CRN Distribution Roundtable: We Help Digital Transformation Come To Life

Top executives from Ingram Micro, Tech Data, D&H and Pax8 discuss how distribution has evolved to meet the needs of today’s solution providers and their customers, with one executive noting that distributors are the few players that ‘touch every piece of the pie, all the way down to the end users.’

More Than ‘The Barn And The Bank’

The nation’s top IT distributors say the term they are best known by is outdated and doesn’t begin to encompass the services they offer today.

“Distribution's a misnomer now. We're really solution aggregators,” Kevin Kennedy, senior vice president of advanced solutions at Tech Data, told CRN in an exclusive roundtable discussion. “Whether you're talking about cloud, infrastructure, software, no longer are we the barn and the bank.”

The CRN roundtable, titled “The Changing Face of Distribution,” also featured senior executives from Ingram Micro, D&H Distributing and Pax8.

The other executives in the roundtable agreed, adding their roles have moved well beyond shipping boxes. Here's what they had to say

The Cloud Was The Storm That Forever Changed Distribution

Cloud and the ability to deliver robust IT services with the click of a mouse have changed how legacy distributors approach the market.

“We're putting together multivendor solutions on every level, from the infrastructure through the software layer to the cloud,” said Ingram Micro’s Kennedy (pictured). “We're solution aggregators. We're also digital change agents. We're really—from the vendor out to the partner—we're helping the whole digital transformation thing come to life because we're the few that touch every piece of the pie, all the way down to the end user.”

Dean Edouarde, executive vice president with UGM Enterprises, a solution provider in Los Angeles, said he saw that change in distribution come a few years ago when on-premises products started to increasingly be replaced by services.

“We started moving in that direction heavily,” he said. “It’s all about services. It’s all about providing some form of IT on a recurring basis or it’s a recurring service charge. It’s almost like we’re bankers and insurers now. It’s all about the fee. … Almost everybody should have realized that shift was coming, or has come to the point where they are making changes within their organizations. Some people called us crazy two years ago. Crazy was probably right back then, but it’s not crazy now.”

Now It’s About Providing Value

Benjamin Niernberg, senior vice president of sales and services with MNJ Technologies, an MSP in Buffalo Grove, Ill., said this shift to services has sent MSPs clamoring for help from distribution with transforming their own business at the same time they are helping customers transform.

“Answering your phone and shipping a product on time wasn’t good enough anymore. There needed to be true value for what we do for our customers, and in turn there needed to be true value for what distribution did for us,” he said. “We had built our businesses as a Capex, 30-day, eat-what-you-kill purchase and sales cycle. So as society changed, the way we consumed products changed, then our manufacturers changed the way they wanted their end users to consume product. There are business ramifications for how we do that, both cash flow, billing systems, all of these things we didn’t have to encounter before.”

That change does not just apply to enterprise customers or large MSPs, said Peter DiMarco (pictured), vice president of VAR sales at D&H Distributing, which works closely with solution providers selling to SMBs.

DiMarco said D&H works with every part of the end-to-end “ecosystem to make its partners selling cloud solutions successful. “We're really connectors. … We have to connect all the dots,” DiMarco said. “We have some very creative things to do in the open marketplace, bills, applications, solving those problems is what we do right across every element in the ecosystem.”

Distribution Steps Up

Patrick Booth, president of CCB Technology, an MSP in Racine, Wis., that has been family-owned for 30 years, said the days of his father using the family basement to store boxes for sale to the end customer are long gone. He said distributors have responded to the cloud services shift by pouring their own resources into building out services, which helps to give him confidence.

“The coolest thing about [distributors] is that they have not sat on their hands. They have evolved, and they’ve been growing,” he said. “[Distributors have] said we’re not just pushing product, we’re actually pushing solutions with you. We’re here. I don’t have to spend the money to do it. They’re pouring the money into it for me. That’s the key to anything. They’re helping me make it easy. Not just on the product. That’s what we started with. Now we’re delivering the solution behind the product and helping train the customer, but also equip them to help them go further with the product.”

Tim FitzGerald (pictured), vice president of cloud channel sales, North America, for Ingram Micro, said there’s no single word that adequately describes all of the things distribution is expected to deliver in today’s market.

“I don't know that there's one term because ... the types of different companies that we're connecting together are all different,” he said. “They consume our value in different ways and in different mixes. I seem to land on something along the lines of ‘ecosystem developer.’ We're bringing together providers of IT and consumers of IT. This happens to be in IT solutions, but we, again, sit in the middle and operate and bring value in lots of different ways between providers and consumers.”

Born-In-The-Cloud Pax8 Changes The Game

As a born-in-the-cloud distributor, red-hot Pax8 has a front-row seat to the disruption its own model has caused among its rivals. Chief Channel Officer Ryan Walsh (pictured) said even when Pax8 started, the term “distributor” didn’t seem to capture everything the company offered.

“So we called ourselves different things, but what was anchored with our partners was they still related to distribution. We just had to say it's tied to cloud,” he said. “We talk about it and it needs to be reinvented, but there's this notion, I think you're absolutely right, that you're pulling together solutions, you're bringing something to market now that needs to be delivered faster, quicker. Those things are very different in terms of how we do it, and I don't know where there's a better term because we tried to find something different and it didn't work.”

UGM Enterprises’ Edouarde said the change in distribution was one of the catalysts behind his decision to change how he refers to his own business.

“I don’t think we would call ourselves an MSP anymore,” he said. “I think we would call ourselves a BSP—a business service provider, because quite frankly, more and more of what we do is having to do with SaaS models or PaaS models and reselling things like Azure and AWS, in terms of backup and recovery. So when Tech Data calls itself an aggregator, I would say that might be a true vision of where distributors are going.”

MSPs That Fashion Themselves After Netflix Will Big Big Winners

MSPs and distributors are being forced to come to terms with the new business truth: Sales are determined by how willing the customer is to renew at the end of every month.

Edouarde, a former college football player at USC and a former Naval aviator, said this shift has required “wholesale change” inf how UGM Enterprises carries out transactions.

“You don’t like Netflix? You cancel it. So that is also a new phenomenon for running a business, which is, you are pretty much 30-days cancelable, everywhere around,” Edouarde said. “First was to get over the shock of that statement … You have to get comfortable with the fact that our job is to provide hopefully superior service, but certainly service that meets or exceeds their expectations of what they signed up for so they don’t go somewhere else.”