IT distribution strategy: Distributors upping investments in enablement

The IT distribution strategy is shifting away from products and toward enablement around services, solutions and industries.

The relationship between IT distributors and their partners used to revolve around product. That's not the case anymore as partners see a shift in the ratio of revenue from products and services. Enablement around services, solutions and industries is becoming more important than products.

That's because we're in the midst of a transformational market where end-user buying behavior is changing to include line of business (LOB) managers and CIOs in addition to IT, and where the core technology areas around the so-called third platform -- mobile, social, cloud and big data -- are becoming key in addressing customer business issues.

For channel partners, this transformation not only represents new business opportunity but also big changes in their businesses. And for many channel partners who still make most of their revenue on legacy technology, such as hardware, servers, storage, networking and desktops, change is tough.

That's where the IT distribution strategy fits in. To keep the attention of their partner customers as they change course and to keep revenue coming in, IT distributors are expanding their enablement prowess to offer partners the support and services they need to grow their businesses and move forward.

The premise is simple: How partners get to where they need to go -- Cloud services, managed services, mobile solutions, selling to LOB managers, etc. -- is dependent, to a good degree, on the vendor and the distributor.

"We're selling billions of dollars annually in products, solutions and services, but we're not confused about where we sit in this changing ecosystem: We're a services company," said Pete Peterson, senior vice president of U.S. sales at Tech Data. "For us it's not about sales and marketing teams but getting the entire organization behind supporting our efforts to provide the best-in-class experience for our customers," he added.

The minimum investment for distributors now includes field resources, solution centers, and training and education that focus on competencies and LOB selling.

Today, research shows that partners still have a lot of influence with customers. In an IDC survey of 500 partners, survey respondents reported that 62% of their customer deals were requests for which the partner made recommendations about vendors and products, according to Paul Edwards, director of infrastructure channels at IDC.

"That's a lot of influence," he said.

The unanswered question, however, is whether partners will maintain that influence as they aspire to managed services, cloud and mobile solutions.

Probably not without help.

Channel enablement

That's why distributors such as Avnet, Ingram Micro, Tech Data and Synnex are making big investments in cloud, strategic business units and vertical lines.

As the vendors' downstream alliance partners, distributors reach out to VARs that vendors cannot reach directly because they can't afford to. The goal of distributors, however, is the same as that of their vendor partners. The IT distribution strategy is to strengthen the channel partners' role as an influencer with their customers by deepening a partner's expertise around vertical markets, cloud and business solutions.

"The best true value-added distributors have moved from the mechanics of operations management and channel partner activation to sales and channel enablement," said Kevin Rhone, practice director for the channel acceleration practice at Enterprise Strategy Group (ESG).

In their efforts to provide more core value to their partner customers, IT distributors are adding new enablement capabilities for marketing support services, such as analytics support.

Distributors are also providing guidance and advice to partners on how to set up practices around a particular vendor's technology, as well as how to sell technical knowledge and expertise.

"We're actually seeing more distributors providing configuration, build and professional services for a fee to VARs who may not have the expertise in-house or to those who need to augment their staff in times of high demand," Rhone said.

Acquisitions and launches

For a glance at how distributors are evolving their businesses, look at Ingram Micro's purchase of BrightPoint Inc. in October 2012, Promark Technology in November 2012 and SoftCom Inc. in September 2013.

According to Kirk Robinson, Ingram Micro senior vice president, these three acquisitions were key to strengthening the products and services the company offers to its channel partners. "We saw the mobility market as huge, and BrightPoint strengthened our mobility expertise for Ingram Micro Mobility. We carried storage products but didn't have GSA [U.S. Government Services Administration] contracts; that came with the purchase of Promark. And SoftCom enhances our cloud services and aggregation platform and adds talent," he said.

Continuing down a solutions strategy path it has been on for decades, Avnet, long considered a value-add distributor, has acquired 12 services companies over the past two years. "We've added 2,000 service professionals with software capability, cloud, big data automation and lifecycle around infrastructure to help VARs with implementation and managed services," said Tony Vottima, senior vice president and general manager of Avnet Services, Americas.

Being a services-led organization is what differentiates Avnet from other distributors, he added. Avnet's partners are almost always focused on companies with $500 million to $2 billion in revenue that need enterprise solutions.

Tech Data's investment in raising its value proposition started with the launch of its Advanced Infrastructure Solutions (AIS) division in 2007. The goal for AIS was to accelerate the company's entry in fast-growing markets such as virtualization, blade servers, storage, software and other utility solutions, according to Peterson.

That move was followed by the introduction of TDCloud and TDCloud Academy in 2011 to help partners profit in cloud solutions; StreamOne Software License Selector that same year; the 2012 launch of its Solution Store, an applications storefront; and the rollout of TDMobility, a U.S. joint venture with Brightstar Corp., to help resellers with mobile solutions, also last year.

While the evolution of distributors is still a work in progress, channel partners need to consider what the distributors bring to the table, especially if they're looking for help in the sales cycle.

"That comes down to a business decision versus getting product at a cheap price," Edwards said. And, today, savvy partners will take time to build a relationship with distributors that provide the most support.

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