If, as we say elsewhere, Cloud has gone mainstream, then what impact will this have on
traditional distributors and how will they remain relevant in the future.
A large part of a distributor’s portfolio risks becoming disrupted by the rapid emergence of cloud based deployment of applications and services that not so long ago were delivered to the door by the logistics transport of the reseller’s chosen distributor.
For those resellers that continue to sell hardware based solutions this will remain the case but for a growing number of channels cloud has become the new norm.
For distributors this represents both opportunity as well as threat with many embracing the challenge with new services based models to augment or replace their declining traditional ‘stock and ship’ heritage.
Let me say that ‘stock and ship’ will likely remain a key role for distributors in the future but putting that to one side how will distributors fare in a cloud world where applications can be sourced directly from a vendor portal?
Cloud, Internet of Things (IoT), big data: all these innovations appear, at least on the surface, to not require third-party involvement. And why would solution providers need to rely on their distributors for these services when they can get the same thing directly? The simple answer? To leverage multiple value-add options they couldn’t or don’t want to do themselves.
With limited resources and numerous needs, resellers have to choose their battles wisely. Most try to focus their efforts on a core set of skills and business practices. They train and invest in tools that help them excel at these foundational competencies and learn all they can about the business needs of those customers.
So why would they divert those resources to develop an unproven service or take on a new customer when outsource providers can likely do it cheaper or more effectively in much less time?
That’s just one of the value propositions that distributors are stepping up to providing. Why reinvent the wheel when others have mastered the learning curve and made the big investments? With so many technological advances and the growing complexity of IT, why wouldn’t you lean on others who can ease delivery process burdens?
Let’s face it, resellers have enough on their plate - it’s a fast changing world with a host of new cloud, managed services and innovative solutions coming online each year.
The number of new vendors in distribution each year is amazing. There is a challenge in figuring how to integrate them into end customers’ businesses, but there is tremendous innovation available to take advantage of.
If the first step for resellers facing this problem is to leverage more of the resources providers have available to them then one of the first places to look for those resources must be to turn to a distributor.
Why not use the distribution infrastructure? They run incredibly low margin businesses, but run them extremely well. Even in the economic downturn, they remained healthy, which is a testament to their stability and value.
In addition to the traditional hardware and software sales, and to compete in an increasingly cloud based sector, distributors are now offering a number of ‘as-a-service’ options, including:
Engineering and design
Mobile device management
Cloud solutions and programs
Application engineering
Solution selling
Software services consulting
Network assessments
Today, one of the main challenges for those in the channel is staying ahead of the competition and remaining a credible trusted advisor to end-user organisations. The constant need for increased knowledge of new technologies and consumption models can be a full time and never-ending job. Therefore, an intrinsic part of the value provided by the right distribution partner must be education and enablement. By gaining skills and capabilities business partners can sell more effectively and transform their businesses.
One distributor specialising in cloud based solutions told us, “Being able to provide an extensive portfolio of supporting services will always help to build customer confidence in adopting new and disruptive technology.
By providing Cloud Services we have been accelerating the ability of our channel partners to take new next generation products and services to market. By using our services Business Partners are able to provide essential and value-added services to their customers without making costly upfront investments in additional resource.”
The distributor breaks these services down in to four operational areas;
Pre-Sales services are focused on enabling partner’s sales teams and adding value to all pre-sales activities.
Services a distributor can provide here could include; tender support, proof of concept, evaluation and product demonstrations either on the web or on site.
Implementation Services will help to build customer confidence in a partner’s ability to deliver. It will also demonstrate an ability to help manage any perceived risks that can come from the complexity and impact of installing new systems.
Services here could include project management, installation and configuration, security and network design as well as perhaps on-site technical support.
Maintenance and support which are key to building and maintaining customer relationships and ensuring repeat orders for new product versions and services. These services should be available direct to customer or partner branded.
Training and certification; enabling resellers to offer a packaged training service to their customers with the sale of hardware and software. This would increase the level of recognised expertise within the reseller and increase their capacity for pre and post-sales support.
Those resellers more used to a legacy CPE sales model need to be cognisant of the contract time scales. To take polar extremes, a user of a PBX sold on a five-year lease was often only contacted by the sales team six months prior to the lease expiring whereas contracts for cloud based services can be as short as 30-days. It is therefore vital that resellers are in regular contact with their clients to ensure they are the first to know about their plans for future moves, changes, and updates.
Choosing A Distributor
A recent channel survey carried out by Comms Business Magazine in to what factors resellers considered when deciding which distributor to work with reveals that price still dominates.
I was surprised to see that demonstration facilities were so far down the pecking order and wondered if this were due to distributors and resellers relying on the vendors for demonstration facilities or if I was still in a CPE time warp as most applications these days just need a connected laptop or tablet to demonstrate.
Ed Says…
I can’t stop writing this any more succinctly. In 2015 I wrote here, “This market has always represented a moving target for the channel and who here could ever honestly recommend a long-term access contract to a customer without laughing all the way to the bank. Keeping a close watch on the market is essential for resellers providing connectivity whilst recommending the right service for their customers is even harder.” The only thing I would add to that today is keep an eye out for 5G and that it’s getting even harder these days.”