The new tricks in distribution

By on

This article appeared in the September/October 2019 issue of CRN magazine.

Subscribe now

The new tricks in distribution

Caught between the evolving business models of resellers and the rapidly changing offerings of vendors, Australia’s distributors are finding themselves fighting to redefine their operating models in a world where nothing stays the same for long.

While the past 12 months have turned up the usual mix of additions and losses, such as Ingram Micro winning Xiaomi, it has been the operations changes that are providing the bigger news. Because while distributors might have traditionally had as little to do with end customers as possible, even those boundaries are starting to erode.

Common amongst all distributors has been the need to improve systems and invest in automation technology to become easier to work with. In August, for instance, Ingram discussed its reIGNITE program which is aimed at making transactions easier while improving operational efficiencies. Meanwhile, Arrow ECS has announced its Velocity channel services program, designed to enable partners to deliver complex solutions as quickly as possible.

For rhipe, meeting this need has involved a seven-digit investment in its online provisioning tools, with more dollars required to help it bring on new ISVs more easily.

“It is a continual investment that won’t go away,” says rhipe’s group executive for professional services and solutions, Warren Nolan. “We know that we need to continue to make that easy for us to manage and process, easy for our customers to engage with, and easy for our vendors to connect into.”

Follow the user

Many of these investments are a response to the downstream requirements of customers, who are placing pressure on channel partners to deliver new technologies faster and on a consumption basis, under the banner of digital transformation.

According to the general manager of Arrow ECS, Andrew Assad, technology trends such as AI, IoT and big data are underpinned by this drive for new or better outcomes.

“Anything that drives outcomes for businesses and people will drive all future changes,” Assad says. “It’s often referred to as digital transformation but ultimately, it’s the outcomes-based approach that drives the transformation part of the digital.

“Similarly, with the consumption-based technologies that are continuing to grow, the changes in how P&Ls are managed are driving the need for change in how technology is purchased. As the intended outcomes shift and change, we’ll continue to see technology do the same.”

Westcon-Comstor managing director Phil Cameron says changes in market dynamics related to transformation are driving the creation of service offerings within his company.

This includes growth in its financial services offerings and the creation of an annuity contract management team, as the company builds out more creative and flexible finance structures to support cloud, rentals, and other bespoke payment requirements. In one instance Cameron says Westcon-Comstor was able to build out a custom finance solution for a partner’s client who was looking to pay over three years. “It’s definitely end-user driven,” Cameron says.

Speed and complexity

Innovative financial arrangements are also in the sights of Dicker Data, which launched a dedicated financial services arm earlier this year to support the growing demand from its partners’ clients for as-a-service options.

“The demand is increasing to give to our customers and their customers this option,” says Dicker Data’s chief operating officer Vlad Mitnovetski. “It started as a lease offering, but the ultimate goal is to get partners to understand the advantage of the program and move it to a true as-a-service offering.”

While customers often complain about the speed at which technology is being superseded, this trend is also causing headaches for partners who have to stay up to date with the technology they are selling. Alloys CEO Paul Harman says the rate of product innovation is so rapid now that it can quickly get out of control for a distributor.

“You need to have a practice around what products you stock and support in your business,” Harman says, “If you do not you are going to have a stock problem and you are going to have a customer problem.

“We used to make a stock decision where in the worst-case scenario it would last 18 months. Now you can make a stock decision where in a best-case scenario it can last you two quarters. The product changes at a rate that stock, training, sales capability and demonstration become a far different requirement than they were even two years ago.”

According to Dicker Data’s Mitnovetski, this is something that his company is turning into an opportunity by building out its high-touch delivery model.

“They really see the value when the distributor becomes an extension of the vendor,” Mitnovetski says. “With SMBs we are trying to automate a lot of servicing offerings, but when it comes to the mid-market and enterprise it takes a deep understanding of the partner.”

With the growing complexity of technology forcing many partners deeper into specialisation, distributors are having to step up to fill gaps. Rhipe’s Nolan says channel partners are much more willing now to outsource some tasks completely back to distributors.

“In the past, I think what was expected of us was around enablement, education and awareness,” Nolan says. “Now partners are looking for some of those things to be provided by us so that they don’t necessarily resource or tool up to do them themselves.”

Rhipe, however, is going one step further, by purchasing product and services businesses that it can resell alongside its vendor portfolio. In January, rhipe purchased the Queensland-based Microsoft partner DBITS, adding consulting services and support to its mix, and in August it acquired the Melbourne-based software developer Network2Share and its SmartEncrypt solution.

“It is very much around that strategy of asking what end customers are looking for and what we can provide that will satisfy that demand,” Nolan says.

“We don’t want the end customer relationship. That is not what we are about. What we want to do is enable our channel to be able to add more things to their kit bag and enable them to have those stickier relationships with their customers by providing more solutions to them and then support after the fact.”

More change ahead

The trend towards specialisation by channel partners has also led Westcon-Comstor to invest heavily in the development of its supply chain services capability.

It performs the configuration and installation for large network deployments on behalf of partners. Cameron says demand for this service is one of the factors that has led his company to break ground on its new purpose-built warehouse and configuration centre at Yennora in Western Sydney, which will give it 60 per cent more capacity.

“We are a specialist distributor, so we are able to work with a partner and put a solution together around not only processing the order but the configuration services and supply chain and actually deliver it on location,” Cameron says.

But as much as the industry is changing, it may only be at the beginning of its transformation journey. According to Alloys’ Harman, most of the disruption that has taken place within distribution to date has been driven by external factors, and there is still plenty of scope for change.

“What do we need to look like to disrupt our own marketplace?” Harman asks. “We are at phase one of disruption in the distribution marketplace, as it hasn’t actually disrupted itself. It has been disrupted by external influences. The next phase is how will it disrupt itself.”

Got a news tip for our journalists? Share it with us anonymously here.
Copyright © CRN Australia. All rights reserved.
Tags:

Most Read Articles

You must be a registered member of CRN to post a comment.
| Register

Poll

What does your business want for Christmas?
Skilled people who'll take Elves' wages
A stocking full of good leads
Please, Santa, drop some cash down the chimney!
All status indicators green like misteltoe, none red like Rudolph's nose
A peaceful, relaxing time for the team and our clients, and all their families
View poll archive

Log In

Username / Email:
Password:
  |  Forgot your password?