Comms Leaders #6: Knight Corporate Finance and Charterhouse Group

This episode of Comms Leaders brings together Adam Zoldan (Knight Corporate Finance) and James Banks (Charterhouse Group) to discuss two big channel themes - the impacts of uncertainty and the changing status of the generalist. 

Transcript

0:02

Hello and welcome to this, the latest episode of Comms Dealers, Comms Leaders, a new platform that lets us sit down with those in the channel to discuss some of the industry's burning topics, and I'm delighted to welcome my guests for this month's episode. We have James Banks from Charterhouse Group and Adam Zolden from Knight Corporate Finance. Thank you for joining me today, Jens. Nice to see you. Thank you for the invitation. A pleasure to have you. Adam, haven't caught up in a while. What's new and interesting with yourself and Knight? There's quite a lot going on. It's been an interesting time. Obviously, uh there's been quite a lot of change in the channel over the last year. We're seeing that, and there's sort of quite a lot I want to talk about today, really, see where we get to. Great, and thanks for uh suggesting another better name for our podcast with changing the channel. That's that's nice. Uh James, equally a long time since we caught up maybe Comms Vision even how are things with yourself? Yeah, busy is the uh the easiest world. I think um yeah, the world the world keeping is very busy, I think. There are certain sectors of the market that are doing some really interesting things at the moment, and again, probably provides a bit of uh food for thought for some of the things that we're going to talk about in a uh in a minute. Yeah, absolutely. Well, I mean let's get straight into the bulk of the podcast. I asked you both to bring a burning topic, something that's taking up a lot of bandwidth in your brain, something you think needs a platform to just be discussed, teased out, and and have a forum to talk about in a bit more depth. And Adam, can I come to you for your your burning topic first, please? My mine was uh uncertainty, which is uh adequately bland, um, but it sort of uh it arches across pretty much everything we do. So we've obviously got like the macro side um in terms of you know what's going on in the world at the moment, and and we're certainly seeing um some uncertainty there having a bit of an impact. Um but more interestingly, we are we are seeing that filter down into the channel and how companies are looking at their their strategy for growth um and and and how they're going to develop over the over the next few years. Um so yeah, I think there's quite a lot of things to talk about. Do you want me just to crack off? Yeah, I mean maybe imagine you're you're in the head of an MSP leader. What are the main things that are prompting that uncertainty? So um I always say this, but the number one driver of value is organic growth. And um, you know, there are some great businesses out there, great strategies, but it's very difficult to execute that if your pipeline of customers are suffering from uncertainty, which is effectively a lack of confidence, and the sort of what uncertainty does is it paralyzes decisions, and so what what we have been seeing is you know great strategies, great businesses in in the forecast that we see for people, um, but the pipeline and the work in progress just shifting to the right as some of the decisions that need to be made are put off and the cans kicked down the road, and um so and that affects growth, right? Um and when you affect growth, you affect value, and then it just it just it just filters on from there. Yeah, absolutely. And I mean James, are you seeing that from your perspective and in the industry? Yeah, I think just listening to that, it probably jumps out in a number of ways. So agree on uncertainty, and I would definitely extend that not just to the channel, but equally to the customers of the channel, end users, and just as likely customers of those customers. Yeah, I think everybody is seeing their business model not necessarily turned upside down, but there is yeah, I'm always loath to use the word AI. It's a it's a wonderful marketing phrase that covers a lot of things, but there are so many things that people are looking at and thinking, actually, do we do it the way that we always did it, or are we gonna do it in a new way? And if we are, how on earth are we gonna make that work? Who do we work with to do it? Are we gonna throw a whole load of money and time and energy at something that isn't gonna deliver the right result? And actually, at the end of it, if you if you really boil that down to the basics of, you know, I've got a UC platform, and am I gonna renew my subscription for that? Well, there's a question mark there, isn't there? Yeah. Uh that you've got to try you've got to try and answer some of the bigger picture things to then get to the bottom of that, but that then flows all the way back up the chain, and you've got a bunch of uncertainty flowing from some really simple decisions down there and people, yeah, people, organisations just not being quite ready to invest. But I'm hopeful that in some areas that's starting to move, but I do agree with the uh the wider principle that uncertainty is um is very much in the air at the moment. Yeah. I guess two two sides of the same coin at that uncertainty point and and and change. And I know the the the idea is change is the only constant, but even the nature of change has changed. You know, we're we're we're looking at going from sort of set events, big change events where you could respond and react between to just one constant wave of change that is is you know, Adam, in that in that sort of thinking. How do you ever get over that uncertainty or preparedness, agility? What's the answer? The it's tricky, it's a tricky one, right? Um the so let's just you know, start at the top on a global basis. You know, there's lots of things happening that can filter down are we going to be able to get away on holiday and uh you know from that level, but then sort of down back into the UK side of things, and one of the biggest impacts is tax, uh, tax changes behaviour. Um, and what we've seen is the cost of employing people go up, and so you already press the AI button, but