Why Distributors Matters Now More Than Ever
Distributors all too often simply don’t get the credit they so richly deserve for providing the means that enable IT products and services to transform the way businesses, large and small, operate. In many ways, that’s just as it should be. Distributors in no small way personify the invisible economic hand described by Adam Smith driving socio-economic change.
Of course, no one knows this better than channel chiefs. They have been relying on distribution for years to not only ship products to channel partners and end customers alike, but also provide the financing, without which many transactions would never occur.
But like IT itself, the role distribution plays in the channel continues to evolve. New modes of delivery are changing IT consumption. Advanced analytics are providing IT vendors with more actionable insights. Machine learning algorithms are in the process of transforming the delivery of IT services. Channel chiefs, now more than ever, need to understand how these changes impact the role distribution plays in their overall channel strategy.
The Single Biggest Challenge
Arguably, the single biggest challenge when it comes to any business based on a recurring business model is in getting end customers to first activate the service and then renew it. Most providers of a cloud service don’t really start to turn a profit until a customer has been using a service consistently for two-to-three years. Most IT vendors don’t have the resources to manage that process at the level of scale required to succeed. Distributors, in contrast, collectively invest billions of dollars optimizing transaction systems that are now being extended to help channel partners manage multiple streams of recurring revenue.
At the top of that list of activity is making sure the end customer is trained sufficiently to activate a service and then expand its usage. After that, distributors and channel partners play a crucial role in making sure the end customer is happy enough with that service to renew. Only then does the virtuous profitability cycle start to benefit all parties involved.
In the near term, distributors will soon be applying advanced analytics based on machine and deep learning algorithms to both identify new potential prospects as well as customers exhibiting behaviors indicative of not being inclined to renew a service. In both circumstances, channel partners will be provided with actionable insights that will materially impact outcomes.
Finally, channel chiefs trying to drive adoption of emerging technologies, spanning everything from the Internet of Things (IoT) at the edge to the cloud and back, will find distributors indispensable. There’s a chronic shortage of IT talent that is having an adverse impact on the adoption rate of innovative technologies. Distributors are playing a key role in plugging that gap by making available the skills needed to successfully deploy new technologies in a way that reduces the requirement to hire and retain full-time employees.
I’d like to personally invite you to join myself and Tim Curran, executive director of the Global Technology Distribution Council (GTDC) on March 7th for a Channel Mechanics webinar “Distribution: The secret weapon in growing your channel”. Moderated by Mike Vizard, co-host and chief content officer for Channel Happy Hour and contributor to IT publications; IT Business Edge, SmarterMSP, DevOps.com, Container Journal and RT Insights.com. I’m certain regardless of channel experience, we’ll all learn something new concerning how distributors are reinventing the channel for the better on behalf of us all.
Kenneth Fox, CEO Channel Mechanics