Tech Distribution Changes In A Cloudy Industry Telecon 012611 oneill

© 2011 Forrester Research, Inc. Reproduction Prohibited1 © 2009 Forrester Research, Inc. Reproduction Prohibited

TeleconferenceTech Distribution Changes In A Cloudy IndustryPeter O’Neill, Vice President, Principal Analyst

January 26, 2011. Call in at 10:55 a.m. Eastern time

© 2011 Forrester Research, Inc. Reproduction Prohibited2

Agenda

Diverse forces align to change the business of IT.

Cloud computing will change this industry.

Channel partners' plans and problems with “cloud.”

What about the distributor’s point of view?

Call to action


The business of IT is becoming empowered

Source: January 7, 2011, “BT 2020: IT’s Future In The Empowered Era” Forrester report


And three forces of change impact the business of IT



Self-service challenges the value proposition of IT



Businesses expect to be more self-sufficient and empowered



The business environment will be much more complex





Channel resellers' plans and problems with “cloud.”


Call to action

Agenda


Recap: What is cloud computing?

Cloud computing is:

A standardized IT capability(services, software, or infrastructure)delivered via Internet technologiesin a pay-per-use, self-service way.


What will move into the cloud — long-term duality

Private

Virtualprivate

Public

Public transportation

Level ofsharing

Business value

Private cars

What will move into the cloud:

Standardized business logic

Horizontal business applications

Front-office applications

Simple, standardized infrastructure services (IaaS) like storage and compute power

Systems with fluctuating load

What remains on-premise for a long time:

Applications implementing a customer’s intellectual property and competitive business logic will never go into SaaS, potentially onto IaaS and PaaS.

Mission-critical back-office applications

Many custom-built applications

The most mission-critical back-office processes

Applications with constant predictable load


Diverse forces align to change the business of IT




Call to action

Agenda


Channel resellers want to grow

Source: Forrester/OCE Q3 2010 Global Channel Companies’ Cloud Business Models Online Survey


Channel resellers want to grow their business by adding new services

1% in NA, 10% in EMEA

Slightly, 34% in NA, 57% in EMEA

Significant, 49%, 16%

Double, 9%, 14%



Resellers’ product sales go down, services up



Resellers are already providing managed services



Resellers are planning for new managed services



Those without managed services see these barriers



VendorVendor

CustomerCustomer

In summary, resellers are impacted by cloud

VendorVendor

Channel Channel partnerpartner

CustomerCustomer

Channel Channel partnerpartner

Resellers’bread and butteris waning:

• Architectural design• Implementation

Cloud


So, good resellers are changing their business models

Source: July 10, 2009, “The Changing Yin And Yang Of Tech Vendors And Channel Partners” Forrester report


MSPs/hosters can serve more customers

+ Increase in number of MSPs/hosters

+ No significant increase in number of customers

Fewer channel partners

Forrester anticipates a “channel washout”

15%

1.2M channel partners



+ No significant increase in number of customers




M&A

The best

marketers






Call to action

Agenda


Channel resources through the IT buyer lens

Source: November 24, 2009, “What B2B Tech Customers Expect From Your Channel Partners” Forrester report


Distributors are also impacted by cloud

Break up bulkBreak up bulk

(inventory management)(inventory management)

Credit riskCredit risk VAR trainingVAR training

The traditional value pillars of distributors


Distributors will change their orientation

Historically, distributors provided added value for vendors.

– Inventory, financing, channel management

– Sales and marketing

– Often, a distributor specialized on just a few vendors (or just one).

In the future, distributors will be providing a service for resellers.

– Vendor aggregation

– Sales enablement

– Marketing platform

– Hosting (physical or wholesale)


Good distributors will continue to adapt their business


Examples of distributors providing MSP platforms

Ingram Micro(In Production)

“Seismic is an exclusive Ingram Micro managed services portfolio that helps MSPs quickly and easily leverage and deploy a broad array of managed services, enabling them to manage technical labor resources more efficiently, build and sustain recurring service revenue streams, improve service levels and customer satisfaction, and increase profitability.”

Avnet(Planning)

“Growing your business doesn’t mean you have to increase your overhead. At Avnet, we continually invest in high-value services and resources that enhance our partners’ offerings while reducing their cost of business. Throughout your sales cycle, Avnet delivers the comprehensive support you need to achieve your specific business goals.”

Arrow Fusioncloud services(In production in US)

By aggregating and integrating multiple cloud and managed services offerings, we streamline the selection, engagement, and management process for VARs, allowing you to focus on your core business and client relationships.

Tech Data(Reselling only)

Some VARs may feel threatened by distributors that enter the hosting market, so Tech Data doesn’t host MSP platforms, but the VARChoice initiative includes a growing range of MSP platform options that VARs can purchase.


Financing• Vendor – loan/equity

• Third party – Biz2Credit, On Deck Capital

Hook your reseller partners up with your MSP partners.

Distributors will continue to help resellers

Problem “Solutioneer” it Infrastructure investment is too

high.

Don’t understand the business

model

It’s too difficult to find/staff the people with the requisite skills.

Add a people finder to your online partner community.

• Embed a job search engine — CareerBuilder, Monster

Enablement/certification program

Product training

Sales training

Marketing training

Business model training

Channel enablement

maturity curve


Resellers also need help in marketing

Size Mktg. staff Marketing

80% $1 million to $15 million

Zero to one FTE

Maybe one email campaign per quarter, some collateral

15% $15 million to $100 million

One to three FTE

1/2 email/phone campaigns per quarter, more collateral

1% $100 million-plus Two to seven or more FTE

One email/phone campaign per month, comprehensive collateral


Either distributors or vendors can provide this helpthrough partner marketing

Content syndication

List management

Email marketing

Search marketing

Video marketing

Partner community management

Lead management






Call to action

Agenda


Distributors — change or die!Distributors — change or die!

The tech industry is overrun with distributing entities.

• Globalization, brand consolidation, and cloud will prevail.

• To focus on physical product distribution, consolidate your portfolio and your vendors.

• To expand your business and thrive in a cloudy market, turn your focus to the resellers’ needs.

Call to action


Vendors — understand the changes!Vendors — understand the changes!

Distributors will increase their influence over resellers.

• Product vendors must include distribution partners as a new communications route to resellers.

• Understand how to sustain your brand while outsourcing marketing, sales, and business model training to distributors.

Call to action

Resellers — pick your distributor strategically!Resellers — pick your distributor strategically!

Focus on your core competencies.

• Leverage your distributor for supporting services across many business processes.

© 2009 Forrester Research, Inc. Reproduction Prohibited

Thank you

Peter O’Neill+1 650.581.3864

+49 69 959298 39

[email protected]

www.twitter.com/poneillforr

www.forrester.com

Tech Distribution Changes In A Cloudy Industry Telecon 012611 oneill

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