Tech to drive your profits next year

CRN has donned its fortune teller’s turban, dimmed the lights and peered deep into its crystal ball to see what’s going to be hot in 2007.

We are predicting that the following technologies will continue to experience strong growth and drive sales next year: Voice-over-IP, security, Microsoft Office 2007, software-as-a-service, Gigabit Ethernet and WiMAX.

We have come to this conclusion based on our own research determining which technologies show the most promising signs to keep resellers profitable.

To help you make your own fortune in 2007, we asked a range of industry analysts, vendors and channel players to read the signs and tell us what’s on the cards in these areas for next year.

Over the coming pages they will tell you how you can approach these growth markets and what strategies you need to put in place in order to profit from them.

In 2007, customers will become more aware than ever of the fact Voice-over-IP should be a business-enabler rather than just a cost-saver, predicts Ovum research director David Kennedy.

“The value-add of VoIP can be summed up as presence, mobility and collaboration,” Kennedy says.

“Presence means workers can customise their IP communications to ensure they are in contact at all times. Mobility means workers can access the resources of the company from any IP device anywhere in the world. Collaboration means workers can better coordinate and communicate using a variety of applications and their combinations. These will require resellers and integrators to have strong skills in business process analysis.”

Success in the channel also requires a “three-ring circus” of sales, implementation and support, says Craig Neil, managing director of integrator NSC Group.

“In the early days it was a bit of a Catch 22 – you can’t build your support business and use the resultant revenue for growth without first making the sales and completing the implementation. Therefore it’s critical to have sufficient funds, and a favourable corporate reputation.”

Selling VoIP to businesses requires a clear understanding of the differences between residential and business-grade services, says Gavin McDougal, managing director at VoIP provider ISPhone.

“Today your customer might be primarily interested in saving money, but if that is their only motivation then they may try a residential service and as a result lose faith in the quality as a business application,” McDougal says.

“Educating your customer on the benefits of IP telephony will ensure they receive a long-term return on their investment and will give you a solid platform to sell additional products and services,” he says.

A lot of customer training and education is still required for advanced features such as call relay, voice/fax to email and presence management, says Howard Liu, managing director at reseller Lebenton Technology.

“A good reseller will discuss how these can ultimately contribute to work efficiencies, provide an enhanced customer service experience and change the way people communicate. But a great reseller will also continue to manage customer expectations throughout and after the implementation,” Liu says.

VoIP is a business grown and maintained through a comprehensive technical capability, says integrator Matrix CNI’s managing director Deni Saupin. “You need to tie this technical capability with good, focusedcustomer account management to ensure a full understanding of clients’ requirements, scoping the appropriate technologies and services, and setting the right expectations,” Saupin says.

Integrators should limit themselves to working with one or two vendors, with only the biggest integrators stretching to three, warns Gartner principal research analyst Bjarne Munch. “We generally don’t see them go beyond that because it takes such an effort just to get to know even one vendor and become really familiar with their solution.”

Voice-over-IP and Microsoft Windows will loom large as two key security issues in 2007, foresees Ovum’s Kennedy. “In the VoIP area, many enterprise networks are still vulnerable to a range of attacks, principally voice spam and phishing, toll fraud and denial of service attacks.

“The challenge for resellers and integrators is that most vendors are still focused on the public Internet, at the expense of IP VPN products that can be deployed in the enterprise environment.”

Resellers and integrators will need to take leadership here, build their own security capabilities and implement a range of bespoke solutions until the vendors better address the enterprise, Kennedy says. “As for Windows, the healthy industry for security products reflects the vulnerability of XP.

“Microsoft has invested heavily in its Trustworthy Computing initiative and Vista will bear some of the fruit. For resellers and integrators, this improved, though not perfect, security should be a strong selling point for Vista,” Kennedy says.

Security will be a key driver in other areas such as mobility, Voice-over-Wi-Fi, infrastructure optimisation, WAN optimisation, remote infrastructure management and employee productivity, predicts distributor Firewall Systems’ managing director Nick Verykios.

“Ultimately, threat management is now part of the DNA of every facet of IT. We don’t know about the threats we will be protecting against tomorrow so the approach is to take an intrusion prevention approach, as opposed to old school intrusion detection. These preventative strategies, locked into other technologies in key growth areas, will free up significant budgets to invest into security,” Verykios says.

