Distributors Demystify Cloud: New Models, Same Value to Solutions Providers, Vendors

**Editor’s Note: Distributor Report is a recurring column featuring thought leadership from IT and cloud distributors. We’re looking for insights into evolving business models in this new era of distribution, product and technical service offerings, education and training, marketing/branding, credit and a myriad of other services.**

By Tim Curran

I find it both amusing and frustrating to hear people say distributors will be disintermediated by the cloud.

Amusing because of the implausibility of it. Distributors have successfully weathered many storms over their history by transforming their businesses and adapting their models to not only survive — but also thrive. This one is no different. Frustrating because the notion disavows all the investments and great things that distributors have developed around cloud. I’m not going to list them all here, but if you’re unfamiliar, I encourage you to Google your favorite distributor’s name and “cloud.” I’m confident you’ll like what you’ll find.

Most Global Technology Distribution Council (GTDC) distributor members have their own respective cloud marketplaces or platforms in place, each supplying solution providers with an arsenal of cloud applications and services to bring to market. In Part I of this three-part series, we talked about new business models from a broad perspective. Today, let’s examine cloud a bit more closely.

Great Service Brings Rewards

In some respects, what distributors are doing around cloud is no different than what they’ve always done — provide complete, effective multi-vendor IT solutions that their customers can deliver to end users. Granted, it’s a different procurement model, different billing model and different delivery model, but the same basic value is there. Simply put, no one else has the scale, the financing, the access to thousands of solution providers, and the ability to provide integrated full solutions that distributors have.{ad}

It’s encouraging to know that vendors increasingly recognize that value, as evidenced by the comments and research findings in our recent “Insights Into 2017″ research report.

For example, in our report, John Strausburg, cloud sales director, SMB&D for Microsoft, notes that there’s a $127 billion public IT cloud services opportunity worldwide, in addition to a $256 Arroillion managed services opportunity around public cloud by next year. Distribution, Strausburg says, will play a critical role in Microsoft capturing that business.

“Microsoft is placing increasing emphasis on the cloud business through distribution, giving them more and more opportunity as we expand our public cloud assets. In 2017 more than any other time we’ll see the greatest variety of technology to sell and we’ll continue to expand that selection to help transform their business and expand the channel,” Strausburg told the GTDC.

Recognized Value Continues to Yield Success

One of the more recent innovations from distributors is the development of cloud-specific …

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… financing. Distributors have long served as “banks” for many solution providers, but new recurring revenue and service-led models have introduced new, non-traditional financial programs — accelerating the growth of cloud sales for vendors and solution providers struggling to adapt to those new models.

“Some of the things we do around recurring revenue and bringing new partners into the ecosystem helps our base become broader and makes cloud easier for partners to sell,” Wayne Peters, senior director of Arrow Capital Solutions, at Arrow Electronics, said in our Insights Into 2017 report.

Another GTDC research report conducted in 2016 revealed that 100 percent of vendors surveyed expected their cloud sales through distribution to increase compared to the previous year. Vendors highlighted three key benefits of selling cloud through distributors: partner recruitment, partner enablement and partner financing.

Sound familiar? As mentioned above, those three areas have long demonstrated as values that distributors bring to their traditional business as well. Consumption models may change, but the value remains consistent.{ad}

Of course, that’s not to say distributors’ cloud initiatives aren’t without challenges. For one, the market is still developing, so there really aren’t any standard programs that cloud vendors can replicate across multiple distributors. For now, multiple models means a less than optimal route to market for those vendors. Expect that to change as the market matures.

But if you’re a solution provider just now embarking on your cloud journey – or an experienced cloud provider – talk to your distribution partners about where you want to go. What services do you want to add? How do you adjust compensation for our salesforce? How can you aggregate multiple cloud applications into a single bill? Chances are your distributor will have the answers and be able to guide you on your journey. It’s what they’ve always done, and what they will continue to do.

Tim Curran is the CEO of the Global Technology Distribution Council (GTDC), responsible for the strategic direction of the international trade association that represents members with more than $130 billion in annual sales.