CompTIA: Cloud Will Dramatically Transform the IT Distribution Channel

    Slide Show

    Data Center Applications and the Cloud: What You Need to Know

    Think about it: For as long as the IT distribution channel has existed, it’s been all about distributing boxes of stuff to resellers. So what’s happening to that entire ecosystem now that so much of the technology that used to be delivered in boxes now resides in the cloud?

    That question has been addressed by CompTIA, the Downers Grove, Ill.-based IT industry association, in a recently released whitepaper titled, “The Role of IT Distribution in a Cloud World.” According to CompTIA, “It’s not unreasonable to say that the entire market for IT goods and services is likely to undergo one of the biggest transformations since its formation decades ago.”

    I had the opportunity to discuss all of this last week with Carolyn April, CompTIA’s director of industry analysis, and I found that the cloud question as it relates to the channel is still largely up in the air. That said, April shared some valuable insights gleaned from a deep dive into the topic.

    I went into the discussion assuming that certain IT distributors are better positioned than others to adapt to the cloud world, so I asked April what common characteristics those distributors tend to have. She said all the distributors seem to be in the same boat at this point:

    I don’t know that we can see that yet. In fact, right now we’re seeing some collaboration among competitive distributors who are all trying to figure this out together. I interviewed a number of executives, including executives from Ingram Micro and Tech Data, who say they’re all in the same boat at the moment. So anecdotally, I don’t know that there’s anyone that’s out ahead. But they’re all making a big push in this area, and that includes the broadline distributors and the VADs [value-added distributors] in the mix. But just looking at the data that we have, the distributors that will be successful with the cloud are those that are going to retain their current set of channel partners, and hopefully grow that ecosystem. Distributors right now want to be doing things that will get more managed service providers into the fold, because MSPs are really seen as a conduit for cloud services, and telecom services, as well, which are getting into the distributor portfolio. So they need to do anything they can that proves their value to the solution providers that they work with today so that they’re the go-to for cloud services, and the solution providers won’t go off and align themselves with some of the cloud providers, like a Google or an Amazon. I think they have an advantage, and that’s sort of the point of the paper, in that they already have existing, longstanding relationships with the channel. So as long as they can adapt to some of the changes the channel is going to make, and help their partners transition to the cloud, they should hold on to these folks, and not lose them in droves to the cloud services providers. But I think that remains to be seen, because the Amazons and Googles of the world do have some pricing advantages that are very appealing to the solution providers.

    According to CompTIA’s research, the general attitude among vendors is that cloud computing will not have a negative impact on distributors. I asked April if she had any sense of what has led the vendors to draw that conclusion. She said that particular follow-up question wasn’t asked, so she could only offer some informed speculation:

    Vendors need distributors, and maybe just as the downstream channel partners have longstanding relationships with distribution for a variety of services, the vendors obviously need distribution to get to those channel partners, and get their goods and services into the field. What we found was more vendors were likely to say that they thought that their relationship with distributors would remain the same, as opposed to channel partners, who were slightly more apt to say that their relationship with distributors would actually strengthen.

    When it comes to cloud, the vendors are in the same position of trying to figure out where they play in the cloud world, and they have three choices. They can provide their own cloud services directly to customers, which requires having the entire engine to make that happen—the datacenter and the infrastructure, and the sales footprint to make that happen with customers. That’s a difficult one—some of the biggest vendors will be able to do that, but it’s probably not the most cost-effective thing for them to do.

    Secondly, they can go to their traditional distribution channel, using distributors to push cloud services out to channel partners to then sell to customers. They have that relationship already.

    Thirdly, they could use the cloud providers—the Amazons, Rackspaces, and Googles of the world—to be their distributors for their cloud offerings. That can be a very cost-effective way for them to go, but the issue with that is those big cloud providers also have products that compete with the vendors. Think about Google Apps—why would Microsoft, for instance, want to use Google as its distributor of cloud services when Office 365 competes directly with Google Apps? So they may be more likely to stick with their traditional distributors for these services, despite the fact that they might have gotten a lower price with a cloud provider. So I don’t think vendors are going to be jumping ship. They may slightly change the mix of who they worth with, but I don’t see a dramatic shift there.

    Funny she should mention Google Apps. On Feb. 11, the day before I spoke with April, CDW, the large Vernon Hills, Ill.-based computer products distributor, announced that it had added Google Apps for Business to what it calls its “growing portfolio of public cloud solutions supplemented with CDW’s managed services capabilities.” I asked April for her thoughts on the significance of that announcement, and she said it’s very much in line with where things are heading:

    I think it’s indicative of what all these players are doing—everyone’s trying to shore up their cloud play. I think hand-in-hand with that is going to be aligning with managed services, and as many managed services providers as they can, because I think those are going to intersect. Those who provide cloud services are also going to have a stable of MSPs that are associated with them. So that announcement doesn’t surprise me at all. It’s definitely appropriate right now, and it’s certainly what we’re seeing across the board.

    Finally, I asked April what she sees as the most important takeaway for IT professionals who implement technology. Her response:

    For IT professionals who do their procurement through the channel, it’s most likely that their channel partners do their procurement through distribution. So the takeaway is the hope that the channel partners they work with have aligned themselves with distributors who are going to be able to help them with training, both business and technical; and with vetting and aggregation—being able to make good decisions about which cloud services to offer to customers. Those IT professionals are going to be hoping that their channel partner is working with distributors who are providing those kinds of services, and will, in the end, get them the best cloud services at the very end of the food chain. It may be a pertinent question for an IT manager to ask when he’s talking to a third-party channel firm: Who are your distributors, and what are you doing in the cloud with them?

    Get the Free Newsletter!

    Subscribe to Daily Tech Insider for top news, trends, and analysis.

    Latest Articles