Covid-19 has changed how the world thinks of digital technology. That point needs no qualification. But it’s not the full extent of the conversation. Greater appreciation is good, finally responding to the ICT industry’s prompts to modernise. Yet nobody anticipated that when ‘disruption’ finally manifested en masse, it wasn’t about competition or innovation. It became about survival. Already, despite this newfound enthusiasm for digital solutions, customers’ aspirations are becoming more practical.

Dimitri Tserpes, Mustek’s chief technology officer, expects there to be a reduced interest in emerging technologies, but adds that artificial intelligence is likely to become much more popular as we use data to navigate future uncertainties. But customers are going to be more selective. “IT budgets at 46% of companies are expected to remain flat in 2021, while 33% expect to increase spending and 17% expect budget declines – essentially double the 8% who had expected budgets to decline this year when surveyed in 2019. The remaining 4% did not know if their budgets would change in 2021. Overall, budgets are expected to decline,

with the size of the cuts surpassing spending increases,” he says. This means customers will be looking for more tried-and-tested options over risky emerging technologies. But Tserpes adds a caveat that all the other interviewees also reflect that 2020 has been enormously unpredictable, and divining what lies ahead

won’t be easy. “There’s no doubt that specific sectors of the economy have been adversely affected and economist believe that the correction may only start at the end of 2021, with a more positive shift being evidenced by as late as 2025. However, if 2020 is anything to go by – literally anything can happen. It has become much harder to speak in absolutes,” says Rakesh Parbhoo, CEO at Westcon-Comstor Sub-Saharan Africa. The Margin thanks those who are willing to make some predictions despite all this uncertainty. We chose to focus on distributors as they are a central facilitator between different resellers, vendors and end- customers, and have also been spearheading efforts to modernise the channel industry.

For several years, the channel has been urging itself to expand to service-based offerings and not rely so much on selling goods. This service-vs-transactional debate came to a head during the lockdown, when rapid adoption of remote working prompted a sea change in technology requirements and thus the character of the channel. “What caught us by surprise was how much smaller the channel can be, yet serve a larger group of end-users,” says Tarsus’ chief commercial officer Gary Pickford. “In a transactional world that has geographical limitations, resellers need to be in close proximity to the customer. I think what the world realised is that a reseller in Johannesburg with a good services infrastructure can serve a customer sitting in Phalaborwa or Cape Town. This caught the transactional reseller by surprise.” Does it spell the end of the transaction- based reseller? Perhaps. The opinion is unanimous that if an ICT business is only transactional, this pandemic was the last warning that it’s not a sustainable approach. Yet the future isn’t pure-services, but a mix of the two, in part because consumer priorities have changed. As for providers, the ideal model is a series of micro-linked activities, often with partners, that span transactional and services. “It’s the last round to change,” says Craig Brunsden, CEO of Axiz. “Those with a more services-oriented model will be in a better position. But I think transactions are still important. People still want to buy things from people.”

This point highlights another important shift. When the hammer came down, companies turned to the speed and convenience of online transactions. The same procurement manager who expected next-day delivery of their new electric toothbrush used to still be happy with business technology orders taking longer. No more – Covid has reshaped expectations. “Customers got so used to purchasing their essentials online, and online capabilities exploded during the Covid period. And what we find post-Covid is an expectation from procurement departments that all products need to be delivered at the same pace and at the same service level as the electronic toothbrush from the digital online platforms,” says Pickford. This, he adds, predicts the end of the ‘bakkie brigade’ where resellers collect and deliver to their customers. Instead, integrated supply chains and Logistics-as-a Service are becoming the backbone of procurement. Since May, Tarsus experienced a 30% jump in the use of its online portals, and other distributors report similar permanent growth. Technology procurement – even transactional deals – now seems inseparable from e-commerce ecosystems. Shifting customer attitudes are also evident in what they buy. Although the industry promoted a message of emerging tech and modernisation, the pandemic’s crunch led to addressing more fundamental issues. For example, some distributors report changes in how people look more pragmatically at devices. “Already we have seen large enterprise customers downgrading their new laptop purchases and asking for sub-R10 000 units,” says Mike Perry, managing director of MicroD. “Pre-Covid, our average price per laptop was around R16 000. Our desktop sales have all but disappeared. This is obviously due to people needing flexibility and the option to work from home.” Similarly, high-level engineers have been scurrying to solve more baseline problems, such as getting video conferencing to work. Although none of the distributors said as much, there is scope to argue that a business continuity requirement has successfully challenged the industry’s past ‘transformation’ narrative.