Our industry is driven by technology and solutions. Providing the best options for IT services firms to deliver to the business community and end-users should always be a primary focus. However, the bottom line is still critical for everyone involved, from the vendors and providers to the final consumers of their combined solutions, so everyone has to pay close attention to the margins. Developing strong channel partnerships across the ecosystem can improve productivity, streamline operations, and drive down the overall cost of doing business.

When you look at the numbers, the financial impact that distributors in North America and Europe have on their vendors’ bottom-lines is astonishing. A litany of efficient go-to-market activities and support programs ensure everyone in the supply chain enjoys greater profits. While it’s not be easy to put a dollar figure on the value of every resource and program, a recent IDC report highlights the substantial benefits to channel organizations.

The Burden Vendors Take on When Not Engaged with a Distributor

• Annual expenditures for managing each partner: up to $6,000
• Cost of processing an invoice: $35
• Escalations, including re-billing and co-billing are time-consuming and pricey
• The cost of managing receivables (+30 days) begins at .5% and escalates
• Supporting a dedicated partner management team: $400K- $1.9M
• Variable expenses for training and enablement programs
• The costs of securing prime locations on multi-vendor marketplaces
Source: IDC, Distributor and Aggregator Value Economics, Sept 2020 #US46018420

Providing Creative New Opportunities for Vendors to Scale and Prosper    

Did you know that 71% of the channel's resale revenue is sourced through IT distributors? That volume is nearly three times more than the combined hardware, software, cloud and other technology services business that goes through the direct market (24%). Vendors should take note of that disparity. As the numbers and research clearly illustrate, the volume capabilities and value-add opportunities that channel distributors bring to the table are invaluable to short- and long-term channel success. The assistance those companies provide on the virtual side of IT are just as critical for vendors.

The Top 10 Benefits of Working with Distributors for Cloud Services

1. Marketplace services
2. Technical support
3. Migration services
4. Product and services enablement
5. Customer service
6. Individualized strategy support
7. Partner program development/ coordination
8. P2P (Partner to Partner) support and management
9. Geographic reach
10. White label services
Source: IDC

Streamlining and enabling cloud services delivery for the channel is a major value proposition for distribution today. Vendors rely heavily on these critical supply chain partners to scale their offerings, manage complex and time-consuming relationships, and to handle the billing process across the ecosystem. Distributors make it all work seamlessly for cloud providers, IT services firms, and millions of businesses and end-users.

As market demand for cloud services rises, vendors, large and small, must create greater efficiencies in their supply chains to compete successfully in the ever-expanding IT channel. Industry research shows that distributors are quickly and effectively adapting to meet these challenges.

The GTDC and our research partners are dedicated to keeping you updated on the distribution industry and market trends. For more information and to stay well-informed on the latest developments in specific business segments, visit www.gtdc.org/sales-out-data-in-distribution.