Outlook 2022: “Big Year for Channel Partners”
Alaa Bawab, General Manager for Middle East & Africa (MEA) at Lenovo Infrastructure Solutions Group (ISG), says Middle East is fast becoming one of the leading markets in new technology adoption
How was 2021 for the industry and your company?
Lenovo has posted very strong results for our Q1 FY22 (in August), delivering significant year-on-year profitability improvements, with pre-tax income almost doubling to US$650 million (up 96%), and net income also more than doubled (up 119%), as net income margin reached 2.8%, the highest in many years. First-quarter Group revenue continued hypergrowth to US$16.9 billion, up 27% year-on-year.
ISG delivered a record revenue of US$1.8 billion for the quarter and has outperformed the market for six straight quarters while achieving the best results in five years. Going forward, the Group will continue to invest to grow the business with a vision to become the largest data center infrastructure solutions provider, by increasing investments in edge computing, Hybrid cloud solutions, and 5G cloud-network convergence. Our ongoing investment in overall ISG competitiveness will further drive profitability and overall competitiveness for the business group.
Did you face any challenges in 2021?
2021 really brought home the aftermath of the pandemic. For the whole industry, supply constraints were a big challenge. Shortages of semi-conductors remain a global challenge for the entire industry and we see this continuing through to the second half of 2022, driven by continuing high demand across the technology sector.
That said, our quarterly and annual results demonstrate that our size, scale, strong supplier and partner relationships, and unique hybrid manufacturing model have ensured we can maximize available supply. In terms of the supply chain we have once again been named a Gartner Top 25 Global Supply Chain, an elite annual list encompassing some of the world’s leading brands in the retail, manufacturing, and distribution sectors. Ranking at #16, the recognition highlights Lenovo’s leadership as a purpose-driven organization and operational center of excellence in the global supply chain community.
What were your key achievements in 2021?
Along with our record financial results, Lenovo once again achieved ‘Champion’ status in the 2021 Canalys EMEA Channel Leadership Matrix. Champion status reflects not just the highest levels of excellence in channel management, but also an improvement year on year.
Canalys’ assessment of Lenovo said: “Lenovo consistently outpaces the channel satisfaction levels of most of its largest channel-led peers. Partners have benefited from the success in its PC business during the pandemic, with supply challenges partially mitigated thanks to globally distributed production. Partners highly value Lenovo’s channel commitment, which it is now seeking to apply to its “everything as-a-service” strategy.”
What promises does 2022 bring along?
We are expecting 2022 to be a big year for Lenovo’s channel partners, especially as we are rolling out our new Lenovo 360 channel framework. For the first time ever, we have created a global framework that gives our channel partners easy access to all our products, solutions, and people in one place. Lenovo 360 combines all our business groups and offerings into one platform that will enable our partners more flexibility when delivering end-to-end solutions to their customers through expanded access to people, programs, and tools.
We have announced some details of the plan, and we will be sharing additional information in future, but Lenovo 360 will include enhanced alignment of channel leadership and teams, new incentive programs, and evolved tools for ease of engagement for channel partners.
The framework comes at a time as many small businesses and large enterprises alike are increasingly moving toward the “Everything-as-a-Service” model. Deloitte predicts that global business spending with Managed Service Providers (MSPs) will reach $355 billion by 2026 , and 78% of SMBs worldwide either plan to use or are already using an MSP, according to CompTIA. Lenovo 360 seizes the opportunity to equip partners with a portfolio that reflects the full spectrum of customer needs from device, to infrastructure, to services, and beyond.
Additionally, post-pandemic, customers are facing many common challenges – the Lenovo 360 framework is designed to produce solutions with these challenges in mind and aimed at delivering four business outcomes for partners, including: enabling greater workforce productivity and collaboration, providing infrastructure flexibility, sustainability improvements, and tailored, industry-specific solutions.
Finally, Lenovo 360 re-affirms our commitment as a channel-first company by offering partners more ways to build and diversify their revenue streams, through service-led and solutions-based opportunities.
Do you see opportunities in the regional markets with new markets opening up?
The Middle East & Africa data center market by investment is expected to grow at a CAGR of 10.38% during the period 2021–2026. For us, specifically at Lenovo we look to take advantage of these opportunities in a variety of ways. Firstly, our exposure and coverage across the region. We are currently covering all major markets in the region and look to continue to expand to new countries where there are opportunities for us to support customers wherever they may be.
