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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)

“Particularly as an MSP, when we onboard a new customer they have usually been with someone for 2-3 years and the technology is usually old which means we usually need to refresh it all.

“As a customer they are going to buy what we support because they just want a service outcome.”

Distributor alliances

But as partners consolidate portfolios, vendors also continue to put faith in multiple distribution models in New Zealand, a strategy which can place strain on the channel from a competitive standpoint.

“Vendors have every right to appoint other distributors in market because the mindset is that if they bring another distributor to market then they are going to provide totally different market space,” De Bono added.

“But the reality is that they are driving a wedge in competition because vendors don’t think about the lift and shift aspect that happens when you bring another player into the market, they just think that this will increase opportunity.

“If vendors address the fact that a distributor isn’t addressing the market adequately and they have that conversation and work on a plan collaboratively to address those issues, it is more beneficial and will provide greater value faster. Because otherwise, all that happens is a price war and the channel doesn’t win.”

The common channel consensus is that vendors have a responsibility to recognise the size and shape of the New Zealand market, and therefore be realistic about go-to-market distribution strategies to ensure resellers don’t become blocked by price or complexity.

“Vendors knock on our door but we don’t always accept as they have to reach a certain level in the market,” Taege said.

“Some vendors look at the market and try to spread their portfolio across more distributors to achieve a better outcome but it’s a questionable approach to take in New Zealand.”

With intense pressure placed on vendors to hit rising sales targets each quarter, the numbers problem subsequently passes onto the channel and distribution, as large multi-national corporations with little to no knowledge of New Zealand attempt to exert influence from afar.

“Vendors are global companies that are quarterly driven and only care about numbers,” Johnson said. “They are not really seeking outcomes, rather numbers.”

Having operated across vendor, distributor and reseller roles, Alexander believes the conversation is not so much around appointing multiple players in a small market, rather the correct timing and extracting new levels of value for the channel.

Stuart Speers (Enterprise IT)
Stuart Speers (Enterprise IT)

“The right distributor at the right time is key,” he said. “There has to be some form of distributor routes to market but how far does the market go? Transparency will always be key for the channel.”

Partner requirements

In New Zealand, distribution is not only an inherently difficult business to get right, but a business that operates at break-neck pace.

And this alone epitomises the durable characteristics of distribution, whether large or small, and its collective ability to still innovate and excel, even during periods of sporadic success.

Despite it’s demanding role in the channel however, and it’s ongoing importance to vendors and partners, tough market conditions continue to question the future role of distribution.

Naturally, the usual myths still apply - distributors just take orders; cloud has removed the need for distributors and large resellers prefer to deal with vendors directly.

“In my eyes distribution has always been about an order taker, but now there’s a role to become an order maker,” Garcia-Curtis said.

“That’s one of the biggest challenges in New Zealand, the type of reps and the ability to train them up and have a very different conversation because we don’t see that happening too much in the market at this stage.

“But if that is what is coming, and if distributors are setting the bar, then I want to leverage distribution because we will all gain momentum in the market.

“Vendors know they can’t do this without the channel and they are starting to understand we need to work together rather than compete. I think there is change and maturity in the market but it’s an ongoing challenge.”

In 2017 and beyond, value can be found through distributors taking an early view of the market, assessing the key trends emerging and the biggest challenges ahead for resellers.

“Every week we have a business partner that comes in to talk about their technology and why it makes sense from a customer centric perspective,” Raos added.

“And a lot of it is being driven by the distributor which is useful because we have visibility across our partners and the technologies in the market. Distribution helps us assess where technology is resonating and where money can be made.

“Distributors have been effective in communicating what is going on locally and bringing new technologies to market in New Zealand, while creating the demand by educating the industry. That’s a positive step for the channel.”

Mike Clancy (OSS); James Henderson (Reseller News) and Stuart Alexander (Origin IT)
Mike Clancy (OSS); James Henderson (Reseller News) and Stuart Alexander (Origin IT)

As alluded by Raos, wherever technology goes, distributors follow in tandem, applying proven variable cost models and diverse product portfolios as well as services that shift with the changing tides of innovation.

“It’s about understanding that our business is changing,” Raines said. “Lots of distributors still see Acquire as a web-based retailer and that was 10 years but they have pigeon holed us.

“We have a vendor or distributor in our offices two or three times a day which means our sales managers sit in meetings all day.

"That’s an issue for us because we end up in a situation where everyone wants your mindshare but your sales team is hearing the same thing and they are not selling.”

It’s a role continually questioned, a role where value isn’t seemingly apparent and a role which forever has to fight for relevance.

Yet amid constant channel chatter, distribution continues to display strength and longevity, binding together a supply chain that is forever in a state of flux.

“How do I help your top line?” De Bono asked. “How do I help grow your business? How do I help remove cost from your business? And how do I help mitigate your risk?

“As a point of differentiation we’re executing on the Internet of Partners. We’re letting you focus very precisely on what you do really well, but were also providing an environment for you to leverage other partners that have other capabilities.

“In terms of risk mitigation, you’re not running the risk of your customer finding someone that has more capabilities that you offer.”

For Taege, Dicker Data continues to provide value around cloud consumption and deeper levels of education across the industry.

“There’s a huge gap in the market in that respect,” he added. “Many resellers continue to struggle with resources and distribution is here to solve that problem. We will go with our resellers to their customers to advise, help and leverage opportunities, which is key for the channel.”

This roundtable was sponsored by Dicker Data and rhipe. Photos by Jay Creaghan.


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