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Role of distribution changes with accent on services

Distributors are offering channel partners an expanding range of services, including network assessment, managed services, hosted offerings and IT asset disposition.

As the IT industry and businesses move to cloud, the role of distribution in this transformation, along with the parts played by vendors and partners, has changed dramatically. For channel partners, in particular, distributors and the myriad of services they offer -- think of a distributor's offerings today as distribution as a service -- can help a partner extend and broaden an offering without having to invest in fixed infrastructure while retaining customer account control.

"That's our core proposition -- offering a range of capabilities that's increasing every day to our channel on a variable cost basis to help the industry as a whole to continue to grow and evolve," said Tim Curran, CEO of the Global Technology Distribution Council (GTDC), a worldwide industry association representing IT distributors.

Tim Curran, CEO, Global Technology Distribution Council Tim Curran

Curran and Bill Botti, executive vice president of Wayside Technology Group, a holding company for Lifeboat Distribution, recently participated in a webinar -- The Future Role of Distribution -- hosted by Diane Krakora, CEO of PartnerPath.

At the center of the discussion was a look at how the traditional linear vendor-distributor-reseller-customer model, where everyone knew their value, has changed to a cluster model in which partners play a variety of roles. In this model, resellers, system integrators, service providers, solution providers, agents, and vendors serve the customer in a much less clearly defined manner.

Today, distribution is a more integrated and dynamic supply chain partner, relied on for services by the vendors and channel partners.
Tim CurranCEO, Global Technology Distribution Council

Botti dates the transition from a linear model to a cluster model to around 2009-2010 and attributes the change to the way partners sell and the way customers buy. "In the linear model, customers didn't understand the technology and relied on the reseller to explain, install, support and be a service entity," he said. In contrast, today, he explained, partners aren't all things to all customers, are more likely to partner with other partners to solve a customer's problem and, the customer is far more educated on both product and partner selection than ever before.

This complexity, triggered by cloud computing, has driven the transition to the cluster model. "In the cluster model, everybody has to identify where their value is. At Lifeboat, the value we provide is different for all of the different partner types," Botti said. That added value could revolve around financing, technology, cloud, or how a partner goes to market, for example, he noted.

Role of distribution: A growing roster of services

Bill Botti, executive vice president, Wayside Technology GroupBill Botti

It's clear, based on information from GTDC research, that the role of distribution has become quite diversified. The number of services is exploding and continues to grow. GTDC lists more than three dozen services offered by distribution. Those include engineering and design, managed services, licensing, marketing/branding, demand generation, mobile device management, lifecycle management, logistics, technical support, cloud offerings and programs, account management, hosted solutions, education and training, network assessments, government and General Services Administration services, software services consulting and asset disposition.

In this new era of distribution, technologies such as cloud, mobility, Internet of Things and hyper-converged infrastructure represent massive shifts that are becoming a key differentiator in distribution and how these players respond to a market that wants flexibility and options.  "Today, distribution is a more integrated and dynamic supply chain partner, relied on for services by the vendors and channel partners," Curran said.

How are channel partners leveraging distribution?

According to a GTDC survey, more than 70% of managed service providers surveyed said they're turning to distributors for all types of services and they see the distributor value increasing in the cloud.

The 2016 PartnerPath State of Partnering study asked more than 200 partner respondents where they're leveraging distribution and the return on investment of these efforts. On the high end of the graph, partners were leveraging technical support while, in the midrange, partners leveraged distribution for program activation and support, sales training, technical training, technical sales resources and sales support resources, and cloud services enablement.

Security7 Networks, located in Hampton, N.H., an MSP focused on networking and security, utilizes distribution mainly for more traditional product ordering and shipping as well as training. While the company's current use of value-added services from the distributors it does business with is more narrowly focused, that could definitely change, according to Jay Smith, president of sales at Security7.

"One of the ideas we toyed with but haven't yet come up with the right customer situation, is leveraging Fine Tec's configuration work for firewalls," Smith said. Fine Tec is a niche distributor and works with Fortinet, a provider of network security appliances and a technology partner of Security7.

Where the configuration service would come in handy for Security7 would be if the MSP had to configure and ship 1,000 or more unified threat management firewalls to multiple locations, for example. "We'd be tripping over ourselves here if we had that many," Smith said.

Security7 also uses Fine Tec's finance options, most recently for what Smith called a "try and buy." The distributor has worked the MSP to create flexible financing arrangements.

The MSP is also open to using technical services support from distribution partner Tech Data Corp. for customer technical support in locations where the partner didn't have a presence. Security7 does business nationwide and also has some customers overseas.

Next Steps

Read how distributors support Dell

Find out how distributors build smart technology portfolios

Learn about AVG Business's relationships with distributors

This was last published in May 2016

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