Welcome to the second issue of the Channelnomics Europe Partner Panel.
In the first edition, we asked our panellists about how vendor consolidation and restructuring can present challenges – and opportunities – for a VAR's business.
This time around, the panel was asked how geopolitical events can play their part in shaping how a VAR engages with the European market.
With the Brexit bombshell dropping in June, social and political unrest playing out across various parts of Europe, and the US election looming, forging a successful international business must surely come with its fair share of challenges.
The second panel sees repeat appearances from SCC's UK commercial director Andy Wright; CEO of Crayon, Rune Syversen; and Michael Moon, director of international business unit at Bechtle. Making his panel debut is Richard Eglon, marketing director at services firm Agilitas.
First, Channelnomics Europe asked for the panel's insights regarding the extent to which the prospect of Brexit has affected their business. While the panel agreed that it is too soon to tell whether the UK's pending withdrawal from the EU will have a long-term effect on business development, Eglon and Wright said that the political change has put an immediate strain on profits when trading across currencies.
Eglon from Agilitas said that Brexit's impact on exchange rates certainly created initial financial challenges.
"The only challenge Brexit has thrown up is the exchange rate," he said. "From Agilitas' perspective, we trade in three currencies: sterling, euros, and dollars. What happens to finances when there is an event like Brexit is that we see a change to the exchange rates which does hit the business for sure. A lot of our customers also got hit quite badly through that," he said. "We had some tolerance in our budgeting in terms of exchange rates, so we could weather the storm a lot better."
SCC's Wright also said that the biggest challenge was accommodating for the falling value of the pound. He said that the VAR's vendors started hiking up prices, which in turn put a strain on profits.
"[Brexit] affected us in some ways from the earliest moment it was announced. For instance, in the UK we buy with Cisco and for all of our deals we are buying in dollars. In the morning, on the day Brexit was announced, we were looking at what we had in terms of agreed rates with vendors to make sure we had coverage for all those orders. We were buying dollars for 10 per cent more than they used to be. So, yes, it has affected us in terms of the vendors we deal with putting up prices and not holding prices," he said.
"There are things you can do to minimise the impact [such as] make sure you have trade agreements with your customer that allow for flexibility around such uncontrollable events. What you don't want is a fixed contract. I know a couple of resellers that got themselves into fixed-price contracts with customers, especially in the public sector, which hit some resellers hard.
"It is about being sensible about what risks it exposes you to. No one can control things like Brexit but you can control the way you are trading. That can take away some of the shock."
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