 |
| Monday, 29 June 2009 |
|
|
INTERVIEW: Stuart Fenton, Insight EMEA
Stuart Fenton has more than 18 years of leadership experience in the IT industry and now leads Insight’s EMEA and Asia-Pacific business. NASDAQ-quoted Insight operates as a technology solutions provider serving clients in 170 countries. Today, thousands of clients, including more than 80% of the Fortune 500, use Insight to acquire, implement and manage technology solutions to empower their business.
www.channelemea.com caught up with Fenton, President at Insight EMEA, to discuss the company’s recently signed reseller agreement with Google Apps and his wider vision relating to the role of the reseller in the delivery of software as a service (SaaS). Fenton also outlined the challenges of building a reseller operation capable of serving some of the world’s largest organisations.
Q: How challenging is it to run a reseller operation with the capability to sell across EMEA? What are the differences between markets and how do you ensure that you have adequate coverage and reach?
SF: In EMEA there are 22 countries that we operate in with our own staff, but it is important to remember that we are capable of trading in 170 countries on a global basis. Obviously, for some of these markets, you are serving them from sister countries. On a global basis there are some fairly unique countries like China and Russia. These can be fundamentally different to everything else you know so that it becomes a more difficult trading environment. That is not to say [these markets] are not without there returns, but it is definitely a challenge. It is important to remember that in markets like Russia we are dealing with a small subset of customers – typically multinationals with in-country operations. So we’re not over-exposed to all the intricacies of the market but it is certainly an interesting environment.
Q: How does Insight decide where its points of presence should be located? What is the process that the company goes through?
SF: There are a few factors at work - but of course market size is critical and the ease of doing business is also very important. We also have to look at where are existing clients are. Insight works with a large number of Fortune 1000 companies and they may require us to work in a certain country or region. If enough of them say they need our support then we will enter that market. For example, we’re in Singapore, which has a population of only 3.5 million, but we’re there. Because there is a significant amount of business it makes sense. For Russia and China, the sheer size of the market means we’re also there, but just because a market is larger, that doesn’t necessarily mean it is easier to transact in.
Q: Insight EMEA has just signed a deal to sell Google Apps. What do you see as the role of the reseller in selling software as a service (SaaS)?
SF: The reseller provides a handful of services. You can look back to the reseller model of 20 years ago and ask why it started and what benefits it delivered to manufacturers. It was simply about getting closer to the clients. Look at Google – it is a company that doesn’t have a direct sales force. Hardly any vendors do with the exception perhaps of Microsoft and HP and even there, they only touch a small number of clients.
Resellers can get close to the clients and provide a number of services. This may be aggregation for a client with multiple systems and wants to connect them together or move from one to another. An example with Google is that we can provide customers with data migration services. We can connect to an Exchange environment and help them integrate with existing active directories. The reseller provides the services and also the customer interaction.
Q: How crucial is the role of the reseller in terms of the financial model for a solution such as Google Apps?
SF: One of the areas that most resellers are looking at is aggregated billing. Again, look at the original reseller model. The average client could be buying from 300 to 400 vendors or suppliers of IT equipment and services. These clients do not want 400 invoices, 400 purchasing relationships and 400 companies chasing them for payment. The reseller has the ability to aggregate not only products, but also services including SaaS and aggregate them together. The SaaS model plays perfectly into the reseller model, which is why Google have embraced the reseller channel and is using this aggregation ability in terms of the billing and forming the transactional relationships.
Google has an outstanding solution that it is developing at a significant pace. In 2008, Google added more than 150 new features to Google Apps and I expect they will do broadly the same if not more this year. This also represents an opportunity to the reseller to play a role by helping clients understand these new features and the advantages they offer.
Q: So how does the revenue model work for Insight EMEA in terms of selling Google Apps to clients?
SF: Any company with less than 50 users can have the standard edition of Google Apps for free. So for small businesses it is fantastic value. The real value for the reseller is with the premier edition that offers added capabilities, security and the ability to set up complex environments in medium and large enterprises. The premier edition works out at about US$50 per user per annum. This is an annual subscription paid for upfront and invoiced directly by the reseller to the client. The reseller handles the transaction and the billing – if the client wants to add extra seats this is also handled by the reseller.
Q: This sounds positive for a reseller’s finances - a predictable and recurring revenue stream.
