For Niche Distributors, the Future is Cloudy

November 8, 2011 at 4:08 pm 2 comments

By Kevin Fox, Consultant

Many vendors are unclear what role, if any, distributors may play in their cloud strategy. As for niche technology distributors, the future is even more unclear. 

Behemoths the likes of Avnet, Ingram and Tech Data are scrambling to claim a piece of the pie. Who can blame them? IT spending is projected to grow at 4% annually through 2013, while “Cloud” spend is projected to grow at 26% annually (source: IDC). That is, 25% of overall IT growth will come from Cloud/SaaS offerings in the next few years. 

Ingram Micro has taken the lead with their “Cloud Summit” forum to educate VAR’s and MSP’s combined with their Seismic-branded portfolio of managed services. The rest are not far behind with their own service offerings, partner trainings and end user workshops to evangelize the space; Avnet (CloudReady), Tech Data (TDCloud), Synnex (CloudSolv), etc. etc.

Smaller Disti’s typically pick up on the voids in their larger counterparts’ model(s) and simply build a better mousetrap. This is the essence of their business. However, this “wait and see” attitude may not be the best approach this time…especially when you consider the unprecedented opportunity (and mystery) in the cloud.

Pick a Cloud, Any Cloud 

Unlike the behemoths, niche distributors typically offer expertise around specific solution-sets and provide more personalized services. In many cases, they employ hybrid models, delivering directly to resellers and end-users alike. As a result, they may be uniquely positioned to capitalize on the mystery surrounding the cloud. Following is a five step process for niche distributors to get a quick-start on their cloud-based strategy:

STEP 1 – Engage with partners and end-users

Facilitate a round-table session, even if it’s virtual. Determine their needs, where others fall short and what you can do to help. They will be pleased to know that you are willing to listen and that their opinion matters. 

STEP 2 – Be the Cloud.

Your channels are as new to this space as you are. Become a subject matter expert. Take the lead and help facilitate their commercial efforts to sell cloud-based solutions. Create a simple channel development training program, enable them with tools, communicate tips and FAQ’s. Reinforce continuously.

STEP 3 – Get your house in order.

Many smaller distributors are still very transaction-centric. Evaluate your systems and processes to determine how to effectively bill for recurring revenue services. Make sure it works for your partners and their customers.

STEP 4 – Differentiate.

Establish unique relationships with 2-tiered channel friendly vendors. Many cloud vendors are accustomed to billing end users directly. Approach them with a specific vertical/service offerings to demonstrate you can accelerate revenue for them through your channels. 

STEP 5 – Dip your toe in the water.

Keep it simple. Don’t attempt to become a one-stop-shop, integrating everything-cloud for your partners. Choose 1 or 2 service offerings. Pilot with trusted partners and customers. Slowly expand.  

To claim an intermediary position in the future cloud model, niche distributors will need to be the “drivers of value” not only for their partners, but for vendors as well. The ability to leverage their end-user insights may prove advantageous, especially as the “big guys” trip over themselves in an attempt to aggregate everything/anything in the cloud.

It’s time for smaller niche distributors to carve out a “new niche” and reinvent themselves. As Lee Iacocca once said, “the trick is to make sure you don’t die waiting for prosperity to come.”


Entry filed under: Industry Perspective. Tags: , , , , , , , .

Ease of Doing Business The New “VAR”

2 Comments Add your own

  • 1. chanserivera  |  November 9, 2011 at 2:28 pm

    Clarity is difficult to achieve in this space as the landscape continues to change. Would like to read impacts on IT staffing as corporation embrace cloud services.

  • 2. Deirdre Bobadilla  |  November 9, 2011 at 5:41 pm

    I like it, and look very promising, “cloudy with a chance of money rain”


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