Remember: distributors are friends, not food

Lots of traditional IT distributors are suffering, in many cases being bought out by larger competitors or even going out of business completely. The result of this feeding frenzy is a market landscape with fewer VADs, and I hear that resellers and vendors alike are very worried that this could mean less competition and rising prices for little or no value.

Remember: distributors are friends, not food

I wanted to advocate, just like Dory and the sharks in the ‘Finding Nemo’ film, that distributors are friends, not food.

Just like fish, VADs are a part of an important eco-system where all the species make a contribution and all extract value too. The whole thing is mutually beneficial, and if it isn’t then the eco-system itself may not survive. VADs seem to be getting squeezed from both sides, forcing them to reduce the value services they can provide in order to get cost of sale models that work. This is pulling the eco-system out of balance, and unnatural things are starting to happen. It’s like a snake eating its own tail: death is inevitable. I hear horror stories of VADs doing deals at cost plus 2, 3 or 4% margins. When you take off so-called ‘back-end rebates’ negotiated by the some of the larger SIs, you don’t need to be Einstein to understand where this will eventually lead; fewer services, off-shoring of resources and account management, huge cost reduction programmes, lower calibre people, the list goes on…

The result is the ‘dead cat bounce’ effect. VADs may claw back a couple of percentage points relocating their quotation team somewhere cheap, and you may get a ‘bounce’ in the health of the business, but ultimately the cat will still be dead. And so are the distributor business models that get caught in this spiral.

But let’s not put all the blame on everyone else; VADs should take responsibility for their actions as not all value-added disties have earned the right to call themselves ‘value-added’ which, in my view, also undermines the sensitive make-up of channel eco-systems.

The evolution of VADs came from the need to provide a kind of proxy vendor role that accelerates sales success through well-resourced and intelligently composed technical pre-sales and other services, ongoing 24/7 support and marketing-driven business development, demo kit investments and sales lead generation. I have lost count of the vendors whose eyes light up at this wealth of market-making value, only to turn around later and question whether it can be substantiated by giving up a few more points on margin. Similarly, of the VARs and SIs who benefit from lucrative opportunities through disruptive, new technologies – only to claim afterwards that all distribution ever does for them is ship product to the right place at the right time.

Make no mistake – no one benefits from weakening the pure-bred VAD species. This only leads to a monopoly of parasites to take their place.

Small, emerging VADs tend to focus on specific market segments and deliver extraordinary insight and commitment into their role, though they lack the scale to support bigger requirements. Relevance is their strength. History shows us that, at the other end of the spectrum, mammoth-sized broadliners have the opposite problem; lots of global scale but little, if any, value-creating instincts – and no relevance at all. Exclusive Networks and BigTec are unique in bucking this trend, and I believe that, in time, others will attempt to emulate our never-been-done-before project of delivering scale AND value; going global while staying local.

And I make another prediction: that we will see more in the way of sole/exclusive distribution agreements between VADs and vendors. Why? Because this enables available resources to be focused entirely on sales success, benefiting reseller partners with the fruits of a monogamous partnership. In this way, vendors (and resellers) will benefit from the present lack of inter-distributor competition, reducing the costs of sale and encouraging more investment in strategic rather than tactical planning.

So be careful what you wish for, because an alternative future might just come true. Scale on its own is not value, and neither do multi-distributor channel models automatically translate competition into tangible benefits. Vendors and VARs alike should wise up to this. Without distribution exclusivity, a landscape of fewer VADs means the broadliners will have even less incentive to promote value, and more power to extract greater margins, with all the costs falling on the VARs and vendors. Our eco-system will be damaged beyond recognition.

Exclusivity offers a brighter future. Not only has this been at the core of our unique outlook for more than 10 years; it is one of the main reasons for our unprecedented success!

Who employs their own security guards any more?

The easy way to get into the MSSP business

As every salesperson knows – right time, right place, right price. You need to add relevance to that list too, especially with factors such as the cybersecurity skills crisis driving the trend toward more and more services and cloud-based IT consumption. Relevance is a one-way ticket to value.

Who Employs Their Own Security Guards Any More?

In fact, unless you can address customer need for services with your own in-house expertise, and demonstrate a good working awareness of virtual IT consumption models rather than just the ‘old world’ of hardware and kit, you will quickly lose your relevance to those that do. Can you fully understand a customer who talks about VMs and hypervisors? Gaining this value needn’t cost a lot, and I predict that the investment in time and effort will pay off very quickly.

A two-speed channel?