that's um um that that's uh you know what one of the things that we've seen is just that additional cost. But the thing about it is um you know, big companies are one thing, but that what the channel has consistently proven to be is super dynamic, super able to adopt to change, and and and turning the uncertainty and that lack of confidence into a bit of an opportunity. And I think you know that the smart ones, there's a big circle of life going on, right? Um but the smart guys and and sort of the new um the new engines for growth are gonna are gonna embrace it and we're gonna see we're gonna see some um sort of new new companies emerge to be the big boys as the you know as we've seen the big boys of the past sort of disappear. Yeah, I mean I might just pick up on that slightly and um uh phrase I'd like to use here is customer zero, because uh again, I think you use the phrase you have the smart ones, but there is a a very clear view in my head that those that get it early and are nimble enough and able to react uh to very fast changing market conditions will rise to the top of the uh the milk, if you like. And I think being customer zero, so I'm gonna try not to talk about AI too much today, I promise, he says talking about AI, but uh looking at actually, and we're quite fortunate having a mature and very capable AI practice internally, anyway, that yeah, this for us to be bread and butter with our customers, but being customer zero, you know, what can we do? Not to replace people, that's a very different conversation, but what can we do to actually use some of these new toys, new tools to improve what we do, delight our customers and improve the experience there? And I think if you get your head around that right, which is not what toys have I got in my toy box, how can I use them? It's actually what outcomes am I trying to deliver? How can I automate things that you know otherwise might slow me down or might you know might might tie up human time so that actually, yeah, as a business where I'm really fortunate to have a large number of really capable people that you know are not new to the industry, 10-20 years experience, how can I free them up to not be behind a desk but to be out there engaging with our customers? And I'm I'm deliberately making this generic and doing things that make us valuable to our customer, because if we get that right, coming back to the analogy, our customers will find us really useful because we're probably enabling those outcomes in turn for them, which is the aim of the game, yeah, rather than rather than getting tied up in um in paperwork. So, as you can probably tell, quietly excited around AI. But it's um it's one of those that I think we probably have uh I'm gonna phrase this badly, so I'll get kicked for it later. But we you know we may have others in our industry that can't quite spell AI yet, but know they need to get their their heads around it, and I I'd much rather be at the other end of that equation because I think you've got to get it right, otherwise you'll um you'll slow down and and and wither away. Yeah. I agree, and I think that so the outcome there, going back to the um sort of the large companies versus the dynamic ones, is that you know one side of it is viewing as viewing it as um we're gonna see a reduction in spend from this customer, and the other side seeing it as you know, this is a blank canvas. We can uh there's a customer there that we haven't got at the moment, and there's an easy win, right? Yeah, I agree. Yeah, absolutely. And just just to make one last point on AI, perhaps um, you know, we talk about Moore's law when it comes to technology and how AI is now expediting what's already exponential, you know, just from like a basic tech stack perspective, maybe not knowing what's coming down next. How how are you guys preparing for that in terms of the the uncertainty point? Um I think from a preparing perspective, we're um we know the technology is catching up. I think my my personal view here is that the tech is great, but actually it's knowing how to use it. That's where the uh that's where the sharp edge of the uh the knife is. And it's what outcomes can we enable, and that probably comes down to the human factors of being able to understand and I'll probably come on to later the things like verticalization and that side of things, but being able to understand what are our customers' challenges and getting very close to that customer, and then actually what can we do either to directly use AI to delight that customer and meet their challenges in a very efficient way, or does AI enable us to do other things better, just focusing on our core business area so that we can get on with those and um yeah, happy happy customers are very sticky customers and see value both ways in that relationship. Absolutely, and and just one last point on uncertainty, maybe Adam, if we could reframe uh you know through the other side of the lens, is there anything that MSPs can think of as certainties that maybe they they can put a hook in for the next few years? Um people and customers, they're still they're still gonna be there. Um and going back, I'll put I'll probably put myself in the box of someone that couldn't spell IA. But what you know, what we see is that it's taking a lot of the grunt work away in in terms of what we do. Um and you know, so from as we skill up our people, it's about it's about people and the relationships, developing, developing those relationships because that's probably something that's not going to go away. And um and that and that's where where where the value is. Uh so it's you know, my my business is a bit different to a lot of others in the channel, but I think the concepts are pretty similar. Absolutely, thank you. And and James, you've got a uh a burning issue as well to bring to the table. Yeah, there's probably some parallels here, but I think what we've just been talking about, but it's very much the um the shift away from best of breed towards um trusted partner, trusted prime, um, one throat to choke, you know, in in insert other phrase here for the uh the concept. But I think if I if I go back, um I've probably been in this uh this world for a little while now, but if I go back five, ten, fifteen years, we've always