Can distributors seize the Xaas opportunity?

Distributors play a vital role in keeping the lines between software publishers and hardware manufacturers and users operating smoothly. They can expedite response times, enhance a company’s reach and even create value-added packages.

The Distributor market place has been doomed by many to disappear often, and it will continue to be doomed moving forward. But, they are still here, and most probably will still be here in the future. But the opportunity for IT Distribution today is enormous.

The amount of software and tech solutions in the marketplace is beyond comprehension. Software markets are global, the cloud has no borders. The challenge is for end users SMB’s have to keep track of what they are using where. What subscriptions do they have, what skills do they need to use the more and more pervasive and variety of solutions in their orgs. Regional SI’s and resellers who offer digitally transformation services to end customers need help like never before. They will look to distributors for new logistical, technological and knowledge support. They will also look to distributors to help manage the complexity that digital transformation, cloud computing and new ways of working create, especially in small and mid-size businesses. 

As can be seen in Deloitte Insight chart above there is a move toward everything as a service, XaaS. Many distributors have already established their own cloud marketplaces. Solutions aggregation platforms and capabilities have all been part of extensive distributor cloud investment for years and are increasingly critical and relevant to vendors and customers. Distributors have moved from physical pick, pack and ship to accelerated growth and investment in these new platforms and vehicles to serve the new content.

Now is one of those unique moments in history where Distributors can drive a lot of productivity across the entire ecosystem of vendors, distributors, and channel leaders, all while substantially improving customer experiences. One of the challenges is making sure new solutions are adopted by the channel. Channel adoption of emerging technology will remain crucial – and a sizable challenge that distributors are looking to more fully meet in the future.

Making an impact

TechData has for example an extensive program for ISV’s. TD offers. TD is developing its role as an aggregator. Helping ISV’s with their GTM. Helping them transact in the cloud. Helping them find clients and partners around the world. Most large software vendors either have tech alliance programs to help bundle and enhance its own offering for its clients. But also partners can aggregate, and we see this happening in some markets. A distributor ideally could create bundles for SMB resellers to offer to its clients. The Disti becomes a VAD by offering metering, billing and support services. Even bundling in hardware is part of this offering. The obvious ly also financing is a value add.

In a talk with TD’s Caterina Moro, I heard of the investments TD is making. The challenges a traditionally low margin short sales cycle business has to overcome. The role of an aggregator in Xaas, has long cycles for product marketing and development. Distributors a on a tight rope. Vendors , especially the larger Hyperscalers are key to the success, and they will benefit hugely form these investments the Distributors are making. It would be wise for the Hyperscaler to co-invest and hep secure this offering for the SMB markets. ISV should realise that if their target customer is a SMB that these often transact with Distri’s. It is a high exception that a start-up and scale up ISV has a partner strategy in its roadmap, let alone a 2 tier one.

As you can see above TechData is advanced in its offering to help ISV’s leveradge TechData’s expertise and reach as well help the ISV scale quickly.

Our View

My recommendation for distributors is to not try and boil the ocean. Doing some data analysis in regional sales volumes across Hardware and Software, clear potential for bundles can be seen. Work with those vendors and those partners driving the volumes to jointly develop aggregation offering that will help client with ease of purchase, billing and management. The once that is operational, slowly add additional solutions, Hardware and services to that mix. Learn as you go. Track the data, and set goals to optimise one KPI each quarter.

Also, the developments of Marketplaces is omniverse. The investment in aggregation can also be leveraged by allowing transaction to take place on its platform. Again like above start small, with select vendors and resellers. Assess, what works, what can improve redesign and implement. And then slowly grow organically. Add a vendor, and let it run. The add some new clients, then let that run. Exciting times ahead for Disti’s . The Distributor has often been doomed to die, but its future is brighter now that ever.

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