Let’s not pretend that customers are going to suddenly stop buying product-based solutions. They aren’t. But hardware growth is undoubtedly slowing, in stark contrast to the runaway expansion of services-based revenues. Fail to transform and the immediate penalty will be failing to take advantage of a huge revenue opportunity.

Resellers are starting to shake-out into those who are adapting to the services-based, cloud-orientated, OPEX-centric, ‘SaaSonomics’ trend – and those who aren’t. Market relevance is draining out of one pool and straight into the other. While one group prepares itself for the impact of new cashflow models and necessary changes to commission plans for salespeople, the other group tries to pretend it isn’t happening. We could quickly see a two-speed channel with both streams diverging away from each other, making it steadily more difficult for old-school slow-starters to close the relevance gap on their born-in-the-cloud competitors.

Make the services dartboard easy to hit

Imagine the many essential layers of cybersecurity infrastructure drawn as the concentric rings of a dartboard or archery target. Reseller partners that want to own and drive value into their customer relationships need to understand how to satisfy needs and exploit opportunities at every level. Solutions and services map against this target with the most expensive and toughest to achieve at the centre, and the lowest scoring, easier pickings around the edge.

Imagine the same many-ringed target transposed onto an organisation’s physical, rather than IT, security needs. At the edges are the security guards who police the perimeter and snuff out the easy-to-detect threats. There are millions of security guards employed in the world, but what company keeps theirs on its own payroll anymore? No, today’s security guards are universally outsourced as an external service, not employed internally. This same trend is taking hold in cybersecurity too.

Partners that don’t currently offer services miss the target completely. As the saying goes, they “couldn’t hit a cow’s bottom with a banjo.” Nul points! Other partners with a comprehensive services arsenal will have a dart in every zone.

My advice is to build up services capability to suit the needs of target customer groups. For example, supporting those who are struggling to prioritise their finite time and effort on the burden of cybersecurity-related admin and process with 24/7 monitoring and alerting.

At the most basic levels, all customers will have an ongoing need for maintenance and support services, and structured, accredited education programmes. Less frequently, global logistics and project management services will be relevant to ensure complex rollouts go smoothly, as will financing/leasing in support of those OPEX rather than CAPEX payment preferences.

All of these services are arguably around the periphery of our dartboard target. Offer these in a structured and productised way, and you stand to syphon off significant annuity revenue streams. This leaves the way clear to collaborate with the customer on the more valuable projects that are integral to their business, with professional and consulting services that follow the lifecycle of the IT estate within the business – not just answering new requirements when they emerge.

I urge you to look at how the market is changing and see how hard it will be to carry on hitting your targets without recalibrating your approach. Your relevance is at stake, and services are the weapons you need.

The Exclusive Group Project – how to do what has never been done before

For years, the choice facing vendors was to compromise scale for value, or value for scale. Now they can achieve both – value and scale – together!

With the global IT market being such a dynamic and volatile place, it’s a good time to remind both ourselves and our partners why we opted to hook up together in the first place, what attracted us to each other and what keeps the spark in the relationship!

From the start, the Exclusive Group has been restless and unpredictable; we have not conformed. Indeed, we have been daring and audacious. Vendors have always loved this, but while in some quarters their lust for change and disruption has faded, we still hold true to the principles that brought us together.

We’ve stuck to our principles of valuing entrepreneurialism and relationships over imitation and centralisation. We’ve continued to experiment with new technologies and techniques whilst investigating exciting shifts in the market. And we’ve extended our footprint globally whilst keeping local relevance. Above all – we continue to add value-based services.

VAST vision pays dividends

Our unique business model has brought unprecedented growth and success, both through organic growth and astute acquisitions. We’ve complemented our cybersecurity focus with a bold foray into the rapid growth market of hybrid cloud with our web-scale business –BigTec – and we’ve massively extended our overall services capability.

But our project is far from over. The global technology market is such a fickle mistress that we can take nothing for granted.

But look at the facts and our VAST (value-added services and technologies) model is undoubtedly working. The people who matter seem to like what we do.

To examine the Exclusive Group project in more detail, consider the traditional models of value-added distribution that we disrupt.

The ‘unattainable’ top-right of scale and value

There is a niche for small, specialist national VADs in our industry. Built around a handful of good commercial and technical people with strong local channel relationships, they prosper through the value they create. Vendors like them, to an extent. For all their specialism and local relevance, they lack scale and resources, and the prospect of having to manage them all to achieve major channel rollouts is becoming even less of a turn-on.

