Increasingly complicated software licensing and the race into SMB are forcing many channel players to reevaluate the role of software distribution.
Ingram Micro national licensing manager, Angela Logan-Bell, said queries were up across the board. The distributor sold software to 3500 resellers in the last calendar year. The launch of new and modified licensing models from major vendors including Adobe and Microsoft, as well as the types of resellers sourcing product, contributed to the spike.
"With so many vendors pushing into SMB, we are seeing more licensing at the lower end of the market," Logan-Bell said. "Resellers [in this space] aren't as skilled so we are supporting them with licensing deals. It's more efficient if they track software usage through licensing rather than buying boxed product." IBM is one of many vendors investing in value-added distribution to help support its software channel. Last year, it introduced specialisations at a distribution level for each of its five main brands.
Despite the promise of better support, CEO of software integrator and IBM partner Cirrus, Darren Phillips, said it hadn't yet reaped any benefits. He argued software distribution did not make sense. "Distributors don't really add value with their technical skills. They're more skilled up in sales and that's what business partners do," he said. "It takes the decent margins out of it. This market is too small to have a distributor in there too."
Advent One director, Bob Bassett, was also cold on the concept.
"If we didn't have the skills and we had a prospect, then a distributor does bring the skills in to complete the sale. But we do configuring and designing," he said. "What we can't do is the pricing. The distributor goes back to vendor for that - it's the only thing we look for from them."
Avnet country manager, Gavin Lawless, said resellers were often quick to discount the value a distributor brings to the table. "They want to pay less for product, so they discount the distributor. That's the challenge," he said. "But we wouldn't be in business if we didn't add value to the channel.
"If you look at Ingram, Cellnet and Dicker - their value is fulfilment and aggressive pricing, and that has a lot of value to many resellers. But others need technical and integration services, education, customer assistance. "It's about helping partners sell more or educating them by skilling up. We're helping a partner who comes to us with a $50,000 sale make that a $500,000 opportunity. It's about how you structure a solution."
Distributor support was critical for smaller VARs who didn't have the funds or time to specialise in everything, Microsoft director of SME and partners, Pip Marlow, said.
"Software goes beyond pick, pack and ship. We're putting together solutions around collaboration and communications such as Sharepoint or unifi ed communications," she said. "We are seeing Express Data and Ingram Micro investing in pre-sales resources to support the channel. Distributors can aggregate the breadth of capabilities on behalf of resellers."
CA partner and alliances director, Michael Bosnar, said distributors provided two main types of value-add: pre-sales and implementation.