Distributors agree digital transformation an opportunity and a necessity
The current round of channel mergers, sales and IPOs bodes well for the future, says Billy MacInnes
18 November 2021 | 0
Two weeks ago, the Global Technology Distribution Council (GTDC) held its GTDC Forum 2021 event, covering a range of issues and perspectives across a number of presentations and breakout sessions.
At the virtual event, the council’s CEO, Frank Vitagliano, chaired a wide-ranging panel question and answer discussion with three distribution heavyweights: Rich Hume, CEO of TD SYNNEX; Paul Bay, EVP & president, Global Technology Solutions, Ingram Micro; and Esprinet CEO Alessandro Cattani.
He began by asking Hume what was driving the mergers, sales and IPOs in the distribution sphere. Hume described the increased activity as a healthy sign that investors were more informed about the vital link distributors play in the overall IT supply chain and understood the value they bring to the market.
Asked about the growing XaaS trend, Bay at Ingram Micro said there had been “a significant shift” in its adoption by channel partners. For their part, distributors had all invested in marketplace strategies alongside their e-commerce strategies to accommodate XaaS market growth and help provide transactional solutions for their partners.
On that note, Bay urged vendors to bring distributors “in early to your technology conversations. I think we end up being part of the solution but it’s an afterthought in many instances”. He asked vendors to “get us into the technology conversation not just the channels organisation of how we can connect in early. Then we can have those conversations about that connectivity and the APIs so you’re not having to replicate 3, 4,5,6 different times once you decide you’ve got to take new technology to market.”
Asked separately whether he believed the term digital transformation was suffering from over exposure, Hume replied: “I don’t think the term is over-used.” He noted that many of the growth trends in IT, such as automation, IoT and marketplaces, were centred around digital transformation.
“It is where the opportunity is for us collectively,” Hume argued. Digital capabilities, as he described it, was one of those rare opportunities where it was possible to greatly improve productivity and significantly improve customer experience at the same time.
“If you get it right, it’s extremely powerful,” he said. “It is the opportunity and it is a necessity.”
In response to a query on what lessons could be learned from the supply chain issues and constraints afflicting the industry, Cattani said the lesson everyone learned was that “we don’t know where or when a major disruption will come”. Flexibility was the key issue.
The situation had raised a philosophical question over whether the supply chain had been stretched too much to achieve just-in-time. It also highlighted the consequences of the quest for super lean inventory levels and a focus on low cost outsourcing to “only a few places in the world with very long supply chains”.
Distributors needed to sit down and have “a big discussion” with their vendor partners. “We need to connect our IT systems even better to the ones of our vendor partners to get better information earlier,” he added.
Vitagliano concluded the session by asking Bay if he agreed that the label “distributor doesn’t accurately represent what you do”? The Ingram Micro executive agreed readily. He said the limitations associated with the term ‘distributor’ were clear from the number of people who frequently responded “I didn’t know you do that” when he listed some of Ingram Micro’s services.
Bay said a better representation of what Ingram Micro did would be a ‘business partner’. He argued the distributor generated “incredible value for our vendors” by lowering transactional costs and driving productivity, solving complex business processes, reaching new markets and enabling “thousands of partners” to enter new markets on a global basis, delivering new technologies and solutions and helping support customers in how they consume technology.
“The term ‘distribution’ definitely no longer says all that we are really doing in today’s day and age”.
Whatever the future of the term, there seems to be a lot of mileage left in the channel if comments by Stuart Wilson, research director for European Partnering Ecosystems, in his presentation at the event are anything to go by.
“There’s never been a more exciting time to be involved in partnering,” he claimed, stressing that the value of distribution would endure. The function of distribution was not diminishing in the age of cloud and digital transformation, “quite the opposite”, he argued. Efficient distribution was “needed more than ever” to help increasingly complex IT ecosystems thrive.
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