By contrast, broadline distributors have plenty of scale and reach. They give the illusion of pressing all the right buttons. They can supply global projects through a single point of contact with comparative ease, and there are few limits to credit and logistics. Their Achilles’ heel is a distinct absence of true value. Vendors grudgingly accept that the broadliner doesn’t go the extra mile for a deal or to find innovative solutions to market problems. They won’t adapt quickly. Being corporately run, rather than by entrepreneurs, the broadliner’s biggest drawback is its lack of local relevance.

For decades, these approaches polarised the distribution market. Vendors chose either to compromise scale for value, or value for scale. More often than not, they would outgrow one for the other once market adoption of its emerging technology had reached its inflection point. Resellers who enjoyed good margins on emerging technologies from local VADs watched them vanish overnight when the broadliners moved in and commoditised the market.

For some of our vendors, the security and predictability of these steady-going, conservative suitors may offer the promise of short-term benefit, but I ask them, “If you still value your technology, if you still aim to disrupt and re-invent yourselves, if you still desire excitement and risk, then why would you align with a partner that is so incompatible?”

By any measure, these are partners that are shrinking, not expanding; that deliver declining or stagnant revenues and profit; that are extracting local value and retreating to so called ‘low-cost economies’!

Is this what they want? Decline, stagnation and the status quo? I sense this is exactly the opposite to what they want. What they really need is our project!

Go global, stay local, add value – this is our project. It’s one that has never been achieved by a VAD before. This is why it is so important to continue reminding people of this; why Exclusive Group and its vendor partners were drawn together in the first place, and why we will continue to succeed in the future…

High Flyers: Secure Your Digital Future

Even sat here in this airport lounge waiting for a flight, I can hear how keen people from IT and non-IT backgrounds are to talk about the digital revolution. In particular, how this is changing the face of business. For me, it’s all about confronting the cybersecurity threats that businesses face too.

You could be forgiven for ignoring this challenge because you think that ‘digital’ isn’t new. Digital watches were en vogue back in the 1980s. Digital TV made its switch from analogue in most western countries five or more years ago. We’ve had PCs for 40 years, and the world wide web is over a quarter of a century old.

But what’s really new is how all the parts of our digital lives – both personal and work – have now joined up to create a seamless digital existence. That means opportunities and threats.

Look at air travel. I can find a flight, book it, pay for it, check-in and get a boarding pass – all 100% digitally. In fact, I can do it all through a mobile device while passing in and out of different Wi-Fi and cellular areas. Every part of my customer experience is defined by software and delivered over the Internet.

The airline’s view on the world has changed too. All of its business processes are now digitalised and automated, from pricing and ticketing to payment processing and even flight dispatch at the departure gate. This is done by taking internally facing systems and making
them interface to external customers and partners.

All of this increases the size of the so-called ‘threat surface’. Consider this: there will be 50 billion ‘things’ connected to the Internet by 2020, as the IoT phenomenon takes hold and individual users increase their appetite for multiple devices. But the new digital world is not just larger – it provides more hiding places and opportunities for attack by cybercriminals.

59% of organisations expect the number of security incidents to increase next year, and most of the current incidents (82%) involve compromised endpoints. At the same time, CIOs are bracing themselves for more digital processes and more data. More than half of these –
according to Gartner – are worried that the digital torrent is coming faster than they can cope.

So what is the solution? You might think that a business who is afraid of risk would be wise to reject the digital revolution and keep everything operating as normal. No new application integrations, no explosion in endpoints, no dynamic interface with mobile workers…

But rejecting digital innovation is even riskier to a business than embracing it. According to McKinsey Global Institute, organisations working at the digital frontier have two to three times faster profit margin growth. They are more relevant to their customers, more agile in the face of uncertainty and change. It’s why entrepreneurs today are almost all ‘digital entrepreneurs’.

And don’t forget that rejecting innovation is letting the cybercriminals win. It means being trapped.

Rejecting digital innovation is impossible anyway. The cards have already been dealt. We live in a consumer-driven society where the customer is king. The consumerisation of enterprise IT in the last five years shows how unstoppable the next changes will be.

Did you want to keep all your workers in the office? Did you want to prevent customers using social media to communicate with you? Did you want to stop your employees bringing their own mobile devices to use for work? No – you found a solution to address these and other
cybersecurity challenges.

The air travel experience is so easy to do, and so intuitive that I suddenly hate doing these things outside of a digital environment. It’s a bit like SatNav – take it away and people remember how much time and hassle it took to plan a route somewhere. Would you give up your Uber app to go back to hailing taxis on the street?