had that cycle between, you know, are we going for generalists, are we going for specialist, are we are we having best debris point solution? And actually there is I'm gonna talk about AI again. Apologies, but I think there is a there is a level of there where the lowest common denominator here is the customer, what the customer needs to do. And it's working out well, what's gonna be the substrate here, what underpins it, or what am I buying into? And the answer there probably revolves around AI somewhere, but for a lot of things, if I look at our major business areas, yeah, cyber security, enterprise networking, unified communications, customer experience, those are ultimately either part of a network or applications on a network. And I think the difference is not what it was between individual vendors. Um yeah, there are a lot of very capable vendors out there, but it comes down to um to having a a partner that actually you're trusting to to deliver the outcome. And I think we're probably seeing this coming back to to uncertainty and you know activity in the channel, where yeah, there's demonstrably been a shift over the past five years, right, to people wanting to have capabilities in some or most of those areas. And I think that's probably my my burning issue to call out is actually it's um it's not about being best of breed in one area anymore, it's about enabling the outcomes for the customer and working to differentiate in other areas, maybe. Absolutely, and and you know, Adam, is is that something you're seeing from your perspective? Yeah, for sure. I mean, we're all MSPs now, aren't we? Um so there it's you know, for if we look at just comms, it it hasn't from an MA perspective, it hasn't been um you know, still a couple of years, you know, since um Focus uh sort of ref got got a reinvestment, they've been thin on the ground. Um we've also seen quite a few investment failures. So this isn't business failures, this is investors not getting their money back. And again, that goes to confidence. And the reason for the reason that's happened is debt's been quite high, but the organic growth hasn't been delivered to to repay that debt. So that's that that's seen as a switch around. They're still profitable and they're still um they're still operating perfectly, almost perfectly, but the investors haven't been getting a decent return. And the knock-on on that has been um investors re-evaluating the market. And so I don't I'm not sure we'll see that many um sort of prime equity investments into straight comms anymore. It has to be that the the whole stack, so um across a range of comms and across a range of um MSP services to create something that they believe has got organic growth, and so that you know the MSP side is is you know is still running pretty well. Um and I guess that's why we're all called MSPs. But but you you actually have to you have to show and and demonstrate it. And so yeah, I'd certainly agree that just doing the easy stuff is it isn't going to um isn't going to create as much value as actually being um sort of a more complete and trusted advisor to your customer. Yeah, and I I guess just expanding on that as well, and if I had a view, then five, ten years ago it would have been investing in a particular area being the very best at, you know, whatever slice of unified communications or or networking was your bag. I think it's it's gone full full term now, um, and it's about investing in in verticals and actually specialising in a in a given area. And again, I'm not going to talk for every vertical, but for us, an area where I think we've always had a real synergy and a and a good footprint, but today I think really differentiate is something like healthcare, just picking out an example where having an MSP or a partner or a reseller or a VAR or insert other acronym here, we have lots of acronyms across the channel. Um but understanding that, for example, healthcare market, I think really, really comes across. We're actually it's very difficult today, just kind of making the point, to talk about unified communications without also talking around concepts like cybersecurity, like data security and sovereignty, like networking, availability and resiliency, it's really difficult to do that. But then equally, and this is where I think the channel is able to add some real value, you know, you look you look at that marketplace, and I think you'll have some specialists that really get, for example, healthcare and critical care. You know, the the killer application for Unified Comms is the example of going up to any phone and dialing double two, double two, which if you know the healthcare market, you know you're expecting to get somebody at the other end of that that is going to arrange for a medical team or similar to respond very, very quickly to a crisis. And actually all of the other areas just yeah, it's a very specific example, but feed into that. And if if you're not investing in in a given vertical to the level of really understanding those challenges, I think you're not going to add the same value and be able to deliver the same outcomes, and I think that probably shows. Hence why you've got or certainly you've had lots of MA activity that maybe as we've we've alluded, maybe slowing recently potentially, but I cannot see that that can I can't see it continuing. I think it has to happen and things have to um have to come together. Yeah. Sorry. I mean yeah, the the verticals are great, we love it. Um the key is really know your customer. So it's you know if you have a a company with lots of little customers and lots of big customers, not everyone's gonna value the whole lot. Some will be more, some will be more more focused. So yeah, all kind of growth, know your customer. And and the point you made around healthcare really resonates. I'm I'm I'm working on a report at the moment around uh public sector procurement. Uh and in terms of how the NHS are going through those procurement cycles, the the highest growth area is for IT resellers. Uh and they've eaten about 77% of the share from OEMs because they need that, as you said, something a bit more bespoke, something a bit more collaborative when it goes through the tendering process. It's not just uh what software, what tech hardware