The reseller is dead. Long live the reseller! At least, that’s the way it could appear as the rapid evolution of the ICT industry forces a rethink of traditional roles and functions.
Of course, the reseller isn’t dead or even close to passing away. But the so-called new-age reseller is having to evolve, and rapidly. So what is the bottom line to this evolution? According to industry experts the answer is simple: differentiate and grow now or be left behind. It is the only way to stay afloat in a diversifying market.
Differentiation, in turn, breeds change. A growing number of resellers, for instance, don’t want to take on the name ‘reseller’ and prefer to be called partners, integrators or service providers.
A pointer to this change in thinking can be seen in ARN’s forthcoming State of the IT Channel 2013 study which finds 57 per cent of respondents selected services as their main revenue spend, while hardware and software garnered only 30 per cent and 21 per cent of responses, respectively.
Channel Dynamics co-founder and director, Cam Wayland, said, “It's the evolution and maturing of the industry. Customers are beginning to look for different types of solutions and that is becoming possible by offering [something]-as-a-service.”
Traditionally, the term ‘reseller’ had been used generically for businesses that were involved in the resale of hardware and software with installation and maintenance services attached to it, he said.
Now, driven by the concept of annuity revenue and managed services, it was becoming more services-oriented.
“There is a difference in terms of a systems integrator or the value-added reseller [VAR], as they are more services, design and consult oriented,” he said.
But philosophising is all well and good. What does the change mean at ground level? The picture that emerges is slightly blurred as channel businesses adapt in this reshaped world.
Nexus IT principal, Sean Murphy, said the shift is a result of market transitions from selling hardware to focusing on having a value-added relationship with the customer.
But it is not without its challenges. Murphy said getting the right staff is a key challenge that many new-age resellers face.
“They should invest in training and hire enterprise architects so that the knowledge that they’ve got around customer and relationships is relevant,” he said. “It’s about finding the balance where they can assist the customer with the commodity stuff as well as provide them with the high-value stuff.”
UXC Connect CEO, Ian Poole, said the market changes were the main reason it merged three organisations – Integ, Getronics and XSI – into one company, UXC Connect.
“The move from a capital to an operating model, organisations looking into business outcomes, and customers wanting other companies to share the risks associated with deployments were the reasons behind the merge,” he said.
The company’s current strategy is to be a solutions provider to the market, focusing on systems integration, managed services and outsourcing, as well as Cloud aggregation.
“Simplification is critical for customers and they don’t really want to buy technology anymore; they want to be able to buy something that provides an outcome for their business.”
CTO Group Australia managing director, Greg Sly, said the company originally had plans to take the reseller path to market but reassessed it and became an advisor.
As a result of the change in plans, Sly had to retrain his staff and rehire specifically to bring on people with consulting capabilities.
“The value of the model of being a traditional reseller started to lose traction and the competitiveness associated with that started to get aggressive. So from a financial standpoint, it was not valid,” he said. According to Sly, the margins on being a traditional reseller are low.
However, Regal IT managing director, Mark Gluckman, said the company’s role as a reseller has not changed because it has constantly worked in the managed and professional services and procurement space over the past 10 to 12 years.
“We never had a big focus on products. It’s not viable because products are changing at such a rapid rate in the market at the moment,” he said.
According to Gluckman, all the noise is just a name change and does not affect the key survival tactic of the reseller – to be a trusted advisor for the customer. “At the end of the day, it’s just going to be a name change to suit what the customer wants and how resellers are going to maintain their businesses,” he said.
Thomas Duryea NSW state manager, Luke McLean, said there have always been two categories of resellers – box droppers and service providers or system integrators.
“Box droppers sell hardware and software while the other resellers have been consultative and provided services around what they were selling. The box droppers are the only ones affected and over the last decade, those traditional resellers that did not make the transition no longer exist,” he said.
According to McLean, there was a big gap in what a client, systems integrator, and reseller knew in terms of skills and technologies 10 years ago, but over the last few years that gap has narrowed considerably. “A lot of these companies now have systems integrators and resellers working for them so the market and technologies are becoming more converged,” he said.
Murphy said there was no implied threat to new-age resellers as value-add and high level services will always be in customer demand. “The same skills are required in terms of aligning, procuring, partnering and delivering – which is what the customer looks for. While the platform of delivery may change, the skills of delivery don’t change very much,” he said.
Top tips for reseller growthCTO’s Greg Sly: Businesses have to understand their customers’ environment and apply services to help customers fuel their procurement as opposed to the products sitting on the shelf. “It’s very common to see large organisations purchase bulks of software only for it to sit on the shelf. So helping the customer realise the benefits associated with their purchase will be key.
Nexus IT’s Sean Murphy: Resellers need to forge long-term relationships with their customers, especially within the services space. “Resellers should understand and continue to add value, and use their experience and expertise to articulate that value to customers,” he said.
UXC Connect's Ian Poole: Resellers should focus on elements that they’re good at and not try to broaden their reach into too many things. “The market is so large at the moment and there are so many opportunities out there that the big catch is to focus on specific markets and applications and do the job well. ”