The latest evolution of CARM (Cyber Attack Remediation & Mitigation) from Exclusive Networks has a strong proposition for channel partners who want to set their enterprise customers free from fear. With the right approach, you don’t have to let security concerns limit
growth potential. With CARM solutions, businesses don’t have to be held back and prevented from innovating and digitalising.

The continual evolution of CARM allows it to provide the most up-to-date solution framework for the latest cybersecurity challenges. That means preparing for a digital tomorrow, as well as a digital today.

Once again we come back to the subject of change, and how important it is for channel partners to be equipped to prosper from new opportunities and not be left behind.

Now, where has my digital boarding pass, gone? I don’t want the next part of this journey to carry on without me.

Four Ways to Sales and Marketing Success in the Era of SaaSonomics

As more non-IT buyers become responsible for actually buying the IT, they want complete transparency of price, limited or no contractual tie-ins and instant fulfilment. In other words – the same consumer-like experience they get when buying apps. Welcome to the new normal of SaaSonomics.

Channel partners are coming to terms with huge changes in customer behavior, or are they? Putting aside the payment aspects of IT consumption for further examination in other blog posts, it’s clear that decision makers’ new preferences for marketing and sales engagement are having one of the largest effects. What are the SaaSonomics of sales and marketing? Is it pay per click, LinkedIn type marketing where you set a limit of expenditure for your campaign, or some other pay-as-you-go marketing sales techniques that change the way we spend or get value for money?

We now live in an application age where IT decisions are executed by consumers as part of everyday life, and these consumer-orientated expectations transcend into the B2B environment. Indeed, there are signs that what buyers expect from a work related IT purchase has as much to do with the simplicity and efficiency of consumer IT propositions as other factors. The rules of the market have changed, so we need to change as well or risk becoming the obsolete ‘Polaroids’ of the IT world.

Consumer IT typically offers complete transparency of price, limited contractual tie-ins and instant fulfilment. Enterprise IT solutions that fail to address the value of these experiences are at risk of alienating their current and prospective customers.

Internal customer demographics are changing too, with greater instances of non-IT line of business (LOB) executives bypassing their IT departments to procure and implement solutions. As well as compounding the IT consumerisation effect, this new state-of-affairs raises the troubling spectre of ‘shadow IT’ where organisations lose control of their IT operations, opening up budgetary black holes and potential security hazards.

I’ve always advocated a business message for business technology, but these changes are bigger than we’ve seen before. IT is now more important than ever to the value of an organisation – to its very future – and that hasn’t happened because the world’s business executives have all suddenly started getting their heads around bits and bytes. Rather, it’s the simplification of IT that organisations are focused on, even though – ironically – IT solutions themselves are, if anything, getting more complex. It’s critically important that channel partners fulfil the need to execute this ‘simplexity’ on their customers’ behalf.

Every good sales process needs effective marketing to tee it up, and this integration is vital now that customers increasingly ‘self-serve’ on the web, conducting research and making crucial judgements about technology strategy without any consultation with suppliers.
In fact, this trend shows that, even by the most conservative reckoning, the average customer collates more than 50% of the data necessary to make their decisions before contacting partners or issuing ITTs.

So here are four immediate actions you can use to tune up your sales and marketing for the SaaSonomics revolution:

Put Digital First
What is your digital and social persona? Best practice is to develop a digital and social marketing strategy that informs, entertains and creates trust, but go one stage further and inject humour and personality. A friend of mine in the estate agency business recently created a character that makes fun of what life is like as a real estate agent. He’s quickly built up 10,000 followers and regularly gets 3,000+ views on his social updates and weekly blogs. Many followers link back to his website, which has created partnership opportunities plus incremental advertising revenues from recruitment companies.

Track Your Prospects
We all leave signatures and footprints in the digital world, thanks to cookies and other ‘magical’ techniques that watch where we visit, how many times we view content or when we use an app. This not only allows you to track the content you push to prospects and customers, and judge how positive they are towards you, but it also allows you to proposition them again with another ad on a totally unrelated web site. This is ’remarketing’, and it explains the mystery of why – when visiting your fashion site – an ad all about the latest firewall or data analytics tool appears…

Data is Gold (or coal if, like me, you come from Wales)
Your data is very powerful and can provide incredible insights into your customers’ buying patterns, behaviours and trends. These insights aren’t always as obvious or easy to recognise as an Amazon-like “people who bought a DDoS service also purchased an IPS” tip. However, look closely and it could easily tell you the optimum time to approach customers for renewals, and what sectors are more prone to adopt new releases or take calls for attaching additional features or services. I can’t believe I’m saying this, but data really is exciting. And if you’re not using the most obvious data you have to hand, then I guarantee you are missing out on a golden opportunity.

