If one central theme is emerging from Ingram Micro’s annual ONE conference, it’s that a lot of investment in education is going to be needed if the massive distributor wants to get through the digital transformation minimally unscathed—and help its partners do the same.
In the opening keynote this morning, Paul Bay, group president and EVP of Ingram Micro, told the audience that too many of Ingram’s partners are still relying on legacy hardware and software products, where margins are rapidly shrinking. Traditional resellers and MSPs need education in cloud-based service technology, in building a business around consumption-based models, and in walking and talking the line of business (LOB) buyer’s language.
A few key points of emphasis emerged today from keynotes and a closed executive Q&A, as well as from a conversation Channel Futures had with Paul Bay. Here’s where the distributor is focusing as it navigates the digital transformation and empowers its partners to solve for customers’ business outcomes.
In an age where hyperspecialization is touted as the golden key to success, too many partners remain generalists and pass up lucrative opportunities to corner niche markets. Bay told Channel Futures that the shift to consumption-based solutions focused on LOB outcomes mirrors the shift to cloud seven or eight years ago, when Ingram was scrambling to educate itself about cloud solutions from its vendor partners while simultaneously passing that knowledge onto its channel partners.
Anthony Mackle, Ingram’s chief finance executive for the U.S., is having more financial conversations with LOB leaders than with CFOs these days, said Bay.
“What’s the recurring revenue or services contracts you have from an end user standpoint, and how can we help acquire those on your behalf so we give you the cash flow to keep the machine going as you’re making this transformation?”
Bay offered Ingram’s recent acquisition of Phoenix Group, a point-of-sale solution provider, as an example of how the disty is provisioning itself to train partners in how to expand their services and give them the momentum they need to someday do their own deals.
No one can offer true end-to-end solutions, not even vendors, and Ingram is working hard to facilitate partnerships between traditional and emerging partners. VARs and MSPs bring the technical knowledge, and ISVs and digital agencies bring the vertical expertise. Both groups are thriving in Ingram’s ecosystem, said Kirk Robinson, senior VP at Ingram Micro. The disty is seeing double-digit growth in net new partners, both traditional, established businesses and born-in-the-cloud partners.
Bay said that part of the challenge is that many of Ingram’s net new partners don’t fit into its existing, traditional communities. The disty is searching for new ideas and opportunities to diversify its communities. That’s where Ingram’s TrustX Alliance and professional services support initiatives really come into play.
“If you look at our TrustX Alliance and our membership base and who we’re trying to recruit as new members, they’re not just your traditional solution providers. We’re trying to bring new skillsets in to help that partner in a number of different ways,” Bay told Channel Futures.
Ingram is making big investments on the strategy side of things to help educate both traditional and emerging partners on where they can make a play together. It’s also focusing on recruiting ISVs and other “new” partner types in vertical markets where Ingram isn’t all that robust.
“The more we hear and the more we see opportunities, the more resources we’ll throw on top of it,” Bay said.
The good news for partners hoping to ride legacy businesses into retirement is that the consolidation trend, according to Bay, is growing at every level of the channel. Convergence is one of Ingram’s (and the channel’s) buzzword of 2018, and Bay says it’s driving consolidation within the market. At the end of the day, Ingram wants its born-in-the-cloud partners to focus on enabling end users with cloud- and consumption-based IT, but it’s still having a lot of conversations with longtime, traditional partners that are looking for an exit.
Internet of Things
Like everyone else in enterprise IT, Ingram is betting big on IoT in 2018, and wants to help partners specialize at every level of the connected world, from the edge to the core.
Robinson spoke today about capitalizing on market disruptions to build successful businesses in emerging areas of expertise such as data collection and analytics. The key is developing repeatable, scalable solutions in specific vertical markets, an area where Ingram has a lot of energy.
Ingram has about a dozen vertical IoT plays in the Americas, and it’s trying to build out specific solutions appropriate to each geography. AgTech is an example, which may be a big business in Argentina or Brazil, but may not have any traction in Arizona.
“We’ll continue to build out some of those skillsets, but some of them may not necessarily have as much focus or investment,” Bay told Channel Futures. “We think that’s not just the next big buzzword, but it’s really going to come to fruition.”
“It’s great when you wake up and you have enough in your tank already that you have recurring revenue,” said Bay. “Everybody thinks that’s a great thing. It’s going from that low single digit to actually having material enough that it’s a positive impact on your business.”
To help, Ingram is funding managed services contracts by paying partners up front for recurring revenue deals. It’s all about helping partners build consumption-based models that give end users the flexibility and agility they demand.
“The only deal we don’t finance is the one we don’t know about,” said Mackle.
The day is coming when hardware and software revenue will be eclipsed by professional services. It’s already happening in pockets, said Robinson, but Ingram’s cloud and hardware businesses are still growing for now. No one has a crystal ball to say exactly when, but Ingram is bracing for it with its TrustX and SMB Alliances, as well as funding initiatives that bring hardware, software, and as-a-service offerings into a single portfolio partners can offer to end users.