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The channel has enjoyed a solid 12 months, and for those in distribution there are signs that the momentum should continue throughout 2018.
Predictions about what the rest of this year will hold come from industry association Global Technology Distribution Council’s (GTDC) 2018 Tech distribution outlook report, which concludes that growth is continuing and identifies several technologies as key drivers in this.
According to GTDC’s sales data for last year, over 600 vendors saw revenue increase when they used distribution, indicating the success of working with the second tier of the channel.
The company surveyed 50 vendor figures and interviewed over a dozen distribution executives. It found that over 70% of the vendors expected their sales through distribution to increase by a double-digit percentage in 2018. This is a rise from last year’s findings, where 55% expected this. The reason for the change could be due to companies implementing new technologies which ensure better efficiency and reliability.
The interviews with senior distribution figures contained in the report contain some key views about what is happening in the market.
Michael Urban, corporate vice-president for strategy, transformation and global vendor management at Tech Data, said the digital environment was altering “everything in the enterprise today” and “distributors must evolve to the needs stemming from that change”.
Cloud and datacentres
One of the technologies playing a key role is cloud, which the vendors cited as the area where distributors will make the most progress this year.
Reyna Thompson, vice-president of ConvergeSolv secure networking group at Synnex, told the GTDC that the adoption of cloud is only set to continue.
“Cloud has changed everything: the way customers consume services, the way businesses deliver them, and the way channel partners are evolving to meet these fluid demands,” she said.
“Cloud adoption will continue to grow exponentially as scepticism and fear of managing cloud and hybrid infrastructures evaporates,” Thompson added.
Despite the rise in cloud, there is also still a market for datacentres and hyper-convergence, according to the respondents.
Tim Ament, senior vice-president of advanced solutions at Ingram Micro, was quoted in the report as saying that partners in the channel must know the market and client needs before building a hybrid cloud product.
“Distribution can help channel partners with the sales cycle around cloud, from assessment to proactive management,” he said.
Jim Wittry, general manager of channel and alliances at CloudGenera, also shared his views, describing hyper-convergence as “alive and well”, and adding that he expected interest to continue in the coming five or six years.
IoT and mobility
The internet of things (IoT) is also making headway in the industry.
In its Distribution landscape and disruption – trends and challenges to 2022 report, GTDC highlighted IoT as the key technology for the next five years. IoT was seen as more likely to make a quicker impact on the channel than artificial intelligence (AI).
The advice from the GTDC was that distributors need to discuss with their vendors how to utilise the IoT opportunities to help create better user analytics.
In the Tech distribution outlook report, Ingram Micro’s Ament said he expected managed service providers (MSPs) to enter to the IoT market and offer even more compelling products.
“IoT is being used in very simple ways every day, especially within verticals, and is an area that MSPs are primed to participate in and lead. As the technology matures, we will see more purpose-built solutions that scale to meet the needs of a particular market or vertical,” he said.
Tim Ament, Ingram Micro
The surveyed vendors also highlighted the importance of a mobile experience for the enterprise. Peter DiMarco, vice-president of VAR sales at D&H Distributing, said the industry was “on the cusp of a paradigm change”, driven by mobility and cloud.
He voiced the opinion that organisations would not be successful if they replaced customer devices with more of the same technologies, pointing out that the new strategy had to involve more portability.
“Companies that simply replace their existing networks and client devices with technology that’s in keeping with what they already have are going to start losing ground to more progressive competitors,” he said.
“Organisations that replace their desktops and consumer-grade tablets with business-class Ultrabooks and 2-in-1 devices, however, will gain an advantage,” he added.
The report also highlighted the increased demand for professional audiovisual (pro AV), due to the improvement in the technology involved. Ingram Micro’s Ament said the channel can expect distributors to provide more vertical-specific products.
“There is a refresh cycle in play and a new opportunity pipeline is growing at a rapid clip, particularly in verticals such as retail, places of worship, gaming and hospitality,” he said.
GTDC published its Distributors and cybersecurity report in June 2017, highlighting the role distributors can play in security. The company’s survey of distributors found that 75% of them create more partnerships with security vendors than with vendors in any other sector.
The industry group said distributors have a part to play in helping vendors create a full solution product for the user.
Erik Foy, director of AMS distribution channel sales at Symantec, echoed this point in the Tech distribution outlook report. “Distribution is stepping up as a major force in the channel to help drive an integrated security platform value proposition,” he said.
The role of distributors is also becoming more important, as the number of cyber attacks rise and the hackers become more intelligent.
Julie Hens, vice-president of global distribution sales at Cisco Systems, said new technologies such as robotics would be key to addressing the complex cyber threats of today.
“As security attacks become more sophisticated and unrelenting, threat intelligence, machine learning and automated responses on the network are critical,” said Hens.
Vendor relationships and innovation
The respondents also saw agility as an important requirement for the modern distributor, with 75% of the vendors expecting distributors to change their operations based on business demands this year.
Synnex’s Thompson said collaboration between channel partners was important for driving innovation and digital transformation in distributors.
“We must seek more adaptable and collaborative models. Success in the IT channel will rely even more heavily on tight, complementary partnerships between distributor and vendor, and a shared vision of inventive ways to accelerate digital transformation in the marketplace,” said Thompson.
The vendors also expect distributors to continue to invest in business units for specific industries. Paolo Castellacci, president of Computer Gross Italia, said vendors prefer their distribution partners to have a solution tailored specifically to them.
Reyna Thompson, Synnex
“Our challenge as distributors is to add services to channel partners and vendors beyond simple knowledge and support of products and technologies, to offer help in understanding how technologies affect their clients and meet each market’s uniqueness,” said Castellacci.
Distribution is set for a positive year, according to GTDC, with technologies such as IoT and cloud becoming more prominent.
With these developments, however, security needs to be at the forefront of companies’ minds to address the current cyber threats.
It all spells plenty of opportunities for distributors that can work closely with vendors and deliver high-quality support to resellers.