It's no secret that times are tough, which by now, is something that has been discussed over and over again within the channel community. However, discussions usually ensue about this topic, but the question remains in that, "Does anything ever get done to alleviate the situation?" Sure, the government is trying to help with the current economic stimulus package, and it seems in the consumer goods and retail sectors, manufacturers are almost "giving" items away so that they fly off the shelves (and racks). And within the reseller community, the same type of help is being offered. However, some might not know that it exists, or perhaps haven't had the chance to learn more about it. That said, it should be known that the channel's distributors are here to help their reseller partners not only grow their business models, but sustain it as well in these tough times.
To further explain these opportunities, VSR spoke with six representatives from the channel's top distributors to find out what they had to say about the current state of the economy, and how they are here to assist their respective reseller partner communities with any needs they might have -- because their partners' successes are their successes as well.
VSR: What are some of the trends that you are currently seeing in the channel as it relates to end user demand, of which resellers need to be aware of?
Bobby McLain: We are seeing a somewhat softening of "automatic purchase cycles" from end users. End users, now more than ever, want to know how technology solutions can help them operate more efficiently, improve their processes and drive unneeded costs and unproductive activity out of their businesses. This means that end users are not as likely to say, "well, it's been 3-4 years, so it's time to replace our system" and are more likely to challenge a solution provider with, "how exactly is your solution going to save me money and also make my business much more efficient?"
Justin Scopaz: Many organizations (and end users) are postponing or reducing their overall spend as a result of the economic realities and uncertainties. Yet, there are still a number of opportunities for resellers to engage with customers and grow their business. It's just a different sales approach. Currently, resellers who are going in and showing their end user customers how they can save money and cut costs while improving productivity through technology deployments are winning.
Mark Fraker: We're seeing increased use of stacked barcodes, particularly as it pertains to the health care vertical. Digital signage is also gaining popularity - in all types of venues - as it no longer is being added in just general common areas of retail complexes. Kiosks and self-service technologies are also gaining traction, simply because the second-most important commodity is time. Most of today's consumers want to quickly complete more of their transactions themeselves, and on their own time schedule. Initially created, to speed service transactions in transportation complexes, such as airport terminals, self-service technologies are moving into the general retail sector, and now all the way down to a local store level, where customers can walk into a grocery store, and using kiosk/self-service devices, can choose a specific wine to go with their in-store prepared meal.
Joe Quaglia: With the economy as it is, it's no surprise that VARs are telling us about longer sales cycles and more cautious technology spending. VARs are being affected in different ways. Those who are strictly focused on product sales and chasing the next deal are working very hard to meet goals. Those who have already embraced a solutions-oriented model - even managed services - are strongly positioned to weather the storm as a trusted and indispensable advisor to customers. We see technologies like virtualization, wireless networking, unified communications, video conferencing, digital signage, document imaging and security as remaining in-demand solutions for VARs. Also, VARs should keep an eye out for opportunities in service and warranty renewals, remote services like hosted Exchange and security as a service.
Tony Vottima: Now more than ever, end users are focusing their IT investments on projects that provide a business advantage and an immediate financial impact. They're looking for ways to make their dollars go farther and to save money. Our partners are seeing considerable interest from end users in cloud computing, which addresses these key areas. As a first step toward cloud computing, partners can work with their distributors to offer Software as a Service (SaaS) in areas such as hosted messaging and hosted workflow management and collaboration services. End users in markets such as health care, government and education will be particularly receptive to such services because they reduce the need for capital expenses, free up limited floor space and reduce overall costs with regards to power and cooling.
Virtualization will also continue to be a key area of IT investment for many of the same reasons. As more and more companies realize the cost-saving benefits of server virtualization, they are now looking at other areas where virtualization can be applied. Desktop virtualization holds the promise of greater security, while storage virtualization offers improved access to data.
Mary Campbell: Mobility is still hot. Many end users are no longer willing to employ a work force without the immediate flexibility and accessibility to their data that mobile computing provides. This is why sales in the areas of notebooks, netbooks and multimedia smartphones still remain strong and steady despite the economic downturn. We are an on-the-go society, and that fact is delivering great success to companies such as ASUS and its EEE netbooks. Data storage and security solutions are also still in high-demand, which is a consequence of the strength we see in mobility products.