Other hot security areas in 2007 will include network access control and quarantine, patch management and configuration management, says PatchLink A/NZ sales director Chris Wood. “There is great demand for organisations to open up their networks to users, customers, business partners and contractors, and this has significant security implications. At the same time, the threat landscape has changed with the motivation for compromising computing resources moving from fun to profit. As a result, security can no longer just be reliant on technologies such as firewalls, anti-virus, IPD/ IDS and IPSEC based VPNs as these technologies can merely block to problem and not fix it,” Wood says.

Resellers and integrators should look at segmenting the market into high-end, mid-range and entry-level and have a clear understanding of the threat landscape in each segment, says Symantec’s Asia Pacific and Japan Channels vice-president, John Donovan. “In the high-end, there should be a balance between security and availability, with a focus on compliance, while in the mid-range, focus should be on costand performance. In the entry-level market, the important factors are cost and peace of mind.”

A good approach is to focus on one or two specific technology areas, says distributor Whitegold’s managing director Dominic Whitehand.

“Another is to partner with a distributor that you can outsource those skills to initially, but over time get a skills transfer from via training. Don’t try to be a generalist IT security provider – it is way too easy to come unstuck and look unprofessional.”

The release of Microsoft’s Office 2007 will offer the channel a significant opportunity to boost revenue when selling PCs, particularly when combined with the new Windows Vista operating system, predicts IDC’s PC analyst Liam Gunson.

“Microsoft is saying that, while Office 2007 works on Windows XP, it works so much better on Vista. With Vista coming out soon, the channel will be able to use one to help sell the other. Vista is also where you start being able to sell higher spec’ed hardware.”

The fact many of Office’s new features revolve around business processes and workflow means that the channel will need to educate itself on the benefits of Office 2007 before in can convince customers to upgrade, Gunson says. “A key thing to consider, especially when looking at the commercial market, is the amount of change that will be caused and whether or not that will inhibit people upgrading. Office 2007 will require a lot of new learning and training to get the most from it, so if organisations are going to upgrade they’re going to need to consider initial loss in productivity and whether the new benefits are enough to warrant that upgrade process.”

Training for both resellers and customers will be an important investment to ensure success with Office 2007, says distributor Express Data’s software division manager Emma Scott. “There are now eight different versions of Office 2007. Resellers will need to be across all versions to ensure the customer is purchasing the right product for their needs. Office 2007 is easy to use but has a very new look and feel, so user training will be required to get the full benefit of the product.”

Detailed knowledge of new features and what they have to offer customers at all levels will be the key, says Microsoft Australia information worker business group director Tony Wilkinson. “We’ve got three big focus areas: collaboration, content management and business intelligence. I think the idea is to understand what are the scenarios that they think will be most relevant to their customers,” Wilkinson says.

Knowing how to pitch Office 2007 in a way that meets a customer’s specific needs is major a key to success, says integrator Data#3’s platforms and applications practice manager Scott Gosling.

“The key to profit from these growth markets is to firstly being able to understand the business impact and value for the customers and its alignment with each customer’s business objectives,” he says.

Although software-as-a-service is best known in the CRM market, in 2007 it will move further into market sectors such as financial services and HR management, predicts Ovum public sector research director Dr Steve Hodgkinson.

“Software-as-a-service is an increasingly disruptive influence on the overall software market. In the long run, we expect there to be a blurring of the distinction between software-as-a-service and business services,” Hodgkinson says.

Channel players looking to build their business around SaaS need to look closely at their sales and technical personnel, says Steve Russell, Salesforce.com president and CEO Asia Pacific.

“It’s more likely you’ll be speaking with customers’ business managers rather than people solely in the IT department. As a reseller or services company you will really need to be able to identify what are the business issues, map the right technology, do the configuration that bridges business to technology and create value for each stakeholder along the way,” Russell says.

“The next thing to think about is the business model. Traditional IT sales and delivery are typically wrapped around long sales cycles and even longer deployment time frames. Therefore, IT resellers and services companies have built up a set of pricing and packaging that’s rather front loaded or wrapped in large deal sizes.
“For SaaS you want to create a modular business model, one that includes a cost structure and pricing/packaging that is geared for high velocity, transactional sales and implementation cycles. Deliverables should be designed to produce quantifiable return in weeks. The way that SaaS takes off within a customer is to get in quickly and show results,” Russell says.

