The evolution of distribution

To mark the 40th anniversary of MicroScope, Frank Vitagliano, CEO at GTDC, shares his thoughts on the journey that the channel has been on for the last four decades and beyond

As MicroScope celebrates its 40th anniversary, there have been opportunities to look back and wonder about what will happen next. The key theme that links all four decades of the publication’s existence is change – and that has been seen across all parts of the channel.

Frank Vitagliano, CEO at the Global Technology Distribution Council (GTDC), has also seen the industry evolve and here kindly shares his thoughts about how far the industry has come and why it is so important. Here are his answers to our questions.

How do you think the channel has changed over the past 40 years?

You have to start with the change in technology. Forty years ago, the channel was a hardware-oriented community with vendors focused on getting their products into productive use through the indirect marketplace. Over the years, those solution providers have transformed into trusted advisers as technological advances increased their business clients’ reliance on IT expertise and insight.

Digital transformation and cyber security were key drivers in that evolution and continue to elevate the profile and relevancy of the channel, particularly the service providers who manage the complexities involved in end-user solutions and support.

Over the last 10 years or so, there has clearly been a consistent shift in overall channel revenue from hardware to the cloud, SaaS and services. The overall percentage of channel business remains fairly consistent at 65-70% of all IT volume, though that varies by country, region and product types.

Where do you think the channel is going?

First, the channel will continue to be driven by the evolution of technology. Some of the biggest things on the horizon may not be as important today as they will be in the future, such as AI, data utilisation solutions and predictive analysis tools. Cyber security will continue to be a critical focal point.

The second big driver is tied to how, where and why people want to work. Hybrid work environments have clearly changed the game concerning the way companies effectively secure and operate in remote locations. Before the pandemic, most of the attention went to on-premise technologies, with off-site systems considered more of an afterthought or secondary option. Working from home or the road was not nearly as significant. There’s a whole new level of complexity today, requiring more advanced IT skills that most businesses don’t have in-house.  

The channel is dealing with much of this transformation. Regardless of what an internal IT department does, on a global basis, 65-70% of the world relies on the indirect IT market, which experts predict will be even more relevant to businesses in the future.

On the distribution side, that trend is even more critical with the proliferation of platforms and different service-level needs. Many people don’t realise, including some in our industry, that cloud transformation did not replace all the work associated with traditional hardware solutions.

The latest consumption models incorporate different vendors, delivery systems, and beginning and ending dates − all the associated activities must be configured, activated, enabled and supported. Distribution provides a long and growing list of different services to aid solution providers in those efforts. That support is more varied and expansive than when hardware ruled the channel 40 years ago. 

How important is the channel?

The value of the channel is rising due to increasing technology complexity and growing cyber security requirements. The comprehensive needs of the business community are larger than ever, and those organisations rely even more on the support of solution providers and the vendors and distributors that work behind the scenes. Their demands are rising, not shrinking. Despite the rise in SaaS, IaaS and other “as a service” models, I believe the channel’s value is growing, not eroding.

Vendors continue to look to distributors to provide upstream support, which has also changed in complexity over the years. The days of being “a bank and a warehouse” with basic pre-and post-sales support are far behind. Distributors provide more comprehensive support to the ITSP and vendor communities in many different areas now. Many of those new services empower solution providers, making it easier to support emerging technologies, digital transformation and the shifting needs of their clients. Distributors are creating more efficient and profitable ways for their partners to deliver those services.

Lastly, solution providers are relying more than ever on their long-term trusted relationships with distributors.

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