VSR: What are the current emerging verticals within the channel of which resellers need to grab hold of, if they haven't done so already?
Scopaz: Although they are not considered emerging verticals, the public sector and health care industries will bring forward opportunity for resellers as the new administration takes hold in Washington. Resellers that are currently serving these markets will likely see increased spending to modernize existing infrastructure within the next two years.
Campbell: There will be demand in any vertical that involves securing critical data (government, health care, finance) or retrieving critical data (scanning solutions and software to capture that information). The more efficiently a technology can perform these tasks, and the fewer resources it requires, the better for making the sale. Additionally, with the base of mobile-empowered users growing across many verticals, there's a tremendous margin opportunity in a wealth of add-ons for notebooks and mobile devices. Digital signage applications exist for any vertical, becoming more popular as companies' desire increases to deliver messages fast and directly to their audiences. Whether these solutions are leveraged for merchandising, information or entertainment, digital signage is a shrewd business investment that we predict will see more ROI than traditional methods of communication have in the past.
McLain: We're actually seeing an emergence of new technologies that is driving a lot of interest and activity in the channel. In our ScanSource Security unit, we are seeing new wireless technology that can handle the bandwidth requirements of video smoothly, which is a key driver in the acceleration of surveillance solutions moving to the network, and also a lot of interest in and applications for mega-pixel (high-def) cameras. We are also seeing a lot of activity around the government and health care markets, which is probably not surprising in a suppressed economic environment. From a communications standpoint, there is money to be found from healthcare providers, and government spending revolves primarily around the military, along with school districts and higher education.
Fraker: Health care is definitely a vertical that is becoming more prevalent, especially as the average age is increasing. This field is also expanding because of the many new pharmaceuticals entering the market, which prolong life, and in turn require additional monitoring of patients. As it relates to the technologies, we are witnessing more applications using stacked barcodes and imaging. New types of devices are being developed, which enhance the capturing of data on test tube barcodes or on bags of fluids that will then be transferred to an IV or blood sample for patients.
VSR: What are some of the challenges/pain points of your reseller partner community, and how are you working to alleviate these issues?
Vottima: Our partners rely on Avnet to help them grow their businesses. Increasingly, this means that they will need to expand their offerings to meet market demands and target vertical markets, such as healthcare and government, and specialized technology areas like security, Managed Services, mobility solutions and virtualization. While these areas offer significant growth opportunities, it requires a considerable amount of investment to gain the market understanding and expertise needed to effectively pursue them.
Avnet helps its partners overcome the challenges of pursuing specialty market opportunities by making investments in these areas on their behalf. For example, we created "universities" for the healthcare, government and virtualization markets. These industry-specific education forums provide resellers with necessary training to understand the unique aspects of each market and begin cultivating leads immediately after completing their coursework.
Scopaz: At Ingram Micro, we have reseller communities such as SMB Alliance and the GovEd Alliance that provide a plethora of valuable resources and programs. And for those resellers that need financial support, we offer end user leasing and finance options that alleviate risk. In addition, Our IT Outlet program lets our resellers recycle IT equipment, which improves their margins and furthers their image as a "green" company.
McLain: Certainly, third-party credit is more of an issue than it was six months ago. Solution providers need to rely on their distribution partner now more than ever before for creative financing solutions. The key is to be completely transparent with their distribution partner. The more transparent, the more likely a solution can be found to help finance deals.
Campbell: Challenges involve credit offerings, leasing options, and the fact that many VARs can't afford to test the waters today to find out whether certain technologies are the ones they need to sell. Resellers have to be right on-target in deciding what their customers need, and they have to be able to educate their customers in a consultative role in order to make sure they make sound choices for their business models. That's where a distribution partner comes in, pinpointing the categories that will grow their businesses and providing the tools to become educated about those technologies.
VSR: What are some of the measures you have taken to avoid being labeled as a "box pusher?"