do you have anymore? It's a completely different, different approach, and it's interesting to see public sector acting more like enterprise now. That sort of thinking is filtering through everything, right? Yeah, we do have to talk to be about vertical businesses. I've got the best vertical focused corporate finance business in the in the UK, so yeah, I'm bought in. Yeah, absolutely. And uh James, in terms of you know, you you look at customers maybe looking at MSPs more as generalists now. What when you go up the ladder, are you looking at your vendor partnerships through that same lens? Are you re-evaluating your your partner stack? Yeah, I think it's there's two sides to that. I think I think we're always evaluating our partner stack because just putting a personal lens on it, I think that the simplest question I could ask internally is are we in the right position to add as much value to our customers as we can? So if we're not evaluating not only that vendor stack, but also what we do with that vendor stack, then we run the risk of not answering that question in the um in the right way. But I think some of our vendors, and I said to myself I wasn't going to uh name any vendors in here today, so I'm gonna hold true to that, but I think we certainly have some vendors that are able to offer us a a wider range of capabilities across some of those pillars of our business, and appreciating for our customers, as I'm hopefully just outlined, those pillars are starting to blur a little bit in terms of it's very difficult to look at any one of those areas without considering the others. So I think where we've got vendors that either have an offering that covers all of those areas or some of them, that gets very interesting. But the other side to that is integration. You know, we don't need a best of breed vendor, you know, maybe in UnifyCons suddenly they're they're unlikely to come to market launching a networking proposition, right, or become cybersecurity experts. But what they can do is integrate nicely and offer us the APIs and the tools and the um and the value to be able to do that, and that probably is also where the value lies in in MSP or reseller land, where having a a partner, which might be my term for a an MSP or a reseller, having a partner that's got the ability to have that integration conversation in turn with customers, you know, looking at that verticalization conversation, whether you look at healthcare or financial services or insurance or leisure, they've all got their own applications, many of which will benefit, again, alluding to the the concept of AI from some degree of integration so that you know intelligent things can talk to other intelligent things, so at the end of it, you're really will we ever get to one holistic enterprise with one stack? Probably not. But isn't it nice if we've got things that talk nicely to each other? Um, and that probably yeah, that integration piece is key, but then also collaboration and having partners, resellers, MSPs that collaborate well and nicely and productively with peers, you know, or or or adjacencies so that together we're delivering the right outcomes for um the customers and you know, sticking on that healthcare theme, I think there's really good examples of that where you you know you would see us integrating very well with the likes of um you know bleak providers or you know blood bank alarm providers or similar, not directly in the uh the same field, but these things all need to uh all need to work together and all need to uh talk to each other. Yeah, absolutely. I suppose there's a a link back to the original uncertainty point there, where maybe the MSPs who aren't looking at it through that lens are stuck in in that veil of uncertainty and that they're on an island with their own thoughts, right? We uh we the the big change at MSP has been what we know we've known in commerce for years and years is is recurring revenue. And and they've made, well they're generally making that that um switch from um a VAR or a or a systems integrator into being a reseller. And so from a vendor perspective, what's that meant is is sort of more of a focus on on larger global vendors um rather than sort of more proprietary style ones. Yeah, absolutely. Well, before I let you go, gents, uh I'm not gonna say as cynically it's for for a LinkedIn snippet, but if I could just get you both to sort of summarise uh you know one point you'd like an MSP listener to take away in terms of something they could apply straight away in their business, just a thinking change or a technical change. Uh and Adam, I'll come to you first. Okay, it's uh it's it's right where we started. This is the this is the channel, this is the the area that adopts the change. Um, and you know, every crisis they've it's shown itself to stand up and be able to deliver solutions. Just chart house, for example, when was it started? 80, 19, 80. So yeah. Yeah, I mean, you know, so that's sort of from lines and calls, even maybe just calls. Um and now we're talking about um, you know, critical, mission critical IT for for the the health service and AI. So, you know, somehow um we uh yeah, you know, you adopt adopt the change, embrace it, and there's loads of opportunity out there. Great, thank you so much, and James. I think mine mine's quite simple to be honest. I think I absolutely believe that this channel, which I'm proud to be part of, it has has some really brilliant and capable people, always has done, and hopefully always will do. And I think it's yeah, talking to an MSP audience, it's about freeing up those people to go and do what they're good at. You know, put AI to one side, but people work with people, get the people that really understand how to get the value out of technology in front of our customers collectively, doing doing the right thing, and that yeah, the channel is massively ticking the uh the value box because that's far more than just a uh a vendor and a skew. It's how do I actually get that working? So, yeah, free free people up to do what they're good at. Great. Well, I've thoroughly enjoyed talking to both of you this morning. Uh thank you for taking some time out of a of a busy Thursday morning to talk channel with me. Thank you for the invite. Cheers, guys. Thank you.