The evolution of distribution
The role of distribution has gone through massive changes over the last few years. Offerings and services evolved from product sales and related deployment and configuration support to now encompass cloud-based offerings and value-added services, recurring revenue opportunities, and the ability to tie it all together in a package that solution providers can bring to their clients while adding their own value.
Distributors are now assuming the role as an aggregator of relevant IT solutions in both traditional markets and new and emerging markets that are important to the longer-term future of the channel. This means going beyond what would have once been called “core distribution” to include:
- New and different routes to market
- Additional pre- and post-sale services provided at scale
- Engagement methods both online and offline
Platforms and the edge
One of the new routes to market is IT-as-a-service, which will be increasingly served at least in part through cloud management and brokerage platforms.
Platforms represent a new way to sell to and serve the channel as it relates to cloud subscriptions and cloud subscription management. They are an important way to bring together multi-technology and multi-vendor solutions that may include both on-prem and cloud products and services.
The second interesting route, and certainly an interesting market segment altogether, is the edge, where operational technology converges with information technology. This opens a tremendous number of new opportunities in security, networking or data intelligence, among other areas.
This could be in a retail environment where a retailer is looking to transform and digitize the buying and customer experience. It could be on the factory floor where a lot of the traditional machinery is now being automated to apply things like machine learning and analytics in real time. It could certainly be in the automotive and transportation sectors where companies are embracing technology in a significant way.
The edge market is being served by new and different kinds of sellers as well. There’s the industrial integrator — the company that grew up in the manufacturing environment that now needs to intelligently apply IT, be it a data platform on-prem or in the cloud — or the networking that you need to create an edge-to-gateway, gateway-to-data center experience and the cybersecurity associated with it.
On the other hand, edge computing has also introduced cybersecurity threats to devices that were previously not on the network. This situation has made value-added distribution more relevant than ever as these distributors have the knowledge and expertise of how to address these complex scenarios at scale.
The data center environment that we once knew is now extending and morphing into all these different kinds of places, but ultimately, the same disciplines apply.
Everything-as-a-service and consumption model
It’s complicated to bring together two pieces of a solution, such as combining compute and storage on-prem and the cloud, much less three or more.
Imagine that there’s a piece of infrastructure sold on-prem to support a workload or application environment that concurrently requires backup and recovery flexibility that wasn’t considered in the past — this will now potentially be sold via the cloud on an attached basis.
The ability to bring together multiple parts of a solution is a lot trickier in a world that is served in an as-a-service consumption model. An ongoing cloud subscription represents an opportunity to engage a customer steadily and continuously vs. a solution that was sold all at once and everything was done once it was deployed.
Whether it’s cloud-native companies or more traditional players that are looking to pivot their offerings to as-a-service equivalents, the role of a distributor is now to provide an ecosystem of trusted advisors and vendors to make delivering multivendor, as-a-service solutions feasible.
Value-added services and aggregation
Distribution’s role when it comes to services has also evolved. Certainly, resold services — i.e., those that vendors provide or are sold in conjunction with a product itself for deployment — hasn’t changed, and those services are still sold on an attached basis to help make sure they get deployed.
What has changed is the ability to play the role of an aggregator, bringing together a curated portfolio of third-party services that can be sold in conjunction with technology either on-prem or in the cloud. In this way, a distributor serves as the outsourcer of services, helping channel partners offload the duties associated with managing a network of third-party providers.
Likewise, when a vendor decides that they’re not interested in or can't scale to provide post-sales support themselves within a certain segment of their market, a distributor can provide that service on behalf of their channel partners and their end users in a scalable way.
Helping simplify a complex ecosystem
The future is a very complex ecosystem of different players working together in different ways that, until the advent of platforms and marketplaces, it was tough to do efficiently and at scale.
While everybody will be looking to sell cloud in different ways and different forms, at the end of the day, the world of co-opetition is here to stay. This is even more evident when it comes to hybrid and multicloud deployments — some of this will be done through a two-tier motion, some may be done through a single-tier motion, and some will be done directly.
Increasingly, even the large cloud hyperscalers are looking at more entrenched environments with proprietary workloads that aren’t so easy to move, and they are looking to the people who are already the trusted advisors of those companies to work with in a hybrid fashion.
Value-added distribution: More relevant than ever!
You want to ensure you are well-positioned to respond to the right market drivers, whether it's more IT-as-a-service, more revenue streams that are renewable in nature, or the ability to engage online as well as offline with customers. You also want to ensure you have a strategic partnership in place to offer you the agility of quickly activating your growth plan without upfront investment requirements.
As more and more IT relationships transform and become consumption-based in nature, vendors and channel partners need a value-added distributor who can help activate your growth plans with speed and scale.
Contact us to talk through the role we can play in positioning your business to be ready for the continued evolution of the channel.
Arrow Chief Operating Officer Sean Kerins spoke with CRN about the changing role of distribution. Read the original interview here. This article is an edited version of that interview.
This article was originally published in April 2021 and has been updated for relevance.