Quaglia: For VARs who truly make the most of their relationship with Tech Data, I think it's clear that we're much more than a "box pusher." But for those who aren't as familiar with the breadth of services we provide, I think that because we consider stronger vendor and VAR engagement as key in the channel, we therefore established our Technology Solutions Tour, an innovative series of events that help our customers gain exposure to the latest SMB technologies across product segments. We held six Technology Solutions Tour events across the country. More than 1,200 resellers were able to engage industry and Tech Data experts to learn about emerging trends in software, wireless networking, physical security, imaging and printing, data center solutions, virtualization and more. The Technology Solutions Tour also was a way for us to bring valuable business-building consultative sessions similar to what Tech Data provides our TechSelect community to a greater number of SMB resellers.
Fraker: One of our fortes is to obviously pick, pack and ship. However, as a value-added distributor, we have numerous value-adds in our go-to-market strategy, which enable VARs to build a customized rip marketing campaign to wrap around their own marketing programs. Our FUSION program, which was developed over seven years ago, allows this customization to be completed by VARs in real time, online, 24x7. Value added resellers can build business development programs to touch targeted prospects in their metro-markets in just minutes via FUSION. The touches include all forms of marketing, from direct mail, solution sales books, electronic product catalogs, Web seminars, emails and even telemarketing. We also provide portals for VARs to track and manage their leads resulting from their FUSION prospecting activities.
Campbell: D&H is constantly evolving its resources for resellers in order to keep them ahead of the curve in growing their businesses. We look at every sale as an opportunity to educate our customers, continually creating tools and collaterals to help make sure they can maximize every business transaction. Resources on our web site including dedicated solution centers geared at applications such as mobility and network infrastructure; vendor and technology-specific Sales Specialists who are on standby to assist customers with their client's needs; regular print and electronic communications that describe an ecosystem of products and how they can be implemented in different verticals - not just a reiteration of feeds and speeds.
Scopaz: In addition to our pick, pack and ship model, Ingram Micro has introduced several enablement resources that drive real value for our partners. For example, we offer our channel partners a variety of financial services including credit, leasing and flooring options, and we are the only distributor to offer field credit analysts; we also help our partners secure and maximize their MDFs and develop supporting collateral, as well as offer them access to a best-in-class marketing services agency that specializes in channel.
McLain: We have always prided ourselves on being a true value-added distributor. In addition to the logistics we offer, resellers have also come to expect first-class pre- and post-sale sales and technical support, training and education opportunities, convenient custom configuration services, and excellent marketing support from ScanSource, Inc. It's our mission to ensure our customers are receiving the highest quality products in the industry wrapped with these value-added services, allowing them to focus on sales and customer service, while we essentially take care of hte rest.
VSR: As a distributor, what do you feel is your greatest asset when it comes to helping your partners in continuing to build healthy business models?
Vottima: Intellectual property. This may sound unusual for a distributor to mention; however, Avnet has spent decades developing the intellectual property and market know-how that helps our partners grow their businesses. We understand how technology can be used to solve the business problems of end users, and how different technologies and services can be combined to create complete solutions. Additionally, we've invested in the hot growth markets of tomorrow, so that we can remove the barriers to entry for our partners and prepare them with the specialized training that they need to get a jumpstart on their competition.
McLain: In addition to providing products and value-added services to our reseller partners, we also strive to act as consultants to our partners. To that end, we work together to understand their business plan, evaluate their current market and assess their company's strengths and weaknesses. By working closely with our partners, we believe we create a sense of trust that ensures our partners we are here to help them grow their business and uncover new opportunities.
Scopaz: We have a great group of people that are not only dedicated to making Ingram Micro successful, but want to make their customers successful too - both resellers and vendor partners. As a value-added distributor, we will continue to develop and invest in programs, resources, people, and communities to better serve our reseller partners.
Campbell: Passion. Passion is a great asset. We're lucky to be an employee-owned organization. All co-owners have a stake in D&H, and the only way we can be successful is by ensuring the success of our customers.
Fraker: Honestly, it is different for every one of our partners. To some, the ease of use of our online ordering portal, BlueStore, or the one-to-one relationship with their salesperson is our greatest asset to them. Others would say it is our FUSION program, which has been one of the catalysts for their double-digit growth in past years. And others would tell you it is our value service centers providing pre- and post-sale hardware and software support and integration services. I think all of these come down to the fact that we understand our partners; their business pains, challenges and objectives.
