Model Theory - DaaS
Sunday, June 23, 2019
MD of UK & Ireland Paul Bryan thinks he has the secret to finally create a Device as a Service model that actually works for partners. At the distributor’s recent Plug In event at Silverstone Bryan spoke to Technology Business Today.
Starting out his career in distribution when Exertis (then called Micro Peripherals) was below the £20m in revenue threshold Paul Bryan has served a long tenure in the distribution market. After smashing through the £3bn in revenue barrier in 2018, and now part of the DCC Group, Exertis has transformed into a formidable beast in distribution.
Working his way up the sales rungs and into management, in 2008 Bryan found himself in the Sales and Commercial Director role after a brief hiatus working away from the business. Later in 2013 Bryan moved into the Managing Director role for IT and Mobile at a time the mobile industry was still exploding.
Bryan commented, “When you’ve been in a business for that long I am always conscious you have to be able to learn new tricks, you have to make sure you keep a good culture going, keep the blood mixed and retain the good DNA from the past but also have good people coming into the business.”
On Brexit, Bryan is, like a lot of us are, frustrated. “It is a distraction, I hope the government get that sorted quickly because everyone you speak to just want it done with. People work well when there is certainty and predictability. I think we could be doing a lot better if that was sorted, that isn’t a surprise, it’s a frustration more than anything.”
“Whenever anyone says something is going to disappear something else always comes out which needs computing power, local storage, or something to be processed on-site rather than in the cloud.”Exertis UK&I managing director Paul Bryan
Does Bryan feel like the mobile markets are in a period of stagnation and what is driving the business forwards these days?
“It does feel like a period of stagnation but what keeps it alive and tasty for us is new disruptive entrants. Look at Huawei and how they have come in so quickly and disrupted the market share. When new entrants come in it revitalises everything. We don’t do Apple, we sell against it. Having a market dominated by Apple is not a good thing for us.”
Huawei slipped in the global number two spot for smartphone shipments in 2018 and overtook Apple. This was the first time Apple wasn’t in the top two players in over seven years. After a bit of a rally from the US smartphone maker at the end of 2018 Huawei again overtook Apple in Q1 of 2019. Admittedly, the woes the Chinese manufacturer are experiencing following the US trade ban are yet to be reflected in the figures.
The dominance of smartphone technology is clear, are we likely to see the end of computing though as more people move to mobile?
“Whenever anyone says something is going to disappear something else always comes out which needs computing power, local storage, or something to be processed on-site rather than in the cloud. Of course, the cloud is changing everything but I don’t envisage the end of hardware being used to access that cloud. I think laptops were written off ten years ago and they are still going relatively strong.”
Device as a Service
Exertis is not the first to market with a DaaS (Device as a Service) offering, but Bryan does think no one has got it quite right yet.
Talking about his own proposition he says, “I think people realise it will work as they are looking at these other models in software that work already. Why should it be any different? I think it is about making it simple, getting few wins, building momentum and we just aren’t quite there yet. It will take some time.”
So why DaaS and why now? Bryan says the reasons are twofold.
“One, we can add value to second life products and bring them back with a bit of spit and polish or have that type of reverse logistics where we give equity back to people for something which has become redundant just because they have replaced it. I am more excited about the ‘as a service.’ Whether it’s a laptop, phone or anything else quite frankly… if we have a facility like MTR to do the refurbishment, we can give an end of life value in the same way when you buy a car.”
“Our goal would be to equal the monthly payments to the capital value of the device so it’s just a no brainer. Why would you put your capital upfront when you can spread it over the term? You can achieve that by giving it an end of life value so that you are swapping out your phone for a new one, you can also wrap other services around that with the financing. That’s what we are trying to do. MTR do our phones today but it could be absolutely anything from laptops to screens, Xboxs’ to anything.”
“Not many people buy a car outright these days, why would it be any different for IT?”
Although this model is a familiar one in other industries resellers could be in for a shock if their existing model doesn’t allow for a recurring structure. With that in mind, are resellers actually asking for this or is it being pushed from Exertis themselves?
