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of the broadliners strive to get into value added markets. “Some of these deals will be successful and some won’t,” he predicts. “It is the staff that make a successful partner, and often acquisitions will haemorrhage this important asset. In my mind, those distributors that have a global presence but a local approach to markets and real focus on the sectors they play in will be most successful.”
Often a distributor is well placed to bring new technologies and services to market as they can act as a radar for their partners by looking at trends across multiple geographical markets and channels. It is also easier for them to make an investment in a new area than it would be for many in the channel who may not have the resources or infrastructure to adopt such an
entrepreneurial approach.
Another example of a distributor introducing new technologies and services to the market is Wick Hill. As a recent entrant into the converged voice and data space Wick Hill is seeing similar trends to those in the data market. “We see a clear segregation between those distributors whose focus on profitability is based primarily on cutting costs and in growing market share, and those distributors, such as ourselves, whose focus is on driving growth for and with their channel partners by providing value added services and training. In this area, our investment in our channel partners creates a longer- term relationship,” noted Ian Kilpatrick, Chairman of Wick Hill Group.
With skills and expertise in both voice and data Wick Hill is able to work with partners who are looking for assistance to move into this high growth good margin (both in product and services) area. “Our value added skills and services are something that we have used successfully to grow our partners’ businesses for many years,” said Kilpatrick. “We see convergence and Unified Communications as a prime area for the combination of partners’ skills and our value add support, to deal with what often appear to be complex customer requirements.”
Wick Hill’s core strength is in providing channel support for complex products, and in particular the secure integration of voice and data solutions. “Our strong knowledge and established product portfolio in the areas of cloud computing, virtualisation, security and, of course our 20 years pedigree in delivering IP-based applications, solutions, network
management and security, position us to deliver this expertise to our channel partners. This is key to our long-established strategy,” added Kilpatrick.
Wick Hill has been in the channel for around 35 years and has seen much change, but Kilpatrick’s prediction is the same as the old French saying Plus
ça change, plus c’est la
même chose – ‘The more that changes, the more that stays the same’. He commented: “There will be low margin, cost driven distribution and there will be high value add distribution. There is a place in the market for both of these distribution types.” n
New landscape on the horizon
T
echnology innovation and the slow but inexorable move
towards VoIP and UC will shape the distribution landscape of the future, and the emergence of solutions that require a high level of technology support during their introduction and market adoption stages will be the catalyst for change, according to Mark Shane, Sales Manager at ICON. “The pressures in the distribution sector over the next few years will be to assimilate and launch these technologies into the channel,” he said. “The skills required to do this focus on technology competencies rather than the logistics of box shifting. Distributors that already have technology value services as a core competency will see new opportunities.”
These new technology solutions demand a more consultative sale and support infrastructure than the traditional solutions, noted Shane. Those distributors with logistics at the heart of their business model will find it difficult to offer the market a compelling proposition for the emerging products such as these, he believes. “The issue for these distributors is not whether they can maintain profitability but whether they can maintain their market share, turnover and customer base,” he said.
In the early stages of market development the emerging technologies are support intensive. This demands a distributor with a skill set which can deliver the level
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added space where the focus is on sales and technology support for new communications solutions. Its product portfolio includes solutions which in one way or another exploit the emerging technologies.
Mark Shane
“With more products looking like an IT solution the reseller profile is changing”
of technical and sales support required. “Vendor marketing tactics match product requirements with distributor capabilities, get the match wrong and the vendors’ solution will languish in the lower regions of the distributor’s catalogue,” Shane added.
For distributors such as ICON that already operate a value added distribution business model emerging technologies are creating new opportunities, not least opportunities based on fresh vendor partnerships. “Solutions which form part of the converged ICT marketplace mean new channel opportunities for the VAD,” said Shane. “With more and more products looking like an IT solution the reseller profile is changing. Resellers need to understand networking, and ICON is finding new opportunities in the IT reseller channel for its IP PBX solutions TalkSwitch and Wave.”
ICON’s business model is firmly in the value
ICON believes that some distributors claiming to add value do not meet best in class benchmarks. “The test is to look at the commitment given to value added,” said Shane. “Is advice available at time of order, is real time support provided during installation, is there a depth of application knowledge at the end of the phone, does the distributor actively support the sales process, and finally will the distributor’s commitment to the solution continue after the bill has been paid?”
The era of the broad based box shifter is unlikely to come to a sudden end, and it is unlikely that they will suddenly become VAD distributors. The transition from the logistics-based skills model of the broad based box shifter to a technology focused VAD skills business model is probably too much of a step for the box shifter, believes Shane. “Our view is that there will be no major structural changes in the distribution sector over the short-term,” he forecasts. “Box shifters may find pressure on sales, but good business governance should maintain profitability even if sales drop. Individual VAD distributors may become stronger players in the market as they take advantage of the increasing demands for the emerging technologies.” n
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