When the Global Technology Distribution Council (GTDC) was launched back in the late 1990s, one of its main jobs was to promote the value of distributors to the financial community.
Making sure that investors understood what distribution did and its value was one of the main thrusts of its activity. The group remains committed to promoting its members’ skills and abilities, but the days when it needed to educate investors have long gone.
Ingram Micro was snapped by China’s Tianjin Tianhai four years ago for $6bn and the move by private equity player Apollo Global Management to acquire Tech Data for $5.4bn last November has underlined the fact that not only do investors understand distribution, but they are actively going out to get a slice of it.
It is against this background that the latest CEO of the GTDC, Frank Vitagliano, has come into the organisation. He joined last April and has already started to focus minds on what is coming next, with research looking at where distribution will be in 2025.
Boiled down, that Tech Distribution 2025 research said that distribution not only has a strong future, with growth expected throughout the next five years, but the vendor community have understood that they need to have a close relationship with those that are helping them to reach out to existing resellers and help with partner recruitment.
The research also showed that distributors are already moving into some of the new growth areas, such as the internet of things (IoT) and artificial intelligence (AI), and are bolstering their cloud marketplaces to continue to evolve to make sure they are adding value.
“My goal is to promote the value that our members provide in the overall IT landscape, “ said Vitagliano. That membership list includes all the channel household names you would expect.
Tech Distribution 2025 main findings
- 61% of those quizzed by GTDC expected greater than 10% growth through distributors.
- Virtual warehouse support for SaaS and cloud solutions will evolve as a primary distributor core competency and demand driver.
- Integration, logistics, inventory management and asset lifecycle services will remain crucial.
- Partner enablement, credit/financial services and recruitment will be of top overall importance.
One problem is that acting as the channel’s bank, providing slick logistics and warehousing and often acting as the marketing and training arm of a vendor, get taken for granted by quite a few people. Distribution is simply expected to deliver those things well and is not always given the credit for doing so on a daily basis, he said.
“Distributors have been making huge investments in the emerging technology space and they have made incredible investments, but this can be taken for granted and people assume the bases will be covered,” said Vitagliano.
Understood or not, it is those investments that will keep distributors around for the future and Vitagliano believes that people who talk about the doom of the sector should probably learn their history.
“Over the years, distribution has been going to be disinherited every two years, but their core competencies have become so significant, and they are so good at it, that people couldn’t replace them,” he said. “So people have stopped saying that they are going to lose relevance. That debate about distribution being disfranchised is over.”
Part of ensuring a strong future involves the vendor community, and the 2025 research underlined the benefits for both sides if the relationship between manufacturer and distributor was strong.
“As technology becomes more sophisticated and more goes to the cloud, it doesn’t require as much physical distribution,” said Vitagliano. “But what is going to become very significant is virtual distribution and the services they offer.”
In a 30-year career, Vitagliano has held senior executive positions with IBM, Juniper Networks and Dell.
He also worked for a solution provider and was CEO of Computex, which gave him an interaction with distribution from another angle.
“I’m in a little different stage in my career and I was looking for something different to do,” he said. “When this opportunity came up, I felt it would be good and utilise the skills I have.”
He added: “All members can feel good about the future. Vendors need distribution and understand that they can’t do everything, so need to work with distributors, and many are looking to make a significant focus with distributors.”
Not only are existing vendors looking to work with their channel partners more, but Vitagliano has seen a trend of some startups embracing distribution early on. The normal pattern is to wait for a while before launching into a two-tier model, but many emerging tech firms have grasped the value that disties can offer and want to work with them from the start.
As distribution embraces emerging tech, gears up its cloud marketplaces and increases its virtual offerings, the chances are that the investment community will continue to keep a close eye on the sector.
“There are huge opportunities in the market and it is being recognised with private equity getting involved,” said Vitagliano. “There is significant money and investors understand that there are some undervalued assets there.”
He added: “When GTDC was first established, its primary reason was to promote the sector to investors. That is not necessary any more. I doubt that I need to educate them – they can tell.”
For Vitagliano, the CEO’s role at GTDC is still about promoting value and ensuring that investors, vendors and those entering the channel for the first time all understand just what distribution can bring to the table.