Everyone agrees, the Digital Transformation is in full swing. What will that mean for distribution next year? The VAR Guy talked with Sergio Farache, SVP Strategy & Specialized Business Units at Avnet and Ryan Walsh, SVP of Partner Solutions at Pax8 to get the inside scoop.
End-user technology spending continues to move closer to the business. The distribution ecosystem will develop a solutions business outcome approach to accommodate this, with a strong emphasis in vertical industry specialization. This will be especially critical in key industries for technology spending, such as energy, finance, government, healthcare and retail. Being able to demonstrate a strong use case specific to the customer’s market will be a requirement – not an option.
- Sergio Farache, Avnet
As technology becomes more integral to business operations, end-customers increasingly want their solution providers to be their business-enablement adviser. Forward-thinking VARs and MSPs will concentrate on strategic bundling of cloud products and services.
- Ryan Walsh, Pax8
Unfortunately, traditional distributors are still playing catch-up with Office 365, leaving their channel partners vulnerable. Failing to roll Office 365 into the solution provider’s overall end-customer solution leaves the door open to their competition. It’s like having a grocery store with no eggs, milk, or bananas. Supermarkets use these lower-margin products to keep the customer relationship and drive additional, higher-margin sales. Smart solution providers will choose distributors who can help them use Office 365 to do the same.
The need to simplify business models in the distribution ecosystem requires that the distributor fulfill the ecosystem’s business needs. In 2017, distribution will approach solutions with an end-to-end perspective, from the cell phone to the cloud. Distribution will expand and increase the services capability across all levels of the ecosystem.
- Sergio Farache, Avnet
With increasing competition and tighter margins, solution providers will need to expand to a broader customer base to maintain and grow their revenue. Those who can use automation to scale efficiently and provide a high level of customer service will win the most business in 2017. Successful distributors will help their partners scale through automation.
This year, business decision makers continued to expand their influence on technology investments, and end-user purchase behavior changed to solutions that drive business outcomes. In 2017, distributors and their partner communities will increasingly need to specialize to remain relevant to their customers. One of the key ways they will do this is through technology specialization around high-growth market segments, such as cloud, security and enterprise networking, data analytics, cognitive computing, IOT, and mobility solutions, to complement their deep expertise in the data center. In addition, the offering of compelling, real-word education services to complement these technologies will be critical to the acceleration of their adoption and overall success.
As the world moves to the cloud, so is the IT channel. Distribution has been slow to adapt, but the wave is coming. According to IDC, 86% of business customers buy through channel partners for IT products and services. That is a huge opportunity because the cloud market is forecasted by IDC to be $500B by 2020.
Solution providers are busy providing a high-touch customer experience, with virtually no time left in the day for marketing to help close new deals. They’ve traditionally excelled at customer service, but 2017 will require them to expand their customer base. Distributors can no longer be just “the company I have to go through to buy wholesale IT products.” To truly enable their channel partners to thrive, distributors must add value through sales and marketing assistance.
Digital transformation offers significant opportunities for companies of all sizes, especially distributors. They can significantly expand their value by creating digital platforms that enable electronic business process, provisioning, billing consolidation, white-label storefronts for marketplaces, communities, and multi-directional, multi-tier transaction ability.
Additionally, distribution will take a more relevant position in digital marketing, community building and market analytics to help the delivery ecosystem be more effective and efficient, and maximize the end customer acquisition.
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