DACH Vs UK: How do the markets compare in 5 key channel areas?

Strong public cloud growth predicted in Germany, with increased demand in the UK for high-end data practices

Public cloud use in Germany is predicted to grow in the coming years according to new research from The Channel Company (TCC).

At the same time demand in the UK for high-end data practises is set to increase.

These are two of the findings from recent research conducted by TCC, using data from over 149,000 IT companies in the UK, Germany, Austria and Switzerland.

The research was conducted as part of TCC's launch activities for its new CRN Germany business.

Key findings:

1. Looking at the population of CSP (Cloud Service Provider) partners in Germany, the market is not as far behind in cloud adoption as one usually implies. There is a noticeable difference, but it is not critical. Hence potentially Germany might see stronger public cloud growth in the future.
2. The UK partner population has a definite skew towards managed services. Therefore, considering that route to market and building programs for it might be more important in UK than in other markets.
3. The existing partner population in the UK that has "Data Analytics" capability has a higher proportion of highly skilled partners than other markets. This implies that there is a focused demand for these skills in UK market and a leading product in this category might meet success in UK.
4. The DACH markets in general show proportionally bigger populations of partners skilled in "Data Centre Infrastructure Services". This implies that a high-end data centre product like storage might see better uptake in DACH.
5. Switzerland shows a noticeably higher proportion of highly skilled partners in "Security Services". This may mean that it is a good DACH pilot market for a high-end security offering.

In honour of the launch of CRN Germany TCC compared the partner landscape in UK vs Germany, Austria and Switzerland (DACH) across five of our capability tags:

• Data Analytics (detects partner capabilities to provide services and technologies that fall into data analytics category, such as big data, AI etc)
• Data Centre Infrastructure Services (focuses on services and technologies provided by partners around data centre infrastructure)
• Managed Services (covers a comprehensive set of partner-led IT managed services capabilities)
• Cloud Service Providers (covers a wide range of partner services and capabilities related to provision of public cloud services)
• Security (covers broad set of cyber security product and services capabilities)

Germany and UK are the two biggest markets in terms of the sheer number of partners (if you consider that both countries have far larger populations than Austria and Switzerland and are objectively bigger economic markets, this is hardly surprising.)

• Notwithstanding partner population sizes, the UK channel ecosystem shows a distinctly greater prevalence of managed service capability, both in quantity and quality of partners
• The share of companies with security services is noticeably higher in DACH - this is clear evidence that the data compliance policies in the DACH region have significant impact on the structure of the IT service market.

The researchers stated that since partners do not develop technology skills by themselves but are led by their customers, it's possible that the managed services business model is more prevalent in the UK compared to Germany, Austria and Switzerland. The results show that a significantly higher proportion of partners in the UK developed the highest possible (according to TCC's scoring mechanism) level of managed services capabilities.

DACH Vs UK: How do the markets compare in 5 key channel areas?

Strong public cloud growth predicted in Germany, with increased demand in the UK for high-end data practices

• Despite popular belief, Germany is not so far or distinctly behind other markets, from the perspective of cloud service providers - proportionally there is somewhat less of them in the German ecosystem, but not critically so. This can imply that the demand for partner skills in this area in Germany is growing and cloud services could see the growth of public cloud services that historically has been considered to be delayed.

The researchers added that the German ecosystem has proportionally fewer CSPs, however the gap, while noticeable, is not as critical or pronounced as the UK's lead in "managed services" capability or the stereotype that the German market is lagging behind in cloud adoption to a very significant degree.

• Although proportionally, as seen in graph at bullet point 2, the UK market has partners with identified "Data Analytics" capability; if we look at the capability level that the existing partners have developed, there is a significantly higher proportion of very skilled partners compared to other markets - which suggests that there is a strong demand in the UK market for high-end data practices and potentially leading products in that category will see better up take in the UK market than elsewhere.

DACH Vs UK: How do the markets compare in 5 key channel areas?

Strong public cloud growth predicted in Germany, with increased demand in the UK for high-end data practices

• The DACH group of countries has a noticeably higher proportion of partners significantly capable in providing "Data Centre Infrastructure Services" compared to the UK - again, it is not a critical difference but noticeable - hence complex and traditional data centre products like storage might see a good up take in the DACH market.

The researchers said that this could be the after effect of an aversion to public cloud and therefore preference for traditional infrastructure or the high degree of industrialization which historically favoured on premise environments.

• Switzerland as a market shows significant capability for "Security Services" - which means it might be a good DACH pilot country to trial a high-end security product.
• If we look across the above graphs, we can note that the two smaller DACH markets often lead Germany in terms of the proportion of highly skilled partners in a particular capability. Mainly this can be attributed to the fact that these markets have far less partners and the highly skilled German HQ enterprises like Bechtle cover them as well, while in Germany there are far more partners of all levels of capability serving different customer needs.

DACH Vs UK: How do the markets compare in 5 key channel areas?

Strong public cloud growth predicted in Germany, with increased demand in the UK for high-end data practices

Methodology

For this analysis TCC used its proprietary, global channel partner database and our machine-learning and AI-driven methodology for identifying partner capabilities.

Whilst TCC has now launched the CRN publication in Germany, the group has been doing business in Germany and the DACH region for a while, helping local and US headquartered companies reach new partner communities and engage existing ones.

• TCC has a global channel partner database that is generally representative of the total channel landscape in a particular country.

One of the foundational pieces of being able to provide these services has been creating one of the largest independent databases of unique channel partners worldwide but also specifically in Europe and EMEA. The database has been built with the specific intention to capture all detectable channel partners across main IT technologies in the market and even touches operational technology; - so up to a point, it is representative of the total channel landscape available in any particular geographical market.

• TCC segments partners in that database by their declared technology skills and capabilities, through text analytics, machine learning and AI.

In order to be able to operate the data in our database, TCC developed a specific text-based analytics methodology and approach. It stems from detecting partner declared technology skills and capabilities, such as "managed services", "high performance computing", "data analytics practice".

This approach gives TCC flexibility and granularity as it can construct any specific technology skill or capability that a channel partner could be expected to have. Using this, TCC can find partners within the ecosystem that present them and even score them on how strong those capabilities are.

The report was authored by Andrejs Bogdanovs, Data Scientist, Vlad Kostyuk, Senior Consultant, Tamina Carvell, Analytics and Insights Director. All work for TCC.