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​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)

Today, IT departments across the country are required to bring relevance to the organisation, while promoting technology initiatives that support strategic business objectives.

In short, IT now needs to initiate value-based discussions related to the services that technology provides because through taking a service-oriented and consultative position, the CIO can keep up with the ever-changing nature of the market.

But to do this, IT must evolve and become more adaptive.

“In looking back at my distribution experience, the amount you get for the amount you pay is far greater today, and there’s a lot less of the multi-million dollar deals,” Alexander observed. “Five years ago, we were regularly doing large deals, but not as many exist in distribution anymore.

“You can get a lot of compute for a small amount of money now and that’s impacting the market.”

Impacting small, mid and enterprise markets across New Zealand, changing deal sizes create new challenges for resellers around pricing and billing, as the channel transitions to new business models and strategies.

Yet despite the shift, for those operating at the big end of town, value can still be found in securing chunky contracts with enterprise.

“They are less frequent but they are still there,” Raos said. “It’s a longer sales cycle but we’re still seeing them in the enterprise space, although the digestion period is now a factor.”

According to Garcia-Curtis, for resellers in New Zealand “a deal is a deal”, irrespective of how it is structured or delivered.

“The customer still requires an outcome,” he said. “But the large deals and great opportunities are still there. We’ll always have long cycles and we’ll need to change with the customer demands.

“And those demands are changing because it’s not a complete refresh anymore, there’s consulting elements, looking at the business and working with them from nine months to three years at a strategic level.”

In light of increased cloud adoption across New Zealand, customers are now seeking outcomes rather than products, outcomes that are delivered predominantly as a service.

Consequently, such customer change has resulted in a power shift within the channel, as partners take on greater importance in the end-user buying cycle.

James Henderson (Reseller News); Stuart Alexander (Origin IT) and Greg Sharp (Base-2)
James Henderson (Reseller News); Stuart Alexander (Origin IT) and Greg Sharp (Base-2)

“Vendors need to understand that managed service providers [MSPs] are directing the customers,” Alexander said. “It’s service level agreements, it’s outcome driven and the customer just wants to pass the problem off to the partner.

“Some of our customers don’t even ask what brand we put into a deal, they only know when they sign the contract.”

Representing a significant change in customer behaviour in New Zealand, the shift to solution selling ultimately places the power in the hands of the partner, as the trusted advisor tasked with making technology decisions on behalf of the end-user.

While enterprise particularly retains an appetite for well-known and seemingly “trusted” brands, the tier-2 market is experiencing a surge in services-based work, with customers care free when it comes to vendor selection.

“It’s more of a solution driven market today,” Taege said. “Some vendors believe they can enter the tier-2 space especially and lead with a product but that’s no longer the case.”

For Johnson, the channel is now faced with two types of customer.

“The one that has skills and expertise internally often seeks a specific direction when it comes to technology,” he observed. “But if not, they play safe and go with established brands and wouldn’t consider any other option.”

Vendor alliances

Traditionally, resellers across New Zealand displayed vendor logos as a badge of honour, an indicator of expertise and skill spanning a wide variety of technologies.

Today however, such statements are few and far between, as partners understand the importance of consolidating vendor portfolios and products, focusing on specialised plays to provide a deepened level of service to the customer.

“We operate purely as an MSP and we’re in the buying market,” Base 2 managing director, Greg Sharp, said. “We have consolidated a lot of our vendors and products that we’re taking to market because of training.

“It’s out of control and expensive. But it’s not just placing staff on training courses because they aren’t always costly, it’s more the time out of the business. There’s a need to consolidate but also to then diversify so you don’t miss the boat, which is an ongoing challenge for the channel.”

Consolidation naturally places the Kiwi channel at a crossroads, as resellers evaluate the pros and cons of a multitude of vendor products in the market.

“It’s not about doing more with less, it’s about doing things smarter,” Open Systems Specialists general manager of services sales, Mike Clancy, said.

“Gone are the days when you have an expanded team or the knowledge base to achieve expertise across a range of technologies.”

Kyle Taege (Dicker Data)
Kyle Taege (Dicker Data)

Speaking from a distribution perspective, De Bono observed that partners nationwide are consolidating what they are taking to market, as they find new ways to remain relevant in the trusted advisor role.

“What can partners use to be different in the market?” he asked. “How many programs should partners be dealing in? We’re seeing the number shrink rather than grow and it’s not because they are going to our competitors, it’s because they are consolidating with fewer vendors in what they are offering so they can drive increased stickiness to their customers.”

In short, the key for resellers is to maintain a certain level of trust with premier customers.

“Our customers are wanting more but they also buy from people they like, it’s a simple fact,” Acquire director, Kelly Raines, added. “That goes from vendor to distribution also which is why we’re seeing consolidation in the market.

"It’s around stickiness and building relationships - it’s up to the reseller to create the best experience possible with the customer otherwise they will leave.”

Through building a cloud platform to take to market under the CommArc banner, Johnson said customers are now taking decisions in house, shying away from spending money on consulting services as a result.

“For years the industry has lived on selling fear, uncertainty and doubt, it’s been the classic combination,” he acknowledged. “It’s a volatile market today and customers are now making decisions internally around where they put their information and who they put it with.”

At CommArc, Johnson said the business runs a strict process around vendor and distributor partnering, judged by an ongoing score based on relevance and importance.

“We drive everything with a relevance score,” he said. “We score our partners in terms of their relevance to us and we provide an amount of time that relates to that because we can’t afford to take our guys out of the field.

"But we do have trusted partners and they will always get our time because they understand our business."

According to Johnson, the channel continues to remain challenged by large vendors selling “fake news headlines” to partners, with agendas unclear and strategies complex.

“Essentially, resellers must decide which vendor to back,” Alexander added. “You can’t back them all, you might say you can but ultimately you get caught out when it comes to support. In our business, unless we can support it, there’s no point selling it.”

For Alexander, vendors remain driven by internal marketing plans issued at a global level, plans that carry no relevance to the reseller or the wider New Zealand industry.

“Vendors don’t understand the influence that the partner is having on the customer buying decisions,” he said. “Vendors have lots of marketing initiatives but they are rarely relevant to the reseller because it’s not always how we go to market in the channel.


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