SF: There is no question that it presents a revenue and margin opportunity – almost an annuity programme – that is profitable. Google is not necessarily there to replace a Microsoft environment. In many cases it will complement a Microsoft environment and we do not see companies completely migrating away from Microsoft. Some organisations want to use a SaaS solution and will operate a mixed model – this is the most likely scenario. We think that the cloud will find its place within a mixed user environment.
Q: How much of the US$50 per user per year does Insight EMEA get?
SF: That’s the question I’m not going to answer. While I wont give you specifics, it is a reasonable and fair percentage. Not significantly different to the margins one would make under a licensing programme from say a competitor.
Q: What sort of internal training has happened within Insight EMEA to makes sure you can go out and effectively sell Google Apps?
SF: We are still going through that process but already have a number of clients that have expressed interest in a Google Apps environment. It is not necessarily overly complex from a licensing and transaction perspective. We have a number of engineers across Europe undergoing training on the services that we will provide to Google Apps’ clients from data migration to console administration and integration with other systems.
Q: So how strong is the order pipeline?
SF: We’ve got a great deal of interest. We expect orders to really start coming through in the second half of this year. It is an interesting mix of clients. What we are seeing is a number of upper midmarket and enterprise clients expressing an interest to use Google in parts of their organisation.
Q: Are an increasing number of software vendors approaching Insight EMEA with a SaaS-based sales proposition?
SF: There are a number of publishers now doing this. We see VMware as a credible partner with a great offering that has significant benefits in the market. Microsoft is launching products and while Google Apps has been around for a while, the reseller model is relatively new. That opens them up to a range of new clients they didn’t have before. There was a recent Gartner report that said by 2012, 25% of software would be delivered as a service. Most of the publishers have created models that involve the reseller because of the additional services and the aggregation requirement.
Q. Any concerns that further down the road the reseller could be cut out of the equation? Is disintermediation not a danger in the longer term?
SF: I think throughout this industry there has always been a threat that manufacturers and publishers would go direct - and periodically that has happened. It is always a possibility. However, we’re confident that the publishers and manufacturers see the value of the reseller channel. At one time HP wanted to go almost entirely direct with their hardware and quickly reintroduced resellers into clients they had gone direct with. Dell – a great example of a company that was the poster child for the direct business - has now built a very credible indirect model. Major resellers are now an important part of the Dell business. Look at Google - you wouldn’t have seen it as a reseller model, but Google has come to the resellers because they understand the benefits.
Q: So the publishers and manufacturers don’t want the headache of dealing with hundreds of customers?
SF: The fact is that the cost to create a direct sales force and a finance team able to collect payments from hundreds of thousands of customers is significant. It may well be possible to do everything by credit card, but businesses don’t always use credit cards – they don’t want to because it doesn’t suit their cash flow models or how they account for things. Large expenses like software and hardware - they want to do this on their own terms and get more control. When things go wrong or aren’t paid for, it can be difficult for publishers. Say they have an important client and something goes wrong and it’s an automated payment system? that could be terrible. That’s where the reseller offers benefits because we’re the glue between the publisher and the client.
Q: A significant number of resellers have signed up for the Google Apps partner programme. How will Insight EMEA stand out from the crowd?
SF: Insight already has relationships with a significant proportion of the Fortune 500. We have tens of thousands of clients that have pre-existing relationships with Insight - trading relationships utilising software, services and in some cases hardware as well. Whether its aggregation, billing support, licensing management, software asset management or solutions architecture – the benefit Insight offers in terms of global support is far from common. We feel that existing clients are likely to remain with Insight and we offer a fantastic proposition for new global clients. For smaller clients, we provide a simple set of services and an international team that can support them 24/7 – something that not all local resellers can provide.
Q: Does Insight EMEA use Google Apps internally?
SF: We do use it internally. Not throughout the entire organisation but we decided to try it before we signed up as a reseller. To spin a US phrase, we wanted to eat our own dog food, to make sure we could use it and get benefits from it. Over time we will look to use it in a mixed environment where it makes sense.
Q: What are the strategic priorities for Insight EMEA for the rest of 2009?
SF: We have a number of priorities. We are investing heavily and aggressively in our midmarket sales organisation across Europe. We have a strong midmarket organisation in the UK and it is developing fast in Spain, Italy, France and the Netherlands. One of our priorities is to expand this to other countries that we are operating in. The second priority is to expand the product and services portfolio where it makes sense - of course, Google is a fantastic example of this. |
|
|
|