“Many salesforces are designed to sell the tin, book the profit and earn the commission. With a recurring model you are asking people to change their makeup. The theory works well, the model you are trying to push it into might take some adjustments to get there.
It’s not going to flash into existence and take over the world tomorrow.”
“With this consumption model, and the billing engine, I see new breed of resellers coming through and doing exactly that. Look at Microsoft, they have changed the software industry and people are doing it on a consumptive model now and not an outright licence purchase. Yes, its theory with the device but there are models out there which are working and growing exponentially.”
“Why would you put your capital upfront when you can spread it over the term? You can achieve that by giving it an end of life value so that you are swapping out your phone for a new one, you can also wrap other services around that with the financing.”Exertis UK&I managing director Paul Bryan
“Back to whether resellers are asking for it, there will be a new breed of resellers that can easily turn their eye to this consumption model and for those that don’t they could find themselves out on a limb.”
For a customer purchasing in this way the benefit is clear. It’s far more beneficial to take the IT on a DaaS model and keep your capital for growing the core business.
The next play?
In an industry full of innovation at a number of different levels picking a clear technology winner is no easy task. So where has Bryan got his sights set?
“Smart tech is booming and is not going away, the house is getting smarter and with voice activation and devices like Alexa that is just going to continue to boom.
“Digital signage in retail is another area, its gone beyond just putting an advert on a screen. We are now talking about cameras measuring demographics, who is visiting your store and when. Then taking that data and crunching it down and making it work for retailers for promotional calendars and to see how stores are performing. That also bleeds into the IoT space.
“IoT is a classic example, it’s such a broad statement but what does it mean? 5G is coming, if you can start connecting things easily there are going to be solutions. Our job is to try and work out what those solutions look like and start to follow trends and just not go in too early. What those solutions are exactly I probably couldn’t tell you at the moment. We do spend a lot of time with the experts within our business to try and tackle these issues though.
Security is another area Bryan has high hopes, “On its own it is just so interchangeable with the different threats coming through and different compliance measures people have to adopt. We are not number one in that space, we would be a challenger there. We have more brands to bring in and the great thing about security is it changes so quickly you can find a challenger brand to go in with and do well.”
When it comes to virtual reality (VR) Bryan says, “we are punching above our weight there.”
"We have taken a consumer launch and taken it into the B2B space. We are talking to developers about a whole range of applications including things like metal health. One of the biggest contracts we have is from a big supermarket in the states who are training their staff with VR in the warehouse. How did we win that contract? It was a US-based contract and we were up against large US competitors. We won because we were willing to be innovative and take those brands into the new markets they wanted to target. The role of a distributor is not invention but rather to enable. We have some clever partners around us, vendors and resellers, that have pretty good opinions on what is going to work but sometimes they can’t always bring the necessary parts together to bring it to a solution. That’s where we come in and work with them. Oculus is a really good example of that.”
“The role of a distributor is not invention but rather to enable. We have some clever partners around us, vendors and resellers, that have pretty good opinions on what is going to work but sometimes they can’t always bring he necessary parts together to bring it to a solution.”Exertis UK&I managing director Paul Bryan
The role of distribution
Bryan is clear when talks about Exertis as an enabler in the market. Yes they do logistics, and do them very well, but it is this ability to bring different elements of emerging technology together and package them in a consumable way for partners where he sees the real value.
“Our role has to be more service orientated, there are lots of SMEs which should look to a distributor to leverage off the back of. Why would they want to invest in a big pre and post sales team, why would they want a 24/7 knock when they could just outsource it to us who can do first line, second line, man and field support for them? Why would a grocer want to manage a complex product set like mobile phone accessories when they can rely on an expert to manage the category and stock for them? If we can bring those services in at scale it is just an enabler for what those businesses are trying to achieve.
“If I was to look at our customers, the broader we get and the more technology we have I believe the key is trying to make that simple and to have a good relationship with the customer that isn’t confused. That is a challenge and something where I don’t think we are perfect yet, we will get better. If you are the customer and I am trying to sell you ten different things with ten different account managers, you’ll inevitably get frustrated. I have to find a way to bring that to you in an easier manner.”