Automate, Automate, Automate
Delivering a more personalised call to action or message at the optimum time – leveraging many of the tactics and techniques above – means more work for marketing and demand generation people. Or does it? New cloud-driven marketing tools are here that automate and accelerate the sales cycle process. It used to be that marketing represented around 25% of the sales lead gen process and 75% was taken up with the selling cycle, but this is now the other way around. If you are doing just some of the above in a mildly successful way, you will undoubtedly be getting access to higher value prospect leads that are more advanced along the sales cycle. The beauty of marketing being 75% of the sales cycle process and selling just 25%, is that sales can be focused on hotter leads that have been properly nurtured. And, by the way, make sure you integrate your Marketing Automation stuff with your CRM. This is what helps you automate the ROI figures, which in turn justifies your next marketing request.

What matters is what works. This is all about moving with the times so, if old sales and marketing approaches mean you’re showing up too late to make a difference, you need to stop living in the past, today!

Simplexity – The Key to Reseller Success in a Software Defined World

‘Softwareisation’ is an ugly way of saying it, but is my best stab at describing – in one word – what’s happening to the old and increasingly outdated, hardware-dominated ways of IT. With vendors increasingly pushing virtualised solutions, and end users demanding IT-as-a-service consumption models, the onus squarely falls on resellers to satisfy both ends of the chain.

So as a reseller you have two ways of looking at this:

1) This is great! Technology is so exciting right now; I just need to make sure I stay relevant to my customers, add value to the direction they want to take their businesses, delivering support, advice and skills where necessary.
2) This is terrible! Why can’t we just sell big boxes of kit anymore? Sooner or later the only product we’ll be able to trade is a software license key at or near zero margin. Anyone can do that. What will be our purpose?

It’s your choice, but it’s one that is fundamental to the future prosperity of your business as advancements in technology – particularly the advent of cloud and virtualisation – are changing the face of the IT channel. Who’s to say the future won’t be just like the software licensing market? You can be frightened by that, or inspired by it. Whatever your emotions are, it’s time to grasp a once-in-a-generation opportunity to redefine your business and deliver enhanced value.

The whole driver for the SDx world is simplicity, speed of service, scalability, flexibility and – let’s not forget – velocity and lower cost. As more business applications and workloads look and feel just like selecting another app off your smart device, this easy and intuitive process can hide the fact that behind this new world order of computing is a complex mix of new services, technologies and techniques that still need designing, integrating and maintaining.

It’s a bit like a swan – what you see above the water is very simple and graceful. However, what you don’t see below the water is the complex movement that propels it forward. This is what we mean by Simplexity – making the complex appear simple. And in a market where experience is low and skills are scarce, it’s a perfect opportunity for resellers to add value.

So with IT buyers striving for simplification, the challenge and opportunity for resellers is how to deliver it as a coherent group of solutions and make it work for their precise needs. Compounding this challenge is the fact that you no longer have the luxury of doing all this in a development lab. Rather, it needs to be done in real time, with real apps and workloads, in the production environment (or, to use the new term, DevOps, which I’ll cover in another blog).

Simplexity is the approach to countering these contradictions. Resellers that know how to deliver simplexity:

– Really believe in making advanced, next generation IT solutions as simple as possible to create, deploy and operate.
– Understand that organisations want to deliver a unique, ‘consumer-like’ experience for all their IT service users.
– Have the frameworks and consultative insight to decode and simplify the technology landscape.
– Put IT automation at the heart of their solutions, so that customers aren’t distracted or slowed down by unnecessary management overheads.
– Have access to technical facilities that let them demonstrate the simplicity of new IT solutions in a secure environment.
– Have the project management and client skills to support the development and implementation of their customers’ long term IT strategies.
– Are willing to manage DevOps integrations

Leonardo da Vinci once said, “simplicity is the ultimate sophistication.” And he knew a thing or two about advanced technology.

Right now, not only are organisations crying out for simplification of advanced IT, but they are doing so during one of the biggest global IT skills shortages of all time. Now if that’s not the perfect scenario for the IT channel to add value and create opportunity, then I don’t know what is.

