Tech Distributors Grow & Change, Security & Cloud Top Concerns

Technology distributors are pursuing new markets and the result is a rosy financial outlook for the industry, the 2018 Outlook report released recently by the Global Technology Distribution Council (GTDC) found.

Now in its second year, the report, which is based on interviews with over 50 technology channel executives, highlights a sense of optimism on the part of technology vendors and their distributors. Seven out of ten vendors predict that they will increase revenue through distribution by a double-digit percentage this year (compared to a little more than half last year.  The growth can be attributed to a combination of improved economic health in the world and the broader availability of digital technologies that enhance productivity. 

“All of the report findings essentially confirm the fast-evolving value that distributors continue to deliver – well beyond point-to-point products and services that essentially defined the industry’s earlier years,” GTDC CEO Tim Curran said. “Comprehensive multivendor solutions are now undeniably imperative. Vendor partners ‘get this’ and are finding dynamic new ways to work with distributors in addressing increasingly complex channel and end-customer requirements. We expect 2018 to be a pivotal year.” 

Getting the right technologies, including cloud, security, Internet of Things (IoT), and data center, in place and on offer will be critical initiatives for technology distributors.  In the report, Michael Urban, corporate vice president, strategy, Transformation and Global Vendor Management at Tech Data, explained:

Digital is changing just about everything in the enterprise today, and distributors must evolve to the needs stemming from that change. In particular, our customers want to engage with us in a completely different way than ever before. They want to engage on a highly sophisticated platform, which allows them to learn, shop, buy and even post-service their customer needs. They want us to provide them with marketplaces that can stand up as their own franchise and have transparency all the way to their end user.

Tech distributors consider cloud a key investment for the second year in a row, but security has been added as the next most pressing concern. Cloud touches nearly every aspect of technology for distributors today.  Meanwhile, three quarters of those surveyed report that security vendors will be the most active category for vendor partnerships in 2018. “Distributors are doubling down on cloud platforms, and actively and proactively working with a number of new security vendors,” said Curran.

Not every big trend in technology distribution will continue though.  In the past, direct sales were a key initiative for many technology OEMs, but that time is waning. Last year, 7.3% of those surveyed said that they expect to increase direct sales, but this year that figure had dropped to only two percent. Meanwhile, 64% indicated that indirect sales would grow this year, compared to 61.8% last year.

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That’s good news for distributors who can offer customers help with multivendor solutions and who keep on top of new offerings, Curran said. In addition to hardware, technology distributors are offering software, applications, platforms, and services more than ever before.  In the past year, the GTDC has identified 600 new technology vendors—and manufacturers and designers can find it challenging to identify, design in and source the products they need 

“With the plethora of new vendors coming to the market, including security, cloud and IoT vendors, customers are faced with wanting to get best product available but realize it’s a lot of work,” Curran said. “All of the new things are complicated and that’s why the market looks to a distributor for knowledge, for help to integrate and build solution incorporating new products. A lot of change is going on and the distributors are right in the center.”

How do you see your relationship with your technology distributors evolving? Let us know in the comments section below.

— Hailey Lynne McKeefry, Editor in Chief, EBN Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook

2 comments on “Tech Distributors Grow & Change, Security & Cloud Top Concerns

  1. johndardick
    January 31, 2018

    I understand the value proposition of reseller channels and suppliers, just still at a loss to appreciate the value distributors bring to the value chain.  If they continue to apply the same traditional thinking they will find it does not take them up the value stream.



  2. stormcat
    February 1, 2018

    Enjoyed your article.  Will stay brief.  I dont think we have even begun to grasp how big security will be in 2018+.  For a number of reasons.   First the money is getting bigger and the bad guys are getting smarter.  You have spammers in Russia making $100k-$1M a year in commissions for just sending spam….no way that train is going to slow down.  Ransomware is everywhere. People are still the weak point…ransomware largely fails if the person sitting at the keyboard does not open the email content.  We can't “train” common sense and “awareness” is very hard to communicate. Too many products….I am talking to resellers who  have over 50 “security vendors” in their portfolio of solutions and are considering adding 25 – 50 more….think of that …100 vendors to provide security…how in the world do you manage that and get them to work together?? Too many products that are mediocre and simply solve the easy problems.  This is a big part.  The focus becomes ease of purchase,   ease of managing,  and of course…lowest possible cost….many times…at the expense of a product that will work well and solve todays problem and not just address last months signatures. I know the company I work for can't boil the ocean and we dont do IPS or behavior analytics or data loss prevention.  There are many companies who make solid solutions for those and other problems.    But we can stop the execution of a ransomware attack at the endpoint.    When that employee clicks on that suspicious email..we can stop the attack.   Your endpoint is going to get attacked….fact of life.  But the simple approach is to mitigate any harmful executable from running …..and you just made it simple at the endpoint . 100 security vendors is not a practical solutions  A few security vendors ,  with a solid plan and vision into the vulnerabilities and an understanding of the customers business and their employees level of security awareness will go a long way.    

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