Despite expectations that the COVID pandemic will continue to be impact businesses across Europe, the IT industry remains in rude health, and there are plenty of postive signs that partners will be able to seize new opportunities in 2021.
The COVID pandemic has shown that businesses are willing to invest across their IT infrastructure as digital transfromation becomes a vital component to their future success.
We're all hoping to hit the digital accelerator in 2021
Clearly, the recent past has been a tough period for everyone - you don't need us to tell you that.
However, while customer budgets have tightened, and projects have been pushed back, it's all happening against a longer term back drop of massive investment in digital transformation.
As analyst company Gartner group pointed out recently: "Top performing enterprises are accelerating digital innovation and leveraging emerging technologies to come out stronger on the other side of the COVID-19 pandemic". Translating that into numbers, despite a global pandemic, direct digital transformation investment is still growing at a compound annual growth rate (CAGR) of 15.5 per cent from 2020 to 2023 and is expected to approach $6.8tn.
And while there has been a lot of investment in public cloud services, it isn't necessarily to the detriment of enterprise investment. According to a recent survey from Uptime Institute, the enterprise datacentre is neither dead nor dying. More than half of workloads are expected to remain in on-premise datacentres in 2022 and beyond.
We are also expecting strong growth in edge computing accelerated by investment in IoT and, as it ramps up, 5G.
According to IDC, the worldwide edge computing market will reach $25bn in 2024 with a compound annual growth rate (CAGR) of 12.5 per cent over the 2019 - 2024 period.
So, while the short-term story may be disruption and contraction in IT budgets, the longer-term picture is much more positive.
Maintain IT infrastructure resiliency through heel-and-toe shifting
While it's encouraging to know that the longer-term direction faces growth and investment in digital transformation, the short- to-mid-term (the track directly ahead of us) is obviously what we are all focused on.
It would be good to think that there will be nice, long straight stretches of track to accelerate into in 2021, but as recent experience has shown, there will continue to be some chicanes and maybe even some wreckage to steer around.
As IDC spending forecasts show, spending will increase in 2021, but it will take time to return to pre-covid levels and will be uneven across different industries and countries.
The trick is how to maintain momentum while also tackling these obstacles. Racing drivers use the heel-and-toe technique to balance the accelerator and brake as they change down gears. Maintaining that balance between speed and control is what we are all going to have to master. Specifically, there is a balance to be struck between digital acceleration - the gas pedal if you like - and digital infrastructure resiliency - the brake which gives us control.
IT infrastructure resiliency needs to be top of mind
What exactly do we mean by ‘digital IT infrastructure resilience'? Well, there has been a lot of recent investment in specific areas of digital transformation by necessity: remote working, remote education, telemedicine, etc. But that increased reliance and focus on digital services carries with it increased responsibility and importance, both in terms of the IT equipment and the physical infrastructure (power, cooling, etc), that supports it.
On the IT side, as a recent report from Interpol showed, there has been a spike in hacking and malware alongside the pandemic. In fact, cybercriminals are using information supposedly related to the pandemic to breach companies' defences or exploiting vulnerabilities created by having more remote workers. And it's a similar story on the facilities side.
A recent report from Uptime Institute revealed that datacentre operators are planning to increase the amount of physical redundancy per site to protect against future disruption from not only the current pandemic, but crucially future pandemics and climate change. For, example at least one large cloud service provider is asking its colocation partners to ensure N+2 redundancy at all of their sites. That's likely to drive continued investment in physical resiliency equipment. According to Omdia, the global UPS market will see five per cent growth YoY in 2021.
So, in 2021 there will be a number of customers looking to hit the gas pedal and accelerate digital transformation projects. But there will also be a lot of start and stop activity, and a need to make sure digital projects are secure and resilient.
Customers will need guidance on how to balance digital acceleration in the right areas and make sure that digital transformation makes their business more productive. Here's where we see three areas in which partners can differentiate themselves:
- New digital tech challenging existing skill sets: partners can bridge the gap between the known and the unknown
- Adding value merits revenue: partners who can add value to the customer supply chain can charge a premium price
- Customisation requirements are growing: partners who can bring customisable solutions will win on simplicity and speed
The continued uncertainty from the pandemic, combined with implementing advanced new digital projects, will multiply the potential risk for some customers. Given that heightened risk, they will be looking for trusted partners to guide them through - a skilled "pit crew" if you like, to keep them in the race.