Unknown Unknowns – The Ultimate Test for Cybersecurity

I’ve realised that, over the last couple of years in cyber, the threats that get deeper, quicker and hide longer inside companies’ IT infrastructures, are the stuff we don’t know about. That doesn’t worry cybersecurity experts all that much, as the very fact of ‘knowing that you don’t know’ about a new virus or malware is actually half the battle. But what if you don’t know what you don’t know?

Tell someone that your work involves cybersecurity and it’s amazing how quickly that they open up about their own experiences.

This is exactly what happened during a recent train journey where I got talking with the guy sitting opposite me. He wasn’t a technologist at all, but turned out to be a board-level management executive at a major international business.

We got chatting about some examples of the latest clever cyber threats I’d heard about, when he suddenly started telling me this story about the mysterious theft of $250,000 from his business.

One Friday the previous month, a colleague at his London headquarters was asked to authorise a transaction by one of the smaller offices in the Caribbean. His company bids for lots of major projects all over the world and it isn’t unusual to submit a bid bond as part of the tendering/RFP process.

A bid bond is a useful way for organisations to ensure that only serious bids are submitted for their projects, and any business tendering for work see them as routine and low-risk.

Anyway, the sum required for this bid bond was $250,000, but the email requesting the money said it had to be lodged by 5:30pm Eastern Standard Time, before the office closed for the weekend and the tender deadline passed.

The amount was transferred at around 11:00am EST and the local office was notified. It was the last time the money was ever seen!

I explained that this sounded like a spear-phishing attack carried out by an intelligent and patient cybercriminal using a combination of inside knowledge and social engineering to deliver the right message to the right person at the right time.

Here’s what he said in response:

“Yes, we know that now. We know a lot more and are vigilant against this kind of trick happening again. Our problem is not having enough known knowns. We would like to know more about threats that we’re supposed to know about, as well as unknown threats we can never predict. We have few known unknowns – and even fewer unknown unknowns.”

This phrase about ‘known knowns’, was introduced by US Secretary of Defense Donald Rumsfeld during a 2002 Pentagon briefing about Iraqi weapons of mass destruction.

Rumsfeld said:

“…As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know. And … it is the latter category that tend to be the difficult ones.”

At the time Donald Rumsfeld came in for a lot of criticism for his comments, because many people felt they didn’t make any sense and were an unnecessarily complex way of explaining the issues around security intelligence.

14 years on, and in the context of new cybersecurity threats that nobody could have predicted back then, the phrase makes perfect sense. Combating known threats is an essential part of a cybersecurity strategy. It goes alongside advanced capabilities to anticipate, capture and – ultimately – learn from unknown threats.

What struck me about the bid bond incident is how unlikely the chances that the threat was also an ‘unknown unknown’ to other organisations. Certain kinds of emails from certain kinds of people asking for money for certain reasons flew around that organisation every day, so the threat went unnoticed. In another business, alarm bells would have started ringing straight away.

Everyone involved in cybersecurity must always keep in mind that customers have different weak spots and different processes, and they each manage risk in different ways.

There are exciting opportunities around those cybersecurity solutions that can take the fear factor out of unknown quantities, and make them ‘known’. But there continue to be significant opportunities around those protection measures that apply the universe of known cyber threat knowledge, to keep us safe every day.

Pre-Sales Doesn’t Mean Free-Sales

Most sales guys sell FREE sales, not PRE sales… sound familiar? Well it’s the same story all over the world.

On a recent trip to Sweden I heard someone really talking my language when he said: “I hate it when these salespeople think pre-sales means free-sales.”

I’m lucky that English is the main language in the tech industry, and terms like ‘pre-sales’ transcend whether the direct translation is in Swedish or whatever. But he could have been speaking any language and I would still have understood the thrust of his argument: that people everywhere are guilty of overlooking real value!

Pre-sales is one of many processes in a sales cycle that need to be completed in order for the customer to sign on the dotted line. It strikes at the heart of what CFOs fail to pick up in their spreadsheets: that sales aren’t 100% associated with the individual salesperson – unless the underlying product is just a commodity.

Of course pre-sales have little value in a commodity-driven, transactional sales environment where the channel just shovels technology along the supply chain and it ends up with the customer. The customer doesn’t need a POC (proof of concept), or architected design to convince them of this solution, or pre-staging to determine configuration and integration with other systems. Box-shifters don’t even need eval kit!

Conversely, when the objective is penetrating new markets and high value opportunities with disruptive new technology, pre-sales is a critical part of a value generating mix. Other frequently overlooked dimensions to this include: project “speccing”, ownership of the customer relationship/customer insights, demand creation through marketing, customer lead and opportunity detection, and captivating the customer through broader market/technology vision.

