A Two Dimension Value Interpretation

For most major technology vendors, distribution is their principal route to market. Representing almost 80% of their of their revenues, distributors palying a key role in providing extensive market reach and coverage. The value of this role gets more significant and critical in emerging markets, especially if the way of doing business has slightly different arguments compering the vendors arised ?markets.

With their crucial role for technology market and vendors, distributors has various definitions based on their service levels such as Value Added Distribution, Broadline Distribution and Fulfillment Distribution. Those definitions are mainly interpreted from two main viewpoint, definition for Vendors and definition for channel partners.

Is 2 dimension value interpretation enough for next generation technology distribution business ?

From a very personal point of view, those critical services , regardles of their value level, should evolve to a next stage by integration “end-customer” dimension. Having said that it will be good to recap some offerings on different levels ;

As mentioned above services are considered and defined for one of the dimensions, that is channel partners. For the second dimension we are referring to Vendors, and services defined are ;

The set of services described here targeting either Channel Partner or the Vendor it self, has been more or less stayed the same through out the last decade. There are distributors who are capable of executing full spectrum of services, and some can only generate up to a certain level.

Each of the roles and services listed has an impact on the distributors business model: the choice of whether it is provided or not, and to what degree, is determined by the specific role the vendor is looking for the distributor to play.

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From a vendor point of view, ?all those services need to be worked through and defined to be performed by distributor. Naturally there will be a cost for each service and those would be reflected in vendor contracts, in margin structures, in compensation schemes and in activity -based fees. Thus for a win-win partnership, the services must be leveraged and utilized at the maximum level.

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Another angle for this would be the distributor concern about balacing the services costs. For those who decided to be on the value side, the cost of value services need to be justified and most of the time Vendor contributions are not enough. So getting the due amount from channel is a challange especially considering the diminishing margins in tech market recently. ?

All those intgerpretations are done based on the fact that distributors in tech market never considered to deal with end customer by anymeans . So lets think out of the box, or even better lets assume there is no box !

Would it be possible to make distributors add customer dimension to this equation ?

Top row represents some of the significant technological innovations ?that has a strong impact on doing business in tech era.

Middle row shows some of the drivers that influence end customer buying criteria. All those, we can simple consider market independent. In every market and business, we are challenged by the need of being;

-??????? Different and Unique

-??????? ?Fast

-??????? Innovative

And the third row represents the new dimension, where we are creating a Business Platform ?where missing parts of the business puzzle fits. In this platform, we have ISV’s for various verticals, system integrators, vendors and end customers gather to find the best solution for any technology need. Of course under the main condition of “Willing to Partner for Solution and Services”.

This is the part where questions arise since getting involved with end-customer has always been a red zone distributors. But considering all the know-how and market intelligence ?comprised, technology distributors seems to be a perfect candidate to manage such a platform. However,whether it will be the distributor or not, platform managment responsible party will not be sufficient for success of the platform. All parties need to contain same main principles and vision to achieve intended purpose.

So next article, I would like to go into details of my “ Business Platform” idea. In the mean time I am hoping to receive feedbacks, critiques and supporting/non-supporting ideas. With all those responses, it will be possible for me to build a stronger concept.

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Looking forward to hear from you.

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