The Evolution of Channel Technology
Whether you’ve worked in the IT channel for 20 years, 10 years, or even just the past two years, you’ve seen dramatic shifts in the way vendor products are brought to market. Today, more than 70% of the end-to-end customer journey is transacting digitally, a trend that has shifted the way organizations build and maintain relationships with one another to solve industry challenges. Now, truly more than ever, there is a tremendous market opportunity to capitalize on additional growth and expand the addressable IT market. But it’s not going to get there with the status quo.
Over the past few years, we’ve had experts discuss how we’re moving to a digital ecosystem, explained the concept of solutions aggregation, how it’s providing benefits to channel partners and ultimately what we need to do to move to a model of channel orchestration.
In this article, we’re taking a step back to look at the multi-decade advancement of IT distribution and how it has evolved to meet customer demand in today’s market. We’re going to take some time to address the past, current and future state of channel technology and show how our multi-faceted partner ecosystem is committed to the expansion of global capabilities and reach.
What is technology distribution?
Technology Distribution [tek-nol-uh-jee dis-truh-byoo-shuhn] (noun): A business model in which an organization acts as an intermediary between technology vendors and channel partners (like VARs or SIs) in the deployment of software or hardware.
The traditional two-tier technology distribution model has worked extraordinarily well for decades and has given us a robust and sustainable business foundation for decades to come. Traditional distribution is ideally-suited for ag hardware- or software-centric spending environment; one that is very linear where vendors produce the products and distributors bring those products to their reseller partners who then make those products available to their end user customers. Vendor. Distributor. Reseller. End user. It’s a model that has stood the test of time and will continue to be a critical standard for the channel.
The traditional tech distribution model supports a build-to-order and deployment philosophy where a single vendor’s hardware simply needed to be pulled from shelves and delivered via an efficient logistics operation and supply chain system to the purchaser. This linear approach limits the requirement to understand which vendor products play nicely with another’s, but still supports many other value-add services you see across the continuum today. Distributors can offer product and sales training, as well as pre-sales, business and technical services to speed technology adoption and enablement.
Distributors were often the key connection for the channel when resellers were unable to purchase directly from the vendor. However, distribution alone isn’t enough to support the full potential of digital transformation and next-generation solutions of the future.
What is solutions aggregation?
Solutions Aggregation [suh-loo-shuhnz ag-ri-gey-shuhn] noun: The building, integration and facilitation of edge-to-cloud IT solutions for the technology partner ecosystem.
Over the past decade and particularly over the past two years of extreme digital disruption, technology has become much more tailored to fit complex business demands of end users. As a result, channel customers need a partner that has the scale, scope and relationships to compile hardware, software and services together into a single business model.
As technology evolves, historically physical delivery models are becoming increasingly virtual. While there will always be a need for the traditional linear distributor, customers want a partner, or in this case, a solutions aggregator, that can provide more than just technology; they need someone who can play a bigger role in solving end user challenges. Solutions aggregators fill that role of designing, integrating complementary components, adding value along the way, and then delivering and implementing these solutions to customers.
Generally, they are going beyond the brand of the vendor and assembling solutions to bring tools, processes and platforms together which allows our partners to create their own offerings and go to market as leaders in their field. Services, like solution design, integration, implementation, customization and peer-to-peer enablement communities play a vital role in the solutions aggregation model, helping to speed time-to-market, reduce costs and increase profitability for channel partners.
The beginnings of solutions aggregation started about ten years ago when the first dedicated hyperconverged infrastructure solution was brought to market. This sparked the trend of bringing specialist vendors together to form a single high-performing solution that consists of servers, storage, software and services. Since then, solutions aggregation has become a critical need and competitive differentiator for partners to expand their value.
Solutions aggregation can support the many physical and virtual elements offered through transactional, subscription-based or consumption financing models. This requires an organization that can connect producers with consumers via an automated platform that simplifies access to different use cases and offerings, reducing traditional complexities.
What is IT orchestration?
IT Orchestration [ahy tee awr-kuh-strey-shuhn] noun: The enablement, connectivity and amplification of strategies, solutions, services and unique intellectual property (IP) for the entire IT ecosystem.
Three-quarters of CEOs from a recent Forrester survey believe their businesses will be unrecognizable within a few years. The evolving IT ecosystem with emerging business needs has become “transformation-or-else.” Businesses need support to connect products from across the technology continuum to address and deliver specific outcomes across all vertical markets in this high-pressure environment.
The model of the future, dubbed orchestration, has been introduced to interconnect the increasingly diverse types of channel partners. The industry needs a model that extends beyond just solutions aggregation; it needs a self-serving, multi-directional enablement platform that brings together industry innovators.
IT orchestrators serve the increasingly expanding channel by empowering partners to become technology producers who create unique solutions of their own. Orchestrators can connect partners with a dynamic marketplace where these solutions become available to more end users in more geographies around the world. The concept of orchestration amplifies the access of vendor products to create the tailored solutions necessary for today’s challenges.
The concept of orchestration is a web of interdependent enterprises and relationships which create business value. As we, along with most of the IT channel, invest in high-growth technologies, automation and improvement across the IT continuum, TD SYNNEX serves as the orchestration engine to empower sales, logistics, assembly, manufacturing, accounting, marketing and operations, globally. This will serve as the foundation upon which we are digitally transforming and building advanced solutions to bring high-growth, high-margin solutions to market.
Our partners in the ecosystem are looking to become more connected via enablement opportunities in areas like digital transformation, next-generation technologies and service delivery. TD SYNNEX is helping partners build the right capabilities to discover their version of differentiated value and the right skills to support their customers more collaboratively than ever before. Orchestration allows specialists and experts in our industry to gain more solution marketplace exposure while leveraging purpose-built partner ecosystem IP via a global marketplace. In other words, complementary vendor technologies combined with the interconnection of channel partner experts will result in bigger business outcomes for all.
The orchestration model is critically necessary given the demands and challenges facing every business across the globe. When 1,500 IT vendors are working through the IT channel, our 150,000+ partners are eager for enablement opportunities to seamlessly support sales and services for these vendor solutions. In doing so, partners will be able to be more agile in their innovation and accelerate time to market.
Our orchestration model continues to expand and there will be many more opportunities to orchestrate interactions moving forward. TD SYNNEX makes it possible for partners to grow their reach, value and influence from our extensive reach and central position in the technology ecosystem, as well as our deep knowledge and experience in this expanding industry.
Ultimately, it’s our vendors and partners that will help us execute the solutions aggregation strategy of today and the orchestration strategy of tomorrow. Together, we can reinforce positive experiences for end user customers in different vertical markets around the world. To learn more about our strategy, watch the replay of our Investor Day webcast.