Partners are key to Microsoft’s SaaS strategy and opportunities for partners will grow as the market expands, says Norbert Haehnel, director of Microsoft developer and platform strategy.

“To fully benefit from the new landscape for delivering applications to end users, ISVs and hosting service providers will strive to change many operating procedures that have been the norm.

“They have to ensure that their applications and services are readily available 24x7 in an environment vastly different from the traditional client/server model, and they must change billing and licensing procedures and enable remote access to the application,” Haehnel says.The majority of WebCentral’s resellers provide technology services to SMEs who prefer pay by the month, says WebCentral products general manager Gene Suna. “The most successful of WebCentral’s 450 SaaS resellers have leveraged our products to help expand their business beyond providing commoditised ‘break/fix’ services and these resellers are now building more strategic relationships as technology advisers to their SME customers,” says Suna.

“We have found the best investment our resellers can make is in training their staff to understand the business problems that SaaS products can solve for their customers and prospects.”

While Gigabit Ethernet will have a more important role to play at the core of corporate networks in 2007, running Gigabit speeds all the way to the desktop is a waste of money for most organisations, warns Gartner’s Munch.

“We are saying outright that we believe the enterprise market globally, from now until 2008, will waste something like $US10 billion on buying Gigabit Ethernet to the desktop. We do not believe that the majority of the enterprise market needs Gigabit to the desktop,” says Munch.

“On the data centre side of the equation there is a need for Gigabit and even 10Gigabit Ethernet, but at the desktop there is hardly any reason to expect the bandwidth needs of a normal, average user to exceed 100Mb/s. If you are an honest integrator, you should go out and tell your clients that instead of spending the money on buying bigger pipes in the LAN they should actually spend their money on deploying features that would make applications work better, such as traffic management and application acceleration. They would have a lot more effect on application performance levels rather than just adding bandwidth,” says Munch.

Every serious network solution sold by Matrix CNI incorporates the ability to migrate to a 10Gb core in the future, says integrator Matrix CNI’s Saupin.

“More often than not the customers who are serious about protecting their current/initial investment will pick this path, budget permitting.

“It is important that resellers and integrators who predominantly sell systems do not see networking as an add-on service to selling hardware, because more than ever there is a need to have the right technical resources in place to help customers enjoy the promise of convergence,” Saupin says.

“Just as it is important to have the right technical skill sets to provide secure network solutions to customers, it is important to have the right skills in 10Gigabit technology to design workable solutions that incorporate data, voice, audio and video whilst maintaining the security and reliability of the network.

“Then marry that with good, focused customer account management to ensure a full understanding of client’s requirements, scoping the appropriate technologies and services, and setting the right expectations to the client in terms of the deliverables,” Saupin says.

“This means having senior engineers on-board with pertinent training, certifications and experience to help customers during the design and planning stage.”

WiMAX may be hot property in 2007, but Australia will have to a wait a little while before it gains traction locally, predicts Ovum Asia Pacific analyst Nathan Burley.

“Fixed WiMAX provides a good wireless substitute for fixed-line broadband services; however, the WiMAX technology of real interest, which has a much larger potential market but has not yet arrived, is the mobile version,” Burley says.

“Unwired and Austar are expected to be the mobile WiMAX leaders in city and rural regions of Australia respectively due to their spectrum ownership. However, they will potentially only upgrade their proprietary ‘pre-WiMAX’ networks and commercially launch mobile WiMAX late in the year. This means 2007 will see more WiMAX announcements, clarification on strategies, interest and developments, but the real year for WiMAX in Australia will be 2008.

It is in 2008 when Ovum expects end user devices and embedded laptops to become available in any volume. “Next year the wireless broadband and wireless data growth will be dominated by mobile operators’ HSPA solutions.

“The performance achievable by this technology has developed rapidly – partly due to the threat of WiMAX. HSPA solutions will have good coverage and offer end user services that are likely to gain a large majority of early wireless broadband adopters. For wireless broadband in Australia, 2007 is more likely to be the year of HSPA than WiMAX. For mobile WiMAX’s year, we will need to wait until 2008,” says Burley.