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....so what would you do?

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greater margins, there is less commoditisation. You are delivering greater

value. The cost to the end user is less, and there is more professional services to be delivered as a result.” “The risk for us is that we have to get it right

and choose the right technologies, signing the best in class, and find those who are reasonably loyal and not going to sign up huge number of distributors and other partners. They need a clear channel strategy and we can build trust with them, but it is always hard at start. When Force 10 has an opportunity, their commitment is that the customer who has been sold on a technology, who has resisted the massive marketing and PR of the likes of Cisco and HP, and has stuck to its guns, can be sure that we can deliver and maintain that system. Force 10 needs to ensure that the customer has a good experience.” In Hungary they had a customer who was

prepared to take a risk in many ways. “From sitting still or buying IBM or whatever, knowing that it may not be the best technology.” This means that Zycko can choose a channel, having learned the lessons from those vendors who have signed up everyone previously, and building a much more long term channel strategy where margins are good.

IT Europa: Is this not more of a philosophical

difference- distributors are expected to distribute – in fact you may be more like the old master

resellers? “It is going back to distribution and what it is all about. The broadliners are stock it, rack and

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pack it organisations and they are as efficient as they can be on behalf of huge vendors. At the end of the quarter, they rely more on the rebates at the end of the quarter to make any money,” argues David Galton-Fenzi. The concept is different. “I’m a VAD, a value

added distributor. The problem is we cannot call ourselves a master reseller, that moves too far to the wrong side. So we are keeping the name distributor. But it is more about value.” Mike Augustine: “From a vendor’s point of view,

the biggest risk is in signing up the wrong channel in an area or region you don’t know very well.” Signing up the wrong channel does more

damage all round – the customer, the product reputation and the channel itself, he says. “Therefore the principle of the value added distributor is a good one – we know Zycko very well, and they know us. We have engaged in multiple processes in various European territories, so working that model in new European country is not a bad one. Together, building up the channel base is the best way. Taking a risk on the wrong channel is too great and I prefer the model we have adopted.”

IT Europa: This is particularly suitable for

emerging countries, then and not Germany and the UK?

David Galton-Fenzi: “Absolutely. It is only in

those territories where there is no foot print, no previous reseller and no organisation that has made the investment. Hungary was such an example. But

distributor start acting like resellers - but in the covered incident it would seem that the vendor should endorse the action taken by the

distributor, and do so in front of the channel ecosystem. A more challenging twist to this incident is where resellers are - in fact

- in the area, but not pre- and post sales qualified to orchestrate the sale and as such service the customer. Increasingly distributors are establishing service/support/maintenance business units to account for this - and that may irk some parts of the channel ecosystem even more - as this will not be construed as “a one off event”. If one studies the evolution of the distribution business model over

time carefully then one will see that distributors have always been moving backwards and forwards in the value chain; in the 1990’s distributors were establish assembly and configuration centers to offload vendors and support resellers. At the same time distributors started moving closer to resellers to support and in some cases drive marketing execution as these services called

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since then we have used this in recruiting quality organisations with a good track record, but who would not necessarily have wanted to sign up without a local case study or renown. Hungary is not a massive market. In certain regions, you could pick on a great big partner, but if you get the wrong one, you have messed up your channel in Hungary.” It is not exaggerating to says that there are a lot

of organisations with exactly that structure. Zycko is now speaking to six/seven potential partners there.

There is no set policy, he concludes: “This

opportunity arose, and that is why we did it. I would say it is not encouraged as a principle, but it is an interesting debate. I was happy to stand up and be counted; unlike some other organisations because I saw it as a positive spin on the argument.” In this region, Zycko is primary a distribution

company to recruit resellers. “I like volume. I’m a sales guy. I know that as an integrator I get four deals when as a distributor i get twenty. That is where I have always been but I also understand that I have to put the building blocks in place for such disruptive technologies.” “So what we’ve done in Hungary is in line with

that. We don’t have a huge channel but we will leverage vertical market where Force10 is strong. We can then work on the channel base. And it works: Force10 is working with Zycko in Russia, the biggest gaming business in EMEA.

for economy of scale, which was not always present in with a majority of resellers. Now with Cloud Computing

and the (radical) medium-to-longer- term changes as to how Information Infrastructures are sold, deployed, provisioned and consumed, distributors yet again have to assess the scope of value added services. This time around the concepts of vertical integration and horizontal aggregation will likely be center stage; and that will be a significantly more meaty debate topic in the channel than an isolated “distributor go direct incident”.

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