Distributors Seeing Silver Lining in Cloud

By Diane Krakora, CEO

When it comes to the role and value of distribution in this new cloud era, it seems as though the death knell has sounded too soon. In fact, distributors stand to become even more relevant for both their vendor and solution provider partners alike.

 That’s the takeaway from our most recent webinar, in which we posed the question, “What is the future role of distribution?” Our two panelists know the disty space inside and out: Bill Botti, executive VP of Wayside Technology Group, the parent company of distribution companies Lifeboat and TechXtend; and Tim Curran, CEO of the Global Distribution Technology Council (GDTC). As such, both were uniquely qualified to give us their take on the state of distribution in the wake of cloud and other technologies disrupting the traditional channel sales model.

The short answer: Distribution has the opportunity to kill it in the cloud.

New Opportunities

“The distribution community as a whole is embracing the cloud and plowing forward, some in different directions, but all trying to assist their vendor partners and their solution provider customers in making this incredible transformation,” Curran stated.

Incredible, perhaps, but it’s easy to see why so many saw distribution potentially being disintermediated by the cloud. Take software licensing, for example: The cloud essentially removes the third-party aspect, enabling solution providers and even customers to go directly to the vendor for their software licenses.

Which, for single-vendor licenses, makes sense. But factor in the reality that most customers use applications from multiple vendors, and suddenly the task of license management has become a time-consuming, at times complicated task. Who better than distributors, which have relationships and the systems in place already, to manage those licenses on behalf of solution providers for their customers?

And that’s just scratching the surface. As business models change and end users become more tech-savvy, solution providers have begun to modify how they sell, Botti noted. So, too, are distributors transforming their business.

“Everybody (vendor, solution provider, distributor) has to identify where their value is,” he said. “[The solution provider] is not interested in being all things to all people, and has begun to specialize and form partnerships with other resellers and distributors to solve his customer’s problem.”

New Solution Offerings

But it’s not a cut-and-dried solution; each customer has unique problems and will require a unique solution. One-size-fits-all no longer is enough for customers that have done their homework. Luckily, the cloud has enabled solution providers to personalize their offerings.

That is what distributors are doing as well: providing customized solutions to meet the needs of their vendor and solution provider customers.

“At the end of the day, everybody has to try to find their niche,” Botti said. “The services and value we provide for Customer A could have absolutely no value for Customer B or Customer C, but in order to be a partner for them, we have to provide different value. That revolves around financing, it revolves around technology, it revolves around cloud, it revolves around what markets they’re going after and how they want to achieve that.”

Curran noted as a result, distributors are becoming much more specialized. “The digital era that we are entering fosters a pioneering state of innovation that’s gathering momentum from all perspectives—distributors, vendors, solution providers, the entire channel,” he said. “You know the old saying, ‘Where there’s mystery, there’s margin.’ We’re now going into another era where there is incredible complexity. To me, that presents opportunity for the distributors, for the vendors and for the resellers.”

What does the future hold?

Certainly, distributors will have a certain baseline of services they all provide—partner recruitment, partner enablement and even financing. But other services, such as education and training, solution vetting, solution assessment, solution selection, solution deployment support and billing, will be provided in ways that are unique and answer the customer’s needs.

“I think that’s our core value proposition, offering a range of capabilities and a range of capabilities that is increasing every day to our partners, our channel on a variable-cost basis to help the overall industry continue to grow and evolve,” Curran said.

Succinctly stated. Yet, Botti noted, it’s not an easy concept for some vendors and solution providers to understand.

“If the vendor or the reseller doesn’t raise their hand and go, ‘Can you?’ they don’t learn what the distribution partner is capable of to help improve their model,” he said.

Clearly, the cloud isn’t getting in the way of distributors’ path forward. The task for vendors and their solution provider partners, then, is finding how distributors can help them move their business forward as the IT space transitions once again.

Do you agree with our panelists? Where do you see distribution headed in the next few years? Leave your comment below.

Diane Krakora is CEO of PartnerPath with two decades of experience defining the best practices and frameworks around how to develop and manage partnerships.