There will be no digital transformation without digital resilience
2020 has had its fair share of challenges. In the short-term, business disruption and budget cuts impacted the channel, but the repercussions of the pandemic will no doubt continue into 2021.
To start the New Year on the right foot, the channel must master the balance between digital acceleration and resilience. For example, the sudden transition to home working caused a surge in digital transformation in Q2. Yet, this has also led to an increase in security concerns. So much so, that between January and April this year, Interpol reported some 907,000 spam messages, 737 incidents related to malware and 48,000 malicious URLs all related to COVID-19.
From February to March 2020, a 569 percent growth in malicious registrations, including malware and phishing, and a 788 percent growth in high-risk registrations were detected and reported to Interpol by a private sector partner. The channel can help customers address these concerns and add value by pre-empting the impact of this transformation and helping businesses manage these risks.
Margarete McGrath, chief digital officer, Dell Technologies UK, suggests that there is a clear link between business, operational and cyber resilience. Ultimately, businesses are investing in resilience across the board and will need to work with third parties to create a robust and secure ecosystem that can flex as the world around us continues to be reshaped.
Customers will be looking for partners to guide them through this process to ensure current and future projects are secure, resilient and adaptable around the new challenges that may lie ahead. There is a real opportunity here for partners to offer value through consulting customers on securing their IT infrastructure at the same time as evolving it for the business landscape in 2021 and beyond.
The network edge is on the Rise
Customers are experiencing what Dell Technologies UK refers to as a ‘pandemic pivot'. Companies are being forced to change from an analogue business model to a digital one. This means customers are looking for technologies that drive faster decision-making and quicker workflows. Many are turning to the cloud for these resources, with cloud spending increasing by a staggering 37 per cent during the first quarter of 2020, according to Margarete McGrath.
This adoption has driven investment in edge infrastructure too. While the network edge remains a smaller part of the infrastructure market overall, according to research from Canalys, 35 per cent of partners said they saw customers' edge investments grow. Furthermore, 35 per cent said they were only making selective network edge investments in 2020. Therefore, as businesses look to AR, VR and a host of other IoT technologies as a means to engage and communicate remotely, it is agreed that the rising demand for edge infrastructure will no doubt pick up as we head into 2021.
No matter whether you are a vendor, partner, or customer, it's safe to say that 2020 has highlighted the importance of strong relationships in the channel.
All parties have gone through very similar challenges in the past months and have therefore been forced to adapt their working relationships. Whilst vendor and channel teams relied heavily on building relationships face-to-face, the pandemic has forced them to communicate and collaborate through IT.
Vertiv has been playing its part in helping strengthen relationships in the channel through introducing its new Partner Portal. Offering a more refined experience, this platform provides easy access to the tools partners use the most: clear contact information, online trainings, and an accessible overview of partner tiers and VIP points at a glance.
Partners are looking at 2021 with cautious optimism. Robin Ody, senior analyst at Canalys, suggests that channel partners are seeing pipelines increasing roughly in line with current spending and are hopeful for good spending on the network edge in 2021. Supporting remote working will remain one of business's biggest focuses. Companies will continue to address security challenges and look for new opportunities to keep people connected; such as investment in edge infrastructure and capitalising on the rollout of 5G.
Ultimately, channel partners and customers are adapting together as businesses must plan to be flexible for the future. The sudden disruption of the pandemic meant customers had to be understanding as the channel figured out how to best offer support; yet partners should bear in mind that they may not be as tolerant next time round, as Paul Stringfellow, technical director at Gardner Systems, mentioned. We are now in a "new normal" and businesses are getting used to uncertain times. The channel must continue to meet evolving customer expectations and be prepared for the next challenges ahead.
Missed out on the fun? Watch our event highlights video or catch-up on the full discussions from the EMEA Channel Summit by joining the sessions on-demand here. To learn more about the latest channel trends and what Vertiv has got up its sleeve for 2021, check out our LinkedIn page.