Where vendors and channel partners seek value, they need to understand where the value needs to come from. Most importantly of all, they need to recognise that value must be paid for.

I believe it is universally true that, “something given away for nothing has no value.” What I mean by this is that you can’t expect the recipient of something to appreciate the value of it, unless they’ve had to pay for it.

What my Swedish friend highlights is the lazy disregard for pre-sales as a valuable deliverable in its own right. That laziness means lost revenue for the salesperson concerned. These individuals clearly don’t have the skill or the self-belief to assert the value of an integral process.

So it isn’t just pre-sales who should be enraged when their skills are given away for free, it’s the owners and principals of channel companies who employ them. Valuable, expensive resources can’t be given away for zero revenue return and treated as a business overhead.

Think about it: “something given away for nothing has no value” has a lot in common with the old adage, “there’s no such thing as a free lunch.” We’ve all had business lunches thrown for us, and while they appear to be free, you know are indirectly “paying” for it through some unspoken favour to be returned in the future. This “payment” demonstrates that you value the lunch – else why the hell did you accept it!?

Greed – The Biggest Cyber Vulnerability of All!

Sadly, greed has become the one of the biggest cyber weaknesses of our time as more and more many ways of exploiting this basic human trait emerge. Even sadder, there is no easy ‘second Tuesday’ patch to block this in-built vulnerability.

Greed provided the backdrop to one of last year’s biggest and most intriguing cyber heists, where personal data was used, not as ‘dark web’ currency between hackers or to syphon money from unwitting individuals, but to exploit human beings’ overwhelming appetite for avarice. To explore this subject a bit further, let’s take a step back.

Credit card details are a classic example of a black-market commodity that people overestimate the value of. Some credit cards have limits of £50,000 or more, but this doesn’t translate to hard cash. More likely to be used as a kind of currency between cybercriminals, as well as to perpetrate new cybercrime (much as stolen cars are typically the ideal choice for a getaway vehicle), the outlet for stolen credit cards isn’t simply “go buy stuff without paying for it.” In any case, CC companies are getting really good at spotting odd 1€ transactions and freezing the card (really frustrating when the trade was real), goods are shipped to addresses that merchants can trace, and geo-sensitive behaviours are tracked to the nearest 10km or so, ensuring further safety.

Far more valuable are the email addresses of ‘middle class’ individuals. Or at least they are, if you know what to do with them.

The aspiring middle classes are emerging as the best kind of cybercriminal target if you don’t just blow it by trying to steal their money directly. They have a certain amount of disposable income and ‘net worth’, and as a global class they are growing.

According to the US Government Bureau of Justice Statistics, people in households with an annual income of $75,000 or more suffer a higher prevalence of identity theft than any other income bracket. And with cybercriminals having to become even more creative at exploiting data they extract from nearly every household (46% of American have either been a victim or know someone who has) novel approaches have been developed to turn this data into hard currency.

They use one of the oldest scams in the equities market to pump up a stock price, dump it at its peak and rub their hands with glee. As the stock price plummets or returns to normal levels, innocent investors are left wondering what the hell just happened. What’s even more appealing about this exploit is the sense of shame and guilt felt by the victims, making them slow to react and reluctant to inform the authorities.

These scams are infamously known as Pump and Dump (P&D) schemes. The scam draws its power from a single human characteristic: greed. While traditional middle America, increasing numbers of affluent Asians – and equally eager Europeans – are duped by a trusted source (compromised by identity theft) into following or buying a stock that is tipped for upward movement, the perpetrators may only be looking for a 10% gain before bailing out, or they may only be addressing a small portion of their stolen credentials at a time so as not to draw attention. Funny really, that cybercriminals avoid the temptation of being too greedy in order to evade detection and maximise their profits!

The sting here though is that the cybercriminals hold tens of millions of records; records that have been extracted over many years. Think about it: so many companies have had their defences breached and data stolen – often over scandalously long timeframes before finding out – and yet few suspicious activities have emerged. Isn’t that suspicious in itself?

Most modern P&D scams have relied upon a very crude spamming approach that sends junk to millions of random email records so that the <0.1% who act on the information generate enough critical mass to impact the stock price.

In the recent case of JPMorgan and several other leading US financial institutions and brokerages, this was made significantly more lucrative because the honest stock-speculators concerned were so well targeted and by highly reputable, trusted sources.

