They Don't Get No Respect

In all the years I've been working with distributors, I must confess: They probably don't get the respect they deserve, but much of this has been self-inflicted. Still, when Lehman Brothers analyst Harry Blount told a group of distributors and vendor channel executives at the recent Global Technology Distribution Council (GTDC) event that the publicly held distributors are the Rodney Dangerfields of the IT industry, it struck a chord.

So, do today's distributors deserve more respect? I asked that of many supply-chain executives, and here are my observations:

1. Distribution needs its own version of 2.0. We have Web 2.0, Print 2.0 and Channel 2.0, but we don't have Distribution 2.0. The GTDC was formed to help bolster the image of distribution among Wall Street investors after the dot-com boom. The plan worked, but distribution needs a new act, a new story.

2. For many years, distribution extracted a high toll from their vendor partners to gain access to their systems and customers. Small vendors felt as if distributors were extortionists, and the large vendors felt as if they were being overcharged. Distributors need to explain how their systems and networks are more open, accessible and inexpensive than ever before.

3. A new generation of executive has taken hold of many of these companies. They are dynamic and determined to attract bright, young workers. Greg Spierkel is about the best thing to happen to Ingram Micro since Chip Lacy. Lacy helped build the distributor of yesterday, and Spierkel is clearly the executive to shape the distributor of tomorrow.

4. As Blount said, the reason distributors get no respect is they have little in the way of annuity or recurring business. Microsoft has site licenses, solution providers have managed services, but distributors have to wake up on Jan. 1 and start building their revenue from scratch.

5. Are distributor's the real channel innovators? When we asked six of today's leading minds in distribution to talk about which vendors are truly innovating in the channel, they drew a blank. Are IBM, HP or Cisco really innovating in the channel the way they once were? Perhaps not. If that's the case, then today's distributors need to demonstrate that to the broader channel IT industry, or they will continue to get no respect.

6. Distribution execs like to talk about all their technical know-how. If disties want more respect, they have to bring that vast technical database to the market in an innovative way.

7. We conducted a study on solution provider perceptions of distributors, and they put price and availability as the top reason they source from distributors. There is an inherent conflict between that perception and the ability to garner respect.

8. Regarding the point above, if distributors were really concerned about their image, they should take the step of ending floor days. Every vendor needs to make its number, but what message do floor days send to the VAR community?

9. Distributors must spend their own money to improve their image. D&H prides itself in investing its--not a vendor's--dollars on marketing. Guess what? D&H is the undisputed leader when it comes to serving small VARs as a result.

10. If distributors really want to shed their bad image, then they must truly work for the solution-provider community. Right now, they fall short. Perhaps the major distributors should show up at our next XChange conference and sit in front of several hundred VARs to get their input.

Let me know what you think at [email protected]. Read my column online for my take on this year's ARC.