GTDC CEO Frank Vitagliano: IT Distribution In A Sea Of Change
‘People are recognizing the inherent value that distribution provides into the marketplace and into the community. And they recognize that value both from a legacy standpoint, traditional types of things that everybody knows about. ... But they also acknowledge and recognize the investments that are being made in order to take advantage of the digital transformation,’ says GTDC CEO Frank Vitagliano.
IT distribution is going through massive changes, both in terms of ownership but also in the way the firms support the channel, that will result in improved opportunities for solution providers in 2021 and beyond.
That’s the word from Frank Vitagliano, CEO of the Global Technology Distribution Council, or GTDC, during a Wednesday question and answer session with Blaine Raddon, CEO of CRN parent The Channel Company.
Vitagliano, speaking during one of the keynotes of the Best of Breed Virtual 2021 conference, said the GTDC, formed in 1998, includes 22 distributors from North America and Europe, ranging from the largest to several specialty distributors. Altogether, they represent more than $150 billion in annual sales.
The GTDC’s primary role is to educate the marketplace on the services and the value that distributors provide, with that marketplace primarily consisting of IT vendors as well as solution providers and MSPs, he said.
The distribution industry as a whole has seen a significant amount of consolidation activity, particularly in the last couple years, Vitagliano said. This round of consolidation started in late 2016 with the acquisition of Ingram Micro by China-based HNA Group. Since then, Tech Data acquired Avnet Technology Solutions, private equity firm Apollo Global Management acquired Tech Data, technology investor Platinum Equity Partners is in the process of acquiring Ingram Micro, and Synnex and Tech Data are in the process of merging.
These things are happening for a reason, Vitagliano said.
“People are recognizing the inherent value that distribution provides into the marketplace and into the community,” he said. “And they recognize that value both from a legacy standpoint, traditional types of things that everybody knows about. ... But they also acknowledge and recognize the investments that are being made in order to take advantage of the digital transformation.”
The mergers and acquisitions go beyond basic consolidation and cost-cutting, and instead will enable distributors to invest more in long-term value creation, Vitagliano said.
The transactions also acknowledge that there will be more pure investment dollars that going forward will be targeted towards certain areas, Vitagliano said. And they will have a positive impact on the competitive landscape, he said.
“I think it will raise everybody’s game,” he said.
The transition to everything-as-a-service is also playing into the hands of distributors who with their long-term ability to financial support and offer support to channel partners are in a unique position to help support the channel’s own moves, Vitagliano said.
“To support the transition of cloud marketplaces as a service in particular, you need to create billing infrastructures,” he said. ”You need to establish API integrations, potentially globally. You need to be able to transition your service and support capabilities to support that, and that’s harder than you think, because this isn’t necessarily about technology. This is about training your folks to sell and support in different ways. [Distributors] clearly understand what’s happening in the marketplace. They clearly have a strategy to engage in it.”
The changes going on in distribution are reflecting the value of distributors to the channel, said Michael Goldstein, president of LAN Infotech, a Ft. Lauderdale, Fla.-based managed service provider.
“You can see that in the face of everything,” Goldstein told CRN. “Just look at Ingram Micro now acquiring a PSA (professional services automation) provider. This is Ingram Micro adding value by trying to make it easier for us to do business with them. Yes, platform providers like ConnectWise offer all-in-one platforms, but Ingram Micro is adding value to distribution.”
Whether its Synnex and Tech Data merging, or D&H treating everyone like family, the key to success in distribution is customer service, Goldstein said.
“It’s not about saving a few dollars,” he said. “Solution providers like us are impacted by our Amazon experience, and see the importance of good customer experience. We’re also moving to focus on our on-line experience, and the changes going on at distributors are key to making it happen. Clients are used to Amazon, and expect the same service from us.”
Distribution is the key to modernization of IT operations, Goldstein said.
“Look at real-time inventory,” he said. “With Amazon, a consumer knows that in a few hours he or she will get the product because of Amazon’s logistics. For us, the logistics need the support of distributors. I may have a customer in Florida, but seen that a needed product is available to ship from California. Customers are used to Amazon, and expect that kind of service from us.”
Goldstein cited as an example a client who said a new executive would start work the next day, but no laptop had been ordered for the executive.
“They emailed us in the morning,” he said. “We found the laptop, ordered it, and knew we’d get it the next day. We gave the customer a 2:30 cut-off time to order it, and had someone on-site the next day to deploy it.”
It’s not just products, Goldstein said. “I know I can get licenses and subscriptions quickly from distributors,” he said. “And we rely on distribution to educate us on ground-breaking technologies.”