This audacious infiltration of trust raises two further questions:

Who is the victim? It’s not simple to address, even though it’s clear that the data has been stolen from a finance house, and that their reputation would have been damaged. But no money was stolen and it’s hard to put a solid value of the theft, even though last year’s discovery estimated the total scam netted the gang more than $100m over a number of years. Meanwhile, the unwitting or amateur stock speculator has been duped, but again none of his/her passwords or account data has been compromised. No money has been stolen; indeed some of the ‘victims’ may even have managed to profit from the scam as they saw the prices rise in the time following their trade. Eventually they’d all lose – unless they got out in time – but then that’s the risk of the stock market, right?

What’s worth more, everyday data about ‘valuable’ people or valuable financial data about everyday people? In this case, I’d suggest the former.

These new P&D scams – and others like them – demonstrate the innovation of cybercriminals and the need for businesses and their trusted IT advisors to think laterally and in non-obvious ways. It should help channel partners introduce new security concepts like modern malware, APTs and behavioural analysis tools – they look for odd behaviours like executable programmes not executing, or unusual trends – and this helps VARs have far more interesting and strategic conversations with their customers that ultimately lead to greater value.

These scams also reveals that – as people – we are our own worst enemy, especially now that the science of cybercrime is staying one step ahead in capitalising on our human weaknesses.

P&D scams show that greed is a very powerful force that cybercriminals are committed to exploiting, and they also highlight the amount of vigilance and investment organisations need to employ to prevent and mitigate them.

As Gordon Gecko famously said, “Greed is Good.” Well that rather depends on whose greed it is…

Learn the Laws of SaaSonomics

The economics of IT consumption is evolving and it will impact the IT supply chain as we know it. This is the era of SaaSonomics and resellers that don’t think about adapting their businesses for this disruption risk becoming the Kodaks or HMVs of the IT channel. Look at the facts and it’s obvious that today’s technology market will not get you from here to eternity.

Consumer IT typically offers complete transparency of price, limited contractual tie-ins and instant fulfilment. By contrast, enterprise IT providers are still the complete opposite of this, despite Forrester and other research houses predicting global SaaS revenues will hit $87bn by the end of 2015; more than doubling the figure for 2012. Even stronger growth on the back of more flexible IT provision is inevitable.

Meanwhile, disruptive new services-based business models are undoubtedly emerging as an alternative to the traditional capital expenditure approach. According to Ovum, over 80% of enterprises globally will be using Infrastructure as a Service (IaaS) by 2016. That’s a significant change over a short period. By the same year, IDC predicts there will be an 11% shift of IT budget away from traditional in-house delivery, toward various versions of cloud computing as a new delivery model. 11% of the global market is $385bn!

And finally, analysts are projecting a fall in enterprise demand for solutions that fail to deliver the benefits of virtualised, cloud-driven and software defined technology. According to a ComputerWorld survey, 52% of organisations over 1,000 employees have increased spending on cloud computing this year. The only standout decrease planned was on hardware, with 24% agreeing they would cut budget in this area.

It is clear that the entire IT channel needs to transform in order to prosper. Disruptive approaches are needed. Buyers are changing how they evaluate and deploy technology, and are considering purchasing it on an OPEX rather than a CAPEX basis. Soon customers will be asking you a monthly or quarterly price for 1,000 VM’s (and I ain’t talking ‘voice mails’).

But whilst the facts and mega trends illustrate this, many resellers are ignoring these indicators and failing to prepare for the impact that reduced or delayed cash flows will have on their business. They are not skilling up for the big change to cloud based consumption, are in denial over the impact on sales plans and commissions, and burying their heads in the sand over the displacement of revenues from one-off lump sums to regular annuities.

No one really knows where the rest of the IT channel will be by the end of the SaaSonomics decade, but the story is not all doom and gloom. Most resellers are in the same shape so now is the time to act.

If you aren’t already planning a business transformation project around SaaSonomics, you need to start now. If you aren’t building out lower cost sales models, you need to begin that modelling immediately. And if you aren’t working internally with your FD/CFO to gradually change financial structures, you have to distract her attention away from the abacus today.

The last time I bought a car, it wasn’t really the colour or performance or consumption figures that caught my eye – it was the sales guy’s approach about how quickly and cheaply per month he could get me into that car, with a promise to upgrade me before the end of the term to a better model for a smaller monthly fee. That’s the thinking our channel needs to embrace.

One of the ways to enable this is to get serious about services, and payment models delivered by IT asset financing and leasing. We may not be there yet in terms of a global offering, but facing the reality and embracing the change is half the battle. Sit on your hands and market disruption will disrupt you out of existence. Take up the challenge and prepare your way from here to annuity.