​Educating from the epicentre - Why distributors are the pulse checkers of the channel

​Educating from the epicentre - Why distributors are the pulse checkers of the channel

This exclusive Reseller News Roundtable examined the pivotal role of distribution in understanding the health of the channel in New Zealand.

Stuart Speers (Enterprise IT); Stuart Alexander (Origin IT); Colin Williams (Lucidity); Pablo Garcia-Curtis (SoftSource); Greg Sharp (Base-2); James Henderson (Reseller News); Kyle Taege (Dicker Data); Kelly Raines (Acquire); Mike Clancy (OSS); Mark Raos (Datacom); Phil Johnson (CommArc) and George De Bono (rhipe)

Stuart Speers (Enterprise IT); Stuart Alexander (Origin IT); Colin Williams (Lucidity); Pablo Garcia-Curtis (SoftSource); Greg Sharp (Base-2); James Henderson (Reseller News); Kyle Taege (Dicker Data); Kelly Raines (Acquire); Mike Clancy (OSS); Mark Raos (Datacom); Phil Johnson (CommArc) and George De Bono (rhipe)

As the channel changes and industry voices deepen, the need for clarity and insight heightens.

Market misconceptions talk of an “under pressure” distribution space, with competitors in that fateful “race for relevance” across New Zealand.

Amidst the cliched assumptions however, distribution is once again showing its strength, as a force to be listened to, rather than questioned.

Traditionally, the role was born out of a need for vendors and resellers to find one another, acting as a bridge between the testing lab and the marketplace.

Yet despite new technologies and business approaches shaking the channel to its very core, distributors remain tied to the epicentre - providing the voice of reason amidst a seismic industry shift.

In looking across both sides of the vendor and partner fences, the middle concept of the three-tier chain remains centrally placed to understand the metrics of two differing worlds, as the continual pulse checkers of the local channel.

“Distribution absolutely has a role to play, but the question is, what is that role?” Softsource director, Pablo Garcia-Curtis, said. “The businesses within the channel have dramatically changed during the past 5-10 years, which requires a new level of value from distribution.

“We understand the logistics aspect of distribution but in this new world, what is the value add? Distributors are the glue in the market and we require that level of thought leadership and new opportunities to help change the conversation for our customers.”

In the pursuit of providing a differentiated service to customers amidst a crowded marketplace, resellers are looking to distribution to advise and guide, partnering with those taking a proactive role in instigating change.

“Distribution is becoming more relevant because they’re being proactive around solving problems and dealing with taking costs away from the reseller,” Datacom client director, Mark Raos, added.

“Our enterprise customers are demanding more from us as a provider across products and technologies and I'm impressed with the energy and thought leadership distribution continues to provide.”

The pivotal role of distribution in understanding the health of the channel continues to grow in importance from a Kiwi context, as resellers battle to stay up-to-date with emerging technologies, new releases and product refreshes.

“It’s the depth of knowledge that is key,” Enterprise IT CEO, Stuart Speers, said. “Take Amazon Web Services [AWS] as a key example, given the rate of growth they are experiencing there is no way we can keep pace of what is going on in the market.

Mark Raos (Datacom) and Pablo Garcia-Curtis (SoftSource)
Mark Raos (Datacom) and Pablo Garcia-Curtis (SoftSource)

“Through distribution we receive deeper levels of knowledge and insight which helps keep our team abreast of what is new in the market and what value we can then bring to the customer.”

Whether it be cloud, artificial intelligence or cognitive computing, emerging technologies are flooding the market en masse, creating a channel jam-packed with services and solutions, congestion that has caused a bottle-neck for partners as a result.

“There’s so many products in the market today that distributors can help bring a level of focus to that noise,” Lucidity general manager, Colin Williams, said. “We’re constantly being bombarded by hundreds of different products to use or sell so it’s crucial to have a distributor capable of cutting through that hype.”

As partners seek new levels of expertise and local insight, distribution is diversifying at a rapid rate, fusing traditional practices with forward-thinking strategies around enablement and education.

“It’s a constant challenge because the market is always evolving,” Dicker Data networking business manager, Kyle Taege, added. “Our key role is around the education part and how we can add value in new ways, while maximising profit for our resellers.”

Market relevance

According to CommArc Consulting CEO, Phil Johnson, the distribution model in New Zealand has changed significantly over time, with the current cycle “one of the most challenging” to impact the channel for decades.

“My business is built largely on referral, we don’t advertise or market so we’re relying on building solutions for the customer,” he explained. “Our relationship with distributors are filled with integrity and honesty. There’s been a real step up in the distribution space and the industry is adding a lot more value than it used to.

“I see them as essential partners as we’re not a huge company which means we need to have specific gaps filled by distribution.”

Much like the battered, bruised and bewildered heavyweight boxer, distribution has taken a pounding in recent years.

Floored by challenging market conditions, the centrepiece of the supply chain has forever lifted itself from the channel canvas, representing the staying power of an undisputed champion.

But going the distance takes more than merely grit and determination, rather an underlying level of quality that even in the hardest times, demonstrates that form is temporary, and class is forever.

Boxing analogies aside however, distribution is an industry that continues to stand the test of time, with an overriding ability to survive and thrive in equal measure.

“As a distributor, how do we remain relevant?” rhipe general manager of A/NZ sales, George De Bono, asked. “How do we continue to differentiate and add value?

George De Bono (rhipe)
George De Bono (rhipe)

“Yes our vendors have strategies, but it’s about packaging solutions and satisfying the partner. As an industry we don’t have enough of those conversations, we enter dialogue with vendors and resellers when something is about to hit the fan but that is the wrong time to have that discussion.”

Representing longevity in the Kiwi channel, for many years, and for many of the world’s leading technology vendors, distribution has been a principal route to market.

Typically accounting for the majority of revenues, distributors remain heavily relied upon to provide extensive market reach and coverage.

In New Zealand, the value of this role grows exponentially across different geographies and industries, where local knowledge is power and reseller access and influence is coveted.

“From the distributor side I would say the service partners and resellers that were clear on their own strategy, could then be clear on how to extract value from a distributor,” Origin IT COO, Stuart Alexander, advised.

“My challenge to the channel is understand your business and understand how you can extract more.

“Leverage distribution to the hilt and you will see great value from it because if you don’t, and somebody else is, then that’s a challenge because distributors have an incredible influence on deal outcomes.”

According to Alexander, and in drawing on industry experience, distributors have a window into the market that partners underestimate, ensuring that they will continue to remain relevant in the years ahead.

“The market is filled with opportunities to grab,” he said. “But as a reseller how are you extracting that value? What do you understand about the value they offer? And what is your strategy?

Market dynamics

Increased investments in devices and software, alongside a boost in IT and communications services will result in technology spending in New Zealand reaching almost $11.6 billion in 2017, representing an increase of 2.7 per cent from 2016.

Chiefly, the rise will be prompted by printers, PCs and tablets making a come back in the local market, reversing a negative trend for the devices segment previously.

As reported by Reseller News, in addition, businesses will increase investments in software and IT and communications services from now until 2018, with data centre spending stalling due to slow server uptake.

But while IT spending is increasing, the buying patterns are changing, subsequently altering the dynamics of the market and creating a new need to leverage distribution.

“If you look at the market from a hardware perspective, the deal size is coming down,” Taege observed. “The large chunky deals are not the same anymore and that’s partly because the industry is shifting to a consumption model.”

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Tags DatacomDicker Dataacquireenterprise ITOSSOrigin ITsoftsourceRhipecommarcLucidity

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