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Vendors are restructuring their business and channel models to focus on software, cloud and annuity income, causing legacy hardware resellers angst in their business operations. Distribution platforms can help.

Writer Nick Booth shares some of the difficulties of doing business with vendors on MicroScope, Computer Weekly’s channel focused portal earlier this month.

In his article titled ‘The hidden cost of doing business with vendors‘, Nick details how resellers come under significant business pressure due to the actions of their vendors. Resellers put significant time and investment into upskilling themselves on vendor products and solutions, but face considerable stress in return by having to jump through vendor hoops in terms of maintaining compliance, attending training courses and participating in demand-generation events, often with no guarantee of any return on their investment. And in extreme cases, Nick mentions that the vendor can “have the rug pulled from underneath them when the vendor decides it wants to sell direct”.

The article also quotes Vortex 6 CEO Peter Olive as saying that the channel has never been a tougher environment to operate in than it is today, with margins being squeezed, rebate programs closely scrutinised and resellers having to jump through hoops in order to maintain status quo and compliance with vendors.

“In the last few years, there has also been an added challenge, bringing yet more disruption to resellers, as many of the large vendors restructure their business models, shifting away from hardware sales to focus more on software, cloud and annuity income” Nick adds.

“The channel has never been a tougher environment in which to operate than it is today.”

It very much echoes sentiments which we have written about here before on this blog. The fact that the IT channel is very much an evolving environment, new sales processes are required, digital transformation is a big issue, the topic of cloud migration and the various challenges facing the channel right now, are all issues which have received our attention in the past.

Nick points out that even though the licensing revenue model is ideally an attractive one, it’s not a simple process for resellers to shift their operations from once-off capital-intensive hardware sales to annuity-based software revenue.

As such, resellers are being forced to evaluate every part of the business, and to automate as much and wherever possible in order to channel resources towards higher value activities where staff can be more productive.

As an IT distribution platform, ChannelCenter caters for cloud and software, as well as legacy-based hardware products, aiding those resellers which are in the process of transitioning but need an overlap period as they phase out one for the other.

ChannelCenter caters for cloud and software, as well as legacy-based hardware products, aiding those resellers which are in the process of transitioning.

The inherent visibility and transparency of the platform makes the planning and strategic aspects of overhauling reseller operations easier, providing resellers with a business snapshot at any single moment whilst engaged in the tricky process of transitioning, and providing a very useful measure of control. It also positions resellers adopting the platform as digital innovators in the eyes of their business partners and customers, an aspect which may be important when transitioning away from legacy products and into cloud software.

The platform reduces complexity and automates various processes, freeing up resellers to direct resources towards higher value activities – of particular importance in the resource-intensive hardware-software transition stage.

Coming full circle within this article, using the platform mitigates some of the common stresses of dealing with vendors. Not only are resellers incentivised to use the platform, but due to data-driven cross- and up-sell opportunities, vendors can also drive greater revenue through the platform, making them more favourably disposed to reseller platform usage. Resellers also have far greater visibility and control when it comes to license assignment and management with their customers.

In summary, distribution platforms not only address some of the pain points faced by resellers in their dealings with vendors, but offer a multitude of other reseller benefits as well.