South African-based IT channel players foresee large investments in solar systems and power backup solutions this year.
This, as the country continues to battle never-ending power blackouts, which have seen businesses losing billions daily.
The channel players also told ITWeb that the chip shortage, which started at the onset of the COVID-19 pandemic, will ease this year.
As with other years, currency fluctuations are also something the industry will grapple with in 2023.
According to Spencer Chen, CEO of ICT distributor Rectron, load-shedding continues to put pressure on the company’s customers and, as a result, they are looking for the right backup power solutions for their business needs.
“We expect solar power solutions to experience a major uptick this year. As it stands, South Africa experiences on average 2 500 hours of sunshine annually and the price of solar panels has decreased by 90% between 2010 and 2020.”
Cloud forecast
Chen adds the distributor is expecting a lot of companies to continue migrating to the cloud.
“It [cloud computing] was a key contributor to ensuring business continuity during the initial pandemic lockdowns and, as a result, has proven itself to be a necessary tech solution for day-to-day operations. Businesses are starting to explore new capabilities that go beyond just hosting virtual meetings and unlock greater business value.”
Unfortunately, he says, for the foreseeable future, load-shedding will continue to be a part of daily life in South Africa for businesses and individuals.
“It is, however, something that is not a new challenge, and many people and businesses have already invested in backup power solutions over the years. That being said, we have noticed that spend on IT equipment has shifted to backup power recently. It is still quite a large investment to make for small businesses and individuals who work from home.”
For Craig Brunsden, CEO of Axiz, a digital technologies and services distributor, the silent danger of load-shedding is the impact it has on all players’ operating costs and general motivation to invest big in a South African business.
He notes diesel generators’ capex and opex costs are making a major impact on channel profitability and customer decisions to spend money on investments that may take three or more years to pay off.
“Instead of a PC refresh, we’ll need to direct budget to solar or diesel costs. If small companies like micro retail shops are in a small mall that has no backup power that, in turn, hurts the whole channel. It’s tragic,” comments Brunsden.
Says Tim Humphreys-Davies, CEO of Pinnacle, an IT distributor: “It [load-shedding] definitely has an impact on the allocation of spend in the SME space. End-customers are diverting opex and capex spend to keep the lights on, and we see a surge in UPS and battery infrastructure spend, and a contraction in some end-user spend.
“Some resellers are telling us their customers are seeing a slowdown in their business as a result of load-shedding.”
For business continuity, Humphreys-Davies says Pinnacle has deployed normal business-as-usual practices, such as solar PV and generators.
“Our approach is now to be power-independent. Our next challenge in Johannesburg and Cape Town is to be water-independent, which we are busy with now. I think all medium to large business will have to have a business continuity plan for power and finite resources to trade.
“This is going to become an imperative in terms of carbon footprint anyway, so the current situation is forcing us to rethink, which is a good thing in a way.”
Top focus areas
On the business opportunities expected this year, Brunsden says Axiz continues to see strong demand for data centre infrastructure equipment and software, despite the challenges in supply. “We expect this demand to be the big story for 2023.”
He adds that although the demand for PCs and related devices has cooled off, it is still an area with potential for the channel.
At Pinnacle, the biggest opportunities include data centre spend, investment in infrastructure and cyber security, surveillance solutions and cloud computing.
While the industry says there are signs of improvement on the global chip shortage crisis, the scarcity is still being felt locally.
From early 2020, the effects of and the mitigation of the COVID-19 pandemic caused disruptions in supply chains and logistics.
This was coupled with a 13% increase in global demand for PCs owing to some countries’ shift to a stay-at-home economy, and impacted the availability of key chips necessary for the manufacturing of electronics.
“The chip shortage is having a bigger impact on profitability now than it did 12 months ago, but we are confident the worst is over and seeing recovery,” says Brunsden.
“Chip supply will remain a headache for industry for many years, as manufacturing capacity is not as agile as the wild swings in demand we’ve experienced through the pandemic and into the recovery.”
For Chen, the chip shortage is only a problem for some specialised products, such as point-of-sale printers and handhold computers.
“But the good news is that the situation is improving,” he notes.
Humphreys-Davies points out the company has seen an improvement in the supply of chips. However, he says some areas, such as networking, are still constrained.
On currency fluctuations, he states this has always been and will continue to be a pain. He says this has led to an average selling price shift. “I think most businesses are used to this.
“Business continuity affects everyone and whether those risks are currency, supply, riots, cyber attacks or power stability, the best we can do is control what we have direct influence over. We’re focusing hard on our basics, expecting anything to happen at any time.
“We have a great team and structures that allow us to make adjustments to our plans very quickly, and this allows us to respond with the interests of our vendors, staff and customers as our key priorities. That then provides continuity.”
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