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Sun 16 May 2004 04:00 AM

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Delivering channel change

New software delivery models and the emergence of hosted offerings will revolutionise the role of value-added partners and systems integrators in the Middle East IT channel.

New software delivery models and the emergence of hosted offerings will revolutionise the role of value-adding partners and resellers in the Middle East IT channel. Put simply, electronic software distribution, the rise of the application service provider (ASP) model and increased acceptance of managed services will leave some resellers with an acute need to adapt their business models.

This is one area where boxshifters and those selling, shipping and installing physical product can rejoice. Where physical boxes are involved, the role of the channel in linking vendors to end-users remains pretty much assured. In other areas such as security software — especially at a consumer and SOHO level — the long-term outlook for resellers must be viewed against a backdrop of web-based distribution of product updates and monthly subscription fees paid direct to the vendor.

Retailers still stock their shelves with packaged anti-virus software for vulnerable consumers logging onto the web from their home PC. Once committed to a vendor, these users are often persuaded to pay a subscription to their anti-virus software vendor to download regular product updates. This model of electronic software distribution (ESD) can effectively disintermediate the role of channel partners. But with so many new internet users logging on in the Middle East, there is a clear opportunity for channel sales to continue growing especially among business customers.

At an enterprise level, ASPs operating in the region are focused on building up relationships with application vendors ready to go down the hosted delivery road and infrastructure providers looking to sell their kit into the datacentre environment. As outsourced application delivery and locating hardware offsite becomes more mainstream, channel players — especially those working as systems integrators installing complex hardware and software — need to reposition themselves to effectively sell both offsite and onsite application and hardware installations.

It will become a case of offering the customer choice and freedom to choose the delivery mechanism and finance package that suits them best. The queue of vendors talking to ASPs about delivering their applications as hosted solutions continues to grow. The whole rise of the datacentre and the ASP model adds new quirks to an already complicated channel model. Enterprise hardware vendors, with a historic tendency to peddle their wares direct to the customers may start to see more value in pushing their offering to datacentre customers and working with software vendors to create effective combined solutions.

Software and service delivery will move online as internet infrastructure capacity and reliability increases. These new models will push some existing channel models into a period of evolution and re-evaluation. Channel players with strong links to their customer base and long-standing relationships will still be able to carve out a niche. The power of the personal relationships should not be underestimated and even ASPs and MSPs still see the need to implement channel programmes to ensure market reach.

This process will take time but it is something that huge swathes of the channel community need to be aware of now. A little bit of strategic planning at this point in the development of IT delivery mechanisms will help stave off potential disintermediation further down the line. With more and more businesses starting to wonder if IT is really a core business process for them, the propensity to outsource grows daily. If the new breed of ASPs can provide the reliability, functionality and attractive financing customers long for, the evolution of IT from an in-house headache to an external service will continue apace.

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