Informa Tech’s Channel Group, in partnership with JS Group, the channel consulting and research firm, is launching a first-of-its kind report on the state of the technology services distributor market. 

The newly announced study, titled “Unlocking the Potential of Technology Services Distributors,” sheds light on the changing identity of TSDs and partners’ changing expectations for TSDs. The survey asked 53 vendors and 142 partners about their experiences working with TSD partners and the service gaps they experience. 

JS Group’s Janet Schijns

“What we saw in our research is that high-growth partners are in some instances outgrowing the legacy model of engagement offered by their TSD,” JS Group CEO Janet Schijns said. “While they may enjoy events, outings and networking, they want increased demand generation, technical and integration support, as well as digital engagement. As these are now must-haves for these partners, this could change how these partners think about which distributor they chose to partner with in the future.” 

In addition to providing insights on the market, the study highlights how 16 of the most influential TSDs are differentiating themselves. 

From Humble Beginnings

While TSDs historically connected selling partners and technology vendors to one another, as the industry has evolved, the pressure for them to expand their business practices has grown exponentially in recent times.   

TSDs traditionally have served to minimize risks for the partners, while providing vendors access to a massive base of customer-facing partners who could sell their solutions. Because partners lacked the size and legal protections needed to sign direct agreements with many vendors – and vendors lacked the ability and reach to sign hundreds of direct agreements – TSDs emerged as a key intermediary in the technology advisory channel. TSDs offer partners a deep bench of vendors spanning across the IT and telecommunications software and services world. 

For Ed Derse, who joined technology advisor Kairos Data Communications from the direct carrier side, it has been “eye-opening” to step into the world of the TSDs.

Kairos’ Ed Derse

“Having a resource to work in tandem with for supplier relationships, marketing and educational information, and various other tools, has enhanced my ability to give our clients the best advice and outcomes for their business transformations,” Derse told Channel Futures.

At the same time, TSDs offer the vendor community a wide partner base to extend, amplify or even augment their direct sales efforts in any vertical or geographic market. As such, TSDs’ influence across the technology ecosystem has soared in recent years.  

TSDs have gained attention outside of their traditional swim lanes in recent years, following several acquisitions and a healthy appetite from the investment community to fuel increased consolidation in the technology supply chain. For example, the acquisition of Intelisys by publicly traded distributor ScanSource put a huge spotlight on the industry, with subsequent investments by private equity firms in rival TSDs validating the value they see in this business model.  

Challenges and Opportunities

However, while the traditional TSD model still represents a plethora of opportunities, it also encounters growing pains and gaps in coverage, according to participants in this study.

While both vendors and partners view TSDs as an essential part of their go-to-market approach, they are requesting more assistance and focus in generating demand and reaching their target end-user customers. For example, 81% of partners claimed they need marketing support that they are not getting today. And 47% of vendors reported major dissatisfaction with how their top TSDs used market development funds.  

“The most successful TSDs will not simply add a few snazzy or vertical events or programs, but will instead offer bespoke solutions for cohorts of partners who need the same things and make a true difference in the partner business,” Schijns said. “The less successful ones will continue to add more social events, generic programs and endless content that won’t resonate, and as such, create an easy off-ramp for the partners to go to someone who can offer what they truly need.” 

The report clearly identifies key gaps expressed by vendor and partner voices interviewed and surveyed, and offers baseline recommendations for how TSDs, vendors and partners can all better address these gaps going forward. It has also listed a “Sweet Sixteen” list representing both “born-in-IT” and “born-in-telco” TSDs.  

That 16-company list includes: Avant, AWS, AppDirect, Bridgepointe Technologies, D&H Distributing, GTS, Hyperion Partners, Jenne, Ingram Micro, Intelisys, Pax8, Sandler Partners, TD Synnex, Telarus, Vendasta and XaaS1.

JS Group and Channel Futures will continue to roll out new research on the state of the TSD market.