Secondly through our strategic partnerships. We currently partner with some of the biggest solutions and software providers in the region including Microsoft, Nutanix, VMware, SAP, Oracle, and more. This puts us in a great position as we offer tailor-made solutions which are software agnostic. As we do not have the issue of legacy, this really allows us to provide solutions that fit every customer’s need.
Thirdly the Middle East is fast becoming one of the leading markets in new technology adoption as you can see countries such as the UAE and Saudi Arabia are already looking at ways in which technologies such as AI can be adopted and used locally. This gives us great opportunities in which we can showcase some of our latest innovations.
According to you, which technologies will be in demand in 2022?
The greatest overall trend, which we expect to continue into 2022 and beyond is the increased pace of digital transformation, which means that companies need solutions that enable them to harness the power of their data; and companies are also looking for different computing models, such as edge computing, that will enable digital transformation projects that are unsuited to traditional models of computing.
Many organizations are turning to hybrid cloud environments, with some applications in the cloud and some workloads on-premise, which creates demand for data infrastructure that has the flexibility to scale to meet their needs, to move workloads to the right platform, seamlessly integrate across platforms and to reduce the complexity of managing a diverse environment. Lenovo’s solutions have been designed for these complex deployment scenarios, with features such as end-to-end data management; encrypted data protection and protection of data at motion, at rest and in the cloud; integration with leading public cloud platforms and enterprise applications and workloads; intelligence and automation to ease implementation.
Organizations are also looking at Edge computing to account for the fact that more and more data is created at the edge of the network, outside of the traditional data center and network perimeter, through connected devices, remote employees, IOT sensors and so on. Edge computing gives the same abilities to use data as if it were in the data center, such as applying analytics, automation of decisions and so on, while overcoming the bandwidth and latency issues that can arise with traditional models. Last year we predicted the work-from-home phenomenon would accelerate.
We have been focused on mobility, user and customer experience over the last few years, as we expected the momentum around distributed workforces to continue to build, but in the future, we will become smarter and more flexible about it. We see remote work becoming hybrid and work-from-home becoming work-from-anywhere as people and companies continue to think beyond the office. Lenovo research shows that 83% of IT leaders expect at least half of work in the future to happen outside a traditional office.
We will see more products, solutions and services designed for the employee experience, considering the office as a destination for collaboration, while protecting the sense of personal space people have experienced by working from home. We will see technology like AI, AR/VR and Lenovo’s smart collaboration suite of tools, providing new features and capabilities that will continue to change how employees interact with technology and one another, transforming the concept of “workplace” and “workforce” in ways that allow them to integrate seamlessly and succeed as one.
Along with the technologies that will become more prominent in 2022, we also see sustainability becoming more and more important. As customers urge businesses for more sustainable products and practices, we see technology providing a smarter way forward, helping companies build a better future for their stakeholders – and that includes the biggest stakeholder of all: our planet.
Sustainable materials – those that can be recycled, including plastics, fibers and metals; those that can self-decompose like bioplastics; and those from more renewable sources such as bamboo – will become more readily available for product development. This will enable companies to move closer to closing the loop on product lifecycle. Recycling and supply chain optimization will become more commonplace.
The rise in sustainable materials will also minimize the need for chemicals in the manufacturing process and help bring manufacturers closer to carbon neutral. The role of the IT provider will continue to transform as we build in services and solutions that help our customers offset the environmental impact of their technology and support them in reaching their own sustainability goals.
What will be your key focus areas for 2022?
On the channel front, we will be focused on rolling out the Lenovo 360 framework. Lenovo 360 is founded on three pillars of “People”, “Programs”, and “Tools” and we will be announcing new initiatives in each of these areas. For People, we have already begun aligning our channel teams across the business units into a single organization across structures that can provide our partners with faster and easier access to our portfolio.
In Programs, we will have additional offerings to grow partners’ businesses across our portfolio; and in Tools we will be evolving some of our exiting tools to support Lenovo 360, and introducing new solutions to further support our partners.
What milestones have you set for 2022?
Our key milestone is to really support our customers along their digital transformation journey by providing the right solutions which will help them develop their businesses in order to stay resilient and competitive in the region. This will be done through the support of our solutions and software partners mentioned earlier and through the support of our channel partners.