How the UK's top-performing resellers and MSPs have transformed during pandemic...

Doug Woodburn rounds up the key takeaways from CRN Rising Stars 2021

This week we published the CRN Rising Stars 2021 report, which profiled seven of the UK's fastest-growing resellers, MSPs and tech consultancies (based on our recent VAR 350 report), and looked at how they have transformed their businesses during the pandemic.

These seven firms were:

Solutionize Global

Highlander Business Solutions

LIMA Networks

Wanstor

QUANTIQ

Tangible Benefit

M-Tech

It also looked at five customer projects carried out by resellers that typify the post-Covid world.

VIEW THE REPORT HERE

Here are my top five takeaways from the report, which we carried out in association with Agilitas.

1) Watch out for the channel's pocket rockets

The seven Rising Stars featured in this report all ranked outside the top 100 in this year's VAR 350.

As a group, these sub-£45mrevenue pocket dynamos are not only significantly more profitable than their top 100 brethren, they also saw profit margins rise more steeply in their latest years. Median net profits among those ranked 101st to 350th vaulted from 3.0 to 3.3 per cent, compared with a rise from 1.9 to 2.0 per cent among the top 100.

The septet of firms highlighted here can be seen as a high-performing microcosm of these smaller but more profitable firms that are looking to challenge their larger, more established peers.

2) Pandemic no drag on ambitions

This year's crop typify the ambitious nature of this second tier of firms that sit outside Top VARs.

Boasting average net profit margins of over three times that of the wider VAR 350, they grew collective revenues by 70 per cent to £176m in their latest years.

Neither has the pandemic prompted them to pull in their horns, with several of them doubling down on bullish growth plans despite the UK just posting its biggest annual GDP dip in modern history.

For some, the forces unleashed by Covid have merely turbo-charged demand for their solutions. Others with a larger footing in the on-premises world or serving Covid-hit verticals have taken a temporary knock, but still see growth ahead after a period of adjustment and reshaping.

3) Staff focus a common trait

This year's CRN Rising Stars are all very different businesses, ranging from ERP specialists and managed services providers to resellers of enterprise technology. But if there is one trait uniting how these seven high-performing businesses have approached the last 11 months, it is their emphasis on putting staff before profits.

While they are split down the middle on whether to downsize or upsize office space post-Covid, it's clear that in each case their decisionmaking is being guided by staff feedback, with overcommunication their watchword.

What they realise more than most is that their ability to listen and respond to employees - as well as customers - will define their success in the post-pandemic world.

4) Covid has accelerated digital transformation

Despite the doom and gloom, our Rising Stars generally expect to emerge from lockdown in stronger shape than before Covid struck. As we have seen throughout this report, the pandemic has accelerated digital transformation, super-charging investments in collaboration, security, cloud, and application modernisation projects. These seven firms - as well as the wider VAR 350 - are in a solid position to benefit from this trend.

At least some of the costs savings on travel and corporate hospitality (as much as 60 or 70 per cent in the estimate of one Rising Star) will stick postpandemic.

This means that some MSPs and VARs could actually enjoy a profit boost as nice-to-have meetings, customer site visits and lunches are cancelled and office rents reduced even after the virus is brought to heel.

5) Reasons to remain optimistic

Though some VARs and MSPs will inevitably encounter low or no growth in their latest years, there is every reason to remain optimistic about the industry's future.

As explored by the case studies on page 30, technology now sits even more deeply at the heart of how all organisations operate, ensuring the channel's status as a growth industry, particularly as more revenues move to an as-a-service model. It is this trend that is making MSPs a more attractive target