How the Channel Is Preparing for Brexit

New research shows that almost a third of UK IT SMEs haven’t yet considered the impact of Brexit on their businesses.

That’s according to figures supplied by Aldermore bank. While the EU and UK haggle over a post-Brexit trade deal, IT firms have been preoccupied managing with COVID-19. This is despite 38% of these firms’ monthly income coming from customers in the EU.

Channel Preparations

So how is the UK IT channel preparing for Brexit?

A Tech Data spokesperson says that the distributor is preparing for the possibility of a no-deal Brexit, among other scenarios.

“Our aim is to support our partners in every way we can through this period,” they said. “We are in regular contact with our reseller customers and vendor partners to keep them updated on any changes. [We want to] ensure that partners feel fully supported by Tech Data as we transition.”

Tech Data’s preparations have focused on four key areas:

• Anticipated delays to vendor shipments travelling into the UK via mainland Europe.
• Heightened reseller demand for Tech Data to export products into the EU.
• Potential price increases on some lines due to import charges.
• Increased demand from resellers to use Tech Data’s specialist configuration centre, rather than their own facilities, prior to export.

“Brexit will inevitably lead to some delays to the supply chain in the initial stages,” said the spokesperson. “We are doing our best to anticipate the challenges and create contingency plans around stock and order cutoff times, for example.”

The trading arrangements between the UK and the Republic of Ireland currently remain unclear. As such, Tech Data says it anticipates additional paperwork and customs clearance activities. It has put in place a specific contingency plan with its Irish partners to cover for January, initially.

Meanwhile, a spokesperson for the UK’s fourth largest channel player, SCC, believes the ongoing uncertainty “is no good for anybody.” The channel giant is working closely with key partners and proactively monitoring the situation.

“Whatever the outcome from political discussions, SCC is in the fortunate position that its services are primarily delivered by UK-based operations. In most instances little or no services [are] transacted with customers across country or territory borders,” said the spokesperson. “That will remain the case post-Brexit, even where SCC utilises its own support operations based outside of the UK.”

SCC also says the firm is addressing the most urgent issues directly with customers. These include product supply and service delivery, and data protection. It has also carried out an impact assessment and developed flexible response plans with distributors and vendors.

Communication Is Vital

However, for many partners, there will be anxiety about what the future holds. Much of that comes down to a lack of information, according to the Aldermore figures. Thirty percent of small IT firms say there’s a lack of information available on what to do. This, they say, is why they haven’t made any plans.

This is where good communication will be vital, says Graham Charlton, CFO at the UK’s second biggest channel firm, Softcat.

Softcat’s Graham Charlton

“Resellers, vendors and distributors all have a role to play in adapting to the new trading relationship with the EU. We’ve been working throughout the past 18 months to define our respective roles and bring our complementary skills to bear. We’ll need to remain close throughout the early stages of 2021 to react to tactical challenges quickly. The quality of the collaboration between the channel and vendors has never been more important.”

Between 5% and 10% of Softcat’s income is from overseas trade, much of which comes from the EU. Charlton says adapting to how that will work once a customs border is in place has enabled Softcat to consider how it could broaden our international trade further as well. This is something it has been “looking to do in any case for a few years now.”

“The export and logistics capability we have built to trade into the EU post-Brexit can also be used to …