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Home > Channel, Covid-19 and the requisite medicine

Channel, Covid-19 and the requisite medicine

28 May, 2020

Covid-19 is playing havoc with the way resellers do business in the ICT space, not least in the instability of exchange rates and a stronger dollar, which is probably the most pressing channel problem that will influence the way companies decide on IT spend.

The second problem facing the channel is the slowdown of flights causing delays of stock – including mission-critical components – by as much as two to three months.

There is no question that coronavirus has caused a slowdown in world trade, and the disruption in global supply chains is already evident. South African companies that have built markets on the back of a global trade network need to be aware of how vulnerable they are and the importance of acting swiftly.

These are some of the challenges that are pivotal to addressing supply chain management and the ability of resellers to assist their customers.

We’ve seen statistics that indicate that there are industries that are going to struggle to recover, and others that look set to surge. However, given that the majority of CIOs recently surveyed by IDC researchers intend pursuing existing vision and strategy, the ICT channel needs to be putting contingency plans in place to meet their demands. Only a meagre 1% of CIOs are stalling or cancelling all current and new initiatives. In the working from home (WFH) context, there will be spend on devices and smartphones, security and teleconferencing and putting emphasis on the digital employee experience and digital workspaces. Spend is also still planned on hardware, storage and networking.

In sourcing stock, we believe that the purchasing calls distributors are making now are good in terms of buying in larger volumes. We also agree with every possible way of de-risking on the exchange rate. It’s the distributors that are geared to buy, however the prices from distributors affect how we work within our arenas and pricing will need to be very carefully managed.

The silver lining for the channel is in providing cloud and virtual platforms, where there is both opportunity and the need to protect the supply chain. With conferencing applications, there is going to be a big drive to cloud and particularly local cloud because international clouds are linked to the dollar and are thus expensive.

We also see the need for security, more than ever. Secure access to IT services is the top short-term priority for 91% of CIOs, based upon a recent IDC survey. We see a trend of digital empowerment – more work stations, data and fibre in the telecommunications side. There’s been a huge uptake in participation in online meetings, seminars and distance learning which is underlining the value of this new digital cloud.

With cloud and social distancing, companies will be making more investments in AI and machine learning projects to digitise customer interactions such as virtual assistants and call centres. 

Transportation will be a big issue for resellers, with the exponential increase in cost per kilo to import – a cost anticipated to increase more than three-fold in the second quarter.

The challenge is that everything is currently imported and as the rand to the dollar fluctuates, this cost is passed on to the consumer. Add to this the reduction in flights, which delays factory production. The software industry is different because there is no stock, so this industry is still healthy. Essentially all the factors affecting the supply chain, including the severe disruption, is, or already has caused, a reduction in demand and the need has come for the rethinking of technology projects and how these are going come to fruition in the short and medium term.



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