Recent market insights have shown that growth in the IT market overall is relatively flat. In Western Europe alone the market has only experienced one percent growth, worth €1.513 billion ($2.07bn). Today, growth in IT is about market segments where solutions are packaged up from multiple IT components into single, optimised computing solutions, such as converged infrastructure and virtualisation technologies. For example, commodity servers are growing at a rate of 1.3 percent whereas converged infrastructure is at 54 percent. Vertical markets are also becoming more important to channel market growth. Finance, healthcare, retail and government are presenting bigger opportunities for the channel. In Western Europe alone, government spending on IT is €53 billion ($72bn).
Vertical growth markets
These are growth markets that are pushing the channel towards selling market specialisations and ‘whole’ solutions rather than single IT components. Resellers need to focus on this if they are to stay ahead of the competition. For players in the IT channel to achieve this distributors also need to adapt to a new, more vertically focused consultative role as a key component of channel enablement.
It’s no longer about selling the latest product in the market; it’s about helping customers to achieve their goals facilitated by IT. Distribution has a big part to play to enable the channel to understand their customers’ businesses and IT needs in their vertical markets. How business is conducted and how people work today is completely different to how it was five years ago. The global workforce is more digitally savvy, brought on by more access to information and development of the Internet, social networking and the proliferation of mobile devices such as tablets and smartphones in the enterprise. Such trends have forced a big shift in end customers’ needs and consequently, the IT channel is now being driven by having to address business challenges rather than simply pushing products.
Looking at addressing only one area of the mobility trend, for example, like security is a common misunderstanding which results in resellers overlooking areas of IT growth like virtualisation for mobile data storage. In addition, vertical growth sectors like healthcare, where mobility solutions need to be strategically tailored, are often ignored. It’s important for resellers to understand there are different drivers in vertical sectors such as: security features in healthcare are focused around data protection for digital health records over and above supporting trends like remote working.
More consultative role for distributors
All of this is not only changing a reseller’s approach to selling products but it’s changing the role of the distributor. To deliver optimised solutions rather than just standard commodity technologies, distributors now have a wider ecosystem at their finger tips where they deal with everything from large system integrators to managed service providers. A distributor’s enablement strategies should be geared towards how to target and position technologies to meet business challenges rather than just talking about what technologies do in a standalone way.
The value added services a distributor provides are now more about addressing growth markets – whether that’s vertically focused or technology focused like big data – and helping resellers understand these. Whether it’s virtual or physical IT assets, a simple upgrade or a capacity issue, today distributors should be at the centre of the value chain. They should take complex products and help resellers solve business issues their customers encounter. Distributors can help resellers look at how to apply technology rather than the other, more conventional way around of only looking at the technology features.
Channel resellers can leverage a distributor’s global relationships and local expertise in these growth areas to deliver an effective supply chain which is married with local insight on in-country trends to support end customer needs. For this reason, overall, distribution is more consultative as it’s about bringing knowledge and alliances together more than ever before. As consultants, distributors need to facilitate the training resellers requirement to learn more about these markets so they can sell best-of-breed solutions which address business needs, in each vertical sector. This also means distributors need to get involved in business planning to look at key IT trends for growth. This will allow them to take the time to show resellers, partners and end customers how to capitalise on the exciting, ever evolving IT marketplace.
This post was written by Avnet Technology Solutions EMEA on June 9, 2014