In CPI's ongoing Spotlight Series we're looking at the Nordics market.
We've spoke to the region's largest reseller, a systems integrator two pan-European distributors and a European hyperscaler.
We asked them what is needed to successfully land and expand in the markets there, what are the tech procurement trends, and what local idiosyncrasies should channel players turning their eye south be aware of.
Led by loyalty
According to a report commissioned late last year by Nordic reseller, Tieto and conducted by IDC Nordic, digital transformation in the region is being fuelled more by mature industry players transforming their existing businesses than by tech disruptors.
As several partners told CPI, this may reflect the Nordic predisposition towards loyalty to brands they already know.
This butts up against the perception that the Nordics are "early adopters".
Yet this too is true in many cases. The caveat being that embracing new technologies tends to be led by "known names".
"Nordic organisations are focusing on business optimisation and progressing cautiously unless a true disruptive force is present," IDC Nordic analysts said.
"While fast to leverage new technology, very few Nordic organisations (seven per cent) have changed revenue models or made similar fundamental shifts in their business models."
Do we want our healthcare data to be on a server in India or on an AWS server in the US? It may be cheaper, but no, we don't," Atea CEO Steinar Sønsteby.
Proact is a SEK 3.32bn (€317.26m)-revenue Nordic systems integrator with over 1,000 staff across 14 countries in Europe and North America.
The firm aims to hit ten per cent revenue growth for its next three consecutive financial years.
Founder and CTO Per Sedihn says that respecting the demand for brand loyalty in his home market is necessary to grow.
"Nordic customers do have these expectations. They see a value in someone actually being in the country to sell them technology with the associated services. We take the full responsibility for managing the integration, but they are willing to pay for the usage of it - if they know you."
The demand for efficiency
Nordic customers are looking for technology that can help drive down high regional costs in the region.
The Nordic's largest reseller is Norway-headquartered giant Atea; a $3.8bn-revenue company.
CEO Steinar Sønsteby (pictured right) says that this demand is a key driver of growth.
"I've been in the industry for 30 years, and have always heard people say that we are more tech savvy and that we are early adopters. But I think that some of that comes from the fact that we have the money to do it, which perhaps a lot of other people in other areas don't," he said.
"We are living in the most expensive part of the world, especially with salaries. So what we see is a lot of focus in areas like in automation and software robotics, as they have an even greater benefit in our part of the world.
"Also analytics and AI to get more value out of data or processes is certainly also very, very high on the agenda."
With this propensity towards embracing emerging technologies and rewarding trusted brands, some of the region's partners are growing at knots.
In CPI's recent Global Elite report, we identified Iceland-headquartered Advania as one of the fastest growing resellers in Europe.
The firm logged a staggering 60 per cent revenue growth in 2017 and is expecting to reach SEK 4.5bn ($466.43m) in sales for full-year 2019.
Premium price, premium products
It's a lesson that's been learned by ELKO, a $1.5bn-turnover pan-European distributor.
It entered the Nordic market in 2017 with its acquisition of Sweden-headquartered rival, Gandalf.
Founded in Riga, Latvia, ELKO has 17 offices across mainly central and eastern Europe, but operates in 30 countries.
CEO Svens Dinsdorf (pictured) singled out high prices as one of the core components of the Nordics channel.
"It's definitely a rich market. So when you look at the products which are sold, they are usually more premium upscale with higher prices.
"So it's pretty developed and competitive. In fact, we have seen some players going bust historically, especially on the retail side. So I do feel that it's competitive; it's not easy."
Dinsdorf claimed that Gandalf was acquired by ELKO in the first place because vendors were concerned that the Nordic distributor was not scaling enough to be competitive in the region.
"Vendors were saying that there is this good distie, a good team, but they are starting to lack scale, and the market is competitive and they are limited."
The combination of the demand for premium products and the capacity to scale is "a Nordics focus on service".
"They value service more than some other markets. And that comes more from being more cost-conscious in terms of labour costs.
"The average labour cost is significantly higher, and so they tend to work very efficiently. This was a good learning curve to see how our Swedish colleagues do business and set up process operations."
Localisation via M&A
Dinsdorf added that his view is that, because of this cultural expectation, having local sales teams is necessary.
"We are not driving much of our [Nordics] market approach from our headquarters; it's more driven by local teams."
For ELKO, gaining that local presence was achieved via acquisition.
Many others have thought along similar lines over the last twelve months.
Two weeks ago, Tieto finalised its merger with software and services peer EVRY, creating a €2.9bn software, cloud and services giant.
DXC Technology bought out part of Danish software partner EG at the start of the year, while two months later Canadian IT consultancy CGI made a SEK 4.32bn (€410m) cash offer for Swedish peer Acando.
Advania group CEO Mikael Noaksson recently told CPI that the Nordics is now a game of "who will acquire who" as the drive to scale quickly pushes consolidation for "survival".
He added in particular that smaller resellers across the region mainly owned by sixty-somethings approaching retirement are now looking to sell up to larger entities.
[Next page: Key trends and the power of the Nordic public sector.]
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