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(Re)Born in the Cloud: Why Distributors Are Ready for IT’s New Era

By TC Doyle
September 02, 2014 - Article

T.C. Doyle**Editor’s Note: You can download the Cloud Partners Buyer’s Guide on Cloud Distributors, The Future of Distribution in a Cloud World," from the Channel Partners Resource Center.

The one universal rule about cloud computing is this: No matter who prospers, distributors, whose livelihood depends on moving physical goods from one location to another, are destined to fail. Or are they?

If you were to judge the fate of distributors by their recent results, you’d unlikely forecast doom and gloom ahead. Take Arrow, which posted second quarterly sales and earnings in July 2014. They beat Wall Street expectations. It was the same in August when Avnet, a fellow industrial distributor, released earnings that also exceeded expectations. Then there’s Ingram Micro, whose stock is trading near its yearly high.

Why are these and other distribution companies soaring when they were pegged for failure? The answer is a combination of foresight and perseverance. After a few years of fumbling about while cloud computing took shape, the industry’s information and communications technology (ICT) distributors have defined how they will embrace and benefit from cloud computing.

Take a hard look at the industry today and you can see five reasons why distributors are unlikely to wither anytime soon.

1. Organizational Capacity

Like a lot of solution providers, Platte River Networks, a Denver-based solutions provider and managed service provider, is rapidly growing its cloud portfolio. Its customers are sold technology as a service instead of a product so they can better manage their investments and more rapidly embrace new innovations. Instead of reducing his dependency on distribution partners, Platte River Networks Co-founder Brent Allshouse finds himself leaning on them more.

“We have found that distributors are helping to provide many of the same tools and resources for our cloud practice that we relied on them for in our traditional practice," said Allshouse. In particular, he relies on Synnex, Ingram Micro and Arrow to help his company vet offerings and integrate cloud services. And he fully anticipates turning to them for help with other needs including drafting service level agreements (SLAs), developing best practices and determining customer credit worthiness, among other things.

Vendors have also realized that leveraging distributor capacity often makes more sense than trying to recruit and engage with partners and customers directly. This is especially true of cloud startups that have focused on product development. When their offerings become ready, they find themselves challenged to onboard sales partners and agents. Green Cloud Technologies, Nimble Storage, Axcient, Amtel and Rackspace are just a few of the cloud companies that have signed deals with distributors.

2. Technological Prowess

Another value distributors bring to cloud computing is technological savvy. Put bluntly, distributors understand how to blend technologies from different vendors and developers like few others. And because they do it for hundreds if not thousands of companies, they have troubleshot almost every conceivable snafu imaginable. This is what makes their bundled cloud offerings so stable and scalable.

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