By Andrew Binding, managing director of Magirus in the UK
Several years ago, people were sounding the death knell of IT distribution. This wayward conclusion stemmed from uncertain times spawned by rapid transformation of the channel. But instead of the death of distribution we are seeing a re-birth founded upon new value being provided to resellers and end customers alike.
The catalyst for change has been the shift in the IT powerbase from vendor-push to customer-pull. In many instances, end-users have become more tech-savvy and specialist in their demand for technology to achieve business efficiency and competitive advantage. Consequently, increasing numbers of resellers have found themselves needing to break free from a world of rigid product offerings and to broaden their understanding of technology as part of a business solution, adapting their business model from pure product reselling to one of providing solutions. For them, the conversation has evolved from part numbers to delivering consultancy and business value.
Today, the demand from this new breed of solution-based resellers is to satisfy the business needs of their customers with wider portfolios of multi-vendor hardware, software and services, backed by in-depth product knowledge and expertise. If a distributor provides training and accreditation in the latest technologies then that's another tick in the box. In short, a new type of distributor has evolved - the 'consultative distributor.'
At Magirus we see that strong, profitable and long lasting relationships are best forged by equipping partners to meet these new market needs. An integral part of the proposition is to engage them at a business rather than supplier level, providing support to help them expand their business into new areas and develop new revenue streams.
This vision for consultative distribution is based upon four principles that underpin a best-of-breed portfolio of established and emerging hardware, software and services.
Firstly, taking a consultative approach is vital. This means listening, understanding each partner's strategy, then offering a combination of technical, market and business development knowledge to assist them to realise their goals. The first question is not "what do you want to buy?" but "what is the long-term goal for your business?" Only after understanding the reseller's strategic intent can the consultative distributor really start to add value.
Secondly, strategic business planning is vital to any business, particularly ones undertaking transformation. Taking time to work through market plans, impart knowledge and, at times, just being a sounding board pays handsome dividends.
Thirdly, partner enablement must not be overlooked. Pro-active skills transfer, mentoring and pre- and post-sales support is crucial for nurturing businesses and particularly important for those entering new niches for the first time, such as virtualisation or storage where the learning curve may be steep.
Finally, partner marketing is often undervalued. Whether it is promoting a new bundled solution or helping a partner to differentiate their brand in a crowded space, good, creative marketing support not only creates stickiness between distributor and reseller, but invariably improves the bottom line.
While no one hat fits all, increasingly resellers are anxious to adopt some or all of these services - it's a question of what's right for their business at that given moment. The rewards are evident though. At Magirus, our UK operation has seen margins improve and revenues more than double in the past three years, and in 2007, this expansion will continue with the recruitment of 20 more staff.
The goalposts may have changed but that is only because the game being played is different. What is perhaps concerning is that not every player has noticed. The question every distributor must ask themselves is what is their ultimate value proposition? Where do they belong in the channel stack? To consult or not to consult, that is the question.