What future for the distribution channel in a cloud-based world?
Over the past few decades a whole industry has built itself on the distribution and resale of hardware and software — an industry that is now under threat as software sales move online and entire services move into the cloud. But, says Jessica van Wyk, channel manager at Veeam Software, the future is bright for those who are able to maintain and build on their role as trusted advisors to their clients.
“Relationships are a distributor’s most important asset,” says Van Wyk. “At best the distributor is a skilled, well resourced interface between a software vendor, the reseller channel and the end client. If they combine expert knowledge of what the vendors offer with deep understanding of what each market needs, they are in a position to put together the most appropriate offers and services for their reseller channel.”
There is a particularly strong opportunity in the cloud services space right now, says Van Wyk. “Distributors who can create or package cloud services, and do it well, will weather the storm. Moving into the cloud is a complex and challenging business, and mid-market companies in particular need skills they don’t have in-house. They are worried about security, about the costs and risks of implementation, about what solution will work best for them. They really need advisors they can trust.”
“A lot of distributors are signing agreements with cloud providers to package and sell their services,” adds Van Wyk. “Moving into the cloud is not a one-off action — once you’ve moved you need to pay attention to ongoing maintenance, support, management and optimisation, and this is where distributors can add real value.”
The challenge, says Van Wyk, is for distributors to rethink their traditional business models. “The market for one-off hardware and software sales is shrinking, so building long-term relationships is critical. The million-rand deal is now going to be delivered over many months under a service level agreement, instead of as one big lump. Sales teams need to be retrained from selling products to selling services. Can you help the client out by hosting their mailboxes, for example? How else can you as the distributor help them make the most of their scarce internal IT resources?”
Distributors should also be keeping in close touch with vendors to make sure their strategies are aligned, says Van Wyk. “At Veeam, for example, we’re launching cloud services by partnering with cloud providers all over the world — and helping our distributors to connect with those services on behalf of their clients. Other vendors may have other strategies, so it’s particularly important to keep track.”
Whatever strategy a distributor decides to pursue, says Van Wyk, “at this point you need to move fast. If you’re going to partner with a cloud provider, you need those agreements well bedded down; if you’re going to build your own infrastructure, you need to do it now. Moving into the cloud is like learning a new language — you need to take small steps at first and build up your competence gradually.”