Tech Data Corp. has a pretty clear vision of the future it must build for itself. To remain relevant amid the transition from “2nd generation” client/server technologies to “3rd platform” markets like cloud computing and the Internet of Things, the company believes, it must shift from supplying shrink-wrapped products alone to delivering solutions and services targeting specific business outcomes as well.
Now it just needs to get to its resellers bought into coming along for the ride.
“We’re long past the bank and warehouse mindset,” said Marc McClure, senior vice president for U.S. commercial sales at Clearwater, Fla.-based Tech Data in an interview with ChannelPro last week at the distributor’s Channel Link conference in Austin, Texas. “We’re undergoing a transformation, and we need the partner base and the community to undergo this transformation as well.”
For the moment—and as fellow distributor Ingram Micro Inc. is discovering as well—that effort remains an exercise in persuasion.
“Fundamentally, if we don’t get our partners to change, we’re at risk,” McClure says. “It’s incumbent upon us to continue to evangelize and help them understand where that market opportunity is and compel them to want to do something about it.”
Channel pros who decline to embrace that opportunity will still have a place in the Tech Data family, he continues. The hope, however, is that such partners will be few in number.
“We’re not distancing ourselves from any of our customers, but we’d rather encourage them to take advantage of the new growth opportunities that exist,” McClure states.
Those opportunities are vast, according to Andrea Miner, director of business intelligence for corporate strategy at Tech Data, who discussed the topic during a Thursday morning keynote. Citing data from IDC, Miner said that global 3rd platform spending will expand at a 12 percent CAGR over the next three years to $239 billion, with net new outlays totaling $66 billion this year alone. 2nd platform products, meanwhile, will slowly account for a declining percentage of IT budgets.
“As that pie shrinks you’re fighting to get a bigger piece,” McClure observed during his own keynote last week. “The ability to remain profitable becomes much more of a challenge.”
Same goes for Tech Data itself, which is why the distributor is investing heavily in initiatives aimed at helping SMB resellers remake themselves as specialists in next-generation technologies.
As ChannelPro wrote in May, Tech Data’s “Practice Builder” program, which guides partners through the process of planning and launching 3rd platform business ventures, is a major component of those investments. Practice Builder sessions, however, are hands-on, months-long engagements too labor-intensive to scale broadly—the company will conduct about 40 in all of North America this year, for example, with partners entering the Internet of Things market.
To help larger numbers of channel pros build next-gen solution practices, Tech Data has created a self-paced training and enablement portal named LevelUp. Opened to the elite members of the TechSelect partner community in May and rolled out more widely last month, the new site draws heavily on Practice Builder’s tools and methodologies.
Introducing pre-packaged solutions that partners can adopt quickly and sell repeatably is another investment priority for Tech Data at present. In the IoT arena, for example, those include a recently introduced video surveillance offering developed in partnership with QPCS LLC, of Ceres, Calif., that includes cameras, gateways, software, and more.
“It’s literally a boxed solution that you can deploy pretty much anywhere,” says Michelle Curtis, director of IoT solutions in Tech Data’s North American specialist solution sales group.
Similarly, the company’s endpoint solutions unit offers a variety of next-generation collaboration solutions involving technologies like Microsoft’s Surface Hub interactive whiteboard as well as meeting room systems from providers like Logitech and Zoom Video Communication Inc. Channel pros should have no trouble finding potential buyers for such bundles, according to Linda Rendleman, senior vice president of endpoint solution in the Americas at Tech Data.
“There are 50 million conference rooms in the U.S., and about two percent of them are set up with conferencing capability,” she observes. Bundling up solutions that make capitalizing on that demand easy, Rendleman adds, benefits Tech Data and its partners alike.
“Resellers want to be more focused on the solution, and the more we can help them and enable them to do that through having the right portfolio or the right managed services to complement what they have to offer, I think the better we will be,” she says.
Packaging up 3rd platform services, as well as solutions, is a further part of Tech Data’s strategy. The company’s recently expanded family of RECON-branded security services, for example, is designed to help partners easily consume and sell a variety of niche offerings from up-and-coming vendors. Rendleman’s organization, meanwhile, provides mobile device management services to resellers looking to outsource that function.
“If they don’t want to dedicate the resources to build the managed service themselves, they can buy this from us, and it’s as if they’re offering the managed service without putting the capital behind it,” she says.
Enabling end users to buy products and solutions via the same kind of monthly or annual fees they typically pay for managed services is a common thread many of Tech Data’s latest programs, including its “Tech-as-a-Service” (TaaS) offering. Unveiled last December, TaaS allows end users to pay for hardware, software, and services via flexible subscription payments. According to Rendleman, it’s gaining momentum with both partners and end users.
“There’s been a huge amount of interest from the beginning, but now we’ve hit this place where we’re just seeing deals roll in,” she says. Partners, Rendleman continues, can include their own maintenance and management services in TaaS deals if they wish. Either way, Tech Data eases cash flow management pains by handing channel pros their portion of the sale in advance.
“The reseller is paid in full upfront, so they have their customer in a recurring revenue cycle, but they don’t have to take any financial risk in order to get them there,” Rendleman says.
Programs like TaaS and LevelUp are just the beginning of what Tech Data has in store, McClure emphasizes. The company has plans to continue investing in efforts aimed at prodding its partners down the road to the 3rd platform.
“As our customers start to embrace it more and more, we have to keep pushing the chips in there to ensure that we’ve got the scale and resources necessary to satisfy the demand in the market,” he says.
