there are many more verticals in which German customers are requesting more automation.
"We have so many customers come to us saying their C-suite leaders are telling the IT department that they're cutting their budget. So now the IT department wants to automate to cope," Xantaro's Weerts said.
"In fact, one of the bigger automotive tier-one companies recently told us the IT budget for the whole company will increase two per cent this and next year, and then drop four per cent for the next five years. How will they survive? They must automate."
According to Proact, this is also at its core a message around simplicity.
"The big question is, how can I simplify my IT? How can I make my life easier? We focus on building up a reputation of being the answer for customers searching for simplicity."
3) German suppliers need 5G
Germany's 5G spectrum auction finished last month.
€6.5bn was raised. But so too was the ire of many in the German tech sector.
Hannes Ametsreiter, CEO of Vodafone Germany, called the auction results "catastrophic".
The issue is that with so much money having been spent in the bidding war, will the telecommunication companies have enough money to actually build the infrastructure?
There are still several parts of rural Germany that do not have 4G yet, let alone 5G.
"Some of the hidden heroes I mentioned operate in rural Germany. Now, they are asking, ‘Will the operators get my factory, or my next office connected with a performance that is satisfactory?' From a local perspective, there is definitely frustration. It's a key issue, so people should be aware of it," Weerts said.
Cause for hope, but slower decision-making
Each of the three trends offers clear opportunities for the channel to beat the incessant financials coming out of Germany indicating that the economy is stagnating.
So, too, do the reports from several partners pointing to the public sector and cybersecurity as positively thriving.
However, many partners caution that German decision makers are proving slower to actually make their decisions.
Computacenter Germany has revealed that some of its projects this year have been delayed as a result.
"People are more cautious in IT procurement," its MD, Reiner Louis, said.
Nonetheless, CPI has heard that the channel perspective on Europe's greatest economy is far from as gloomy as some might expect.
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