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Channel classifications and role descriptions

Channel classifications and role descriptions

Throughout this report you will see that all companies listed are categorised in terms of their Inform Information Technology Industry Classifications (IITIC) channel type. The categories include Distributor, Mass Merchant Retailer, Direct Marketer, Dealer, Corporate Dealer, VAR, Systems Integrator and Service Company. This article is designed to explain these classifications.

Because of the IT channel's increasing complexities, Inform has recognised the need for common practices ensuring consistency in categorising IT channel companies and in the definitions associated with their activities, which are as follows:Volume ResellersRetailersAchieve more than 50 per cent of business through "walk-in" customers or "reactive" custom. All retailers operate from a shopfront. They are likely to be situated in "high street" or "edge of town" shopfront-style premises with shelf space and displays.

Mass Merchant Retailers

Generate less than 50 per cent of total revenue from the sale of IT products.

Mass merchants generate the majority of revenue from the sale of non-IT products such as brown and whitegoods or other household products. Annual total turnover exceeds $100 million.

Independent Retailers

Obtain over 50 per cent of total revenue from the sale of PC products and services.

Dealers

Rely on volume of third-party product sales to end users for the majority of business, however, they do not specialise in retailing activity. Although some dealers may have a shopfront, their sales activity is proactive, thus differentiating them from retailers. Mainly sell to businesses, although some may also sell to home users. Dealers are sub-divided into two further categories:Corporate DealersDerive at least 50 per cent of IT revenue from the sale of products and services to corporate or government end users. Corporate dealers often have an annual turnover of over $20 million.

Traditional Dealers

Derive less than 50 per cent of IT revenues from corporate end users.

Direct Marketers

Derive more than 50 per cent of IT revenues from selling third-party products and services through one or more of the following methods:* telesales* catalogues* off-the-page selling* Internet sellingThe focus is on internally based, rather than externally based sales resource.

Resellers in this channel sell third-party products differentiating themselves from direct manufacturers.

Value Resellers

VARs (Value Added Resellers)

Derive between 50 and 75 per cent of IT revenue from the provision of IT-related services (including the provision of own developed software). In other words, the sale of third-party hardware and software products remains a significant proportion of their revenue (25 - 50 per cent).

Systems Integrators

Integrate multi-platform systems incorporating customised software solutions with third-party hardware, software and network/communications products (LAN and WAN). Usually large project orientated businesses gaining 76 to 90 per cent of revenue from the provision of services.

IT service providers

Gain more than 90 per cent of revenue through the provision of IT-related services. Customised software accounts for less than 50 per cent of its revenue. Does not rely on selling third-party products for revenue generation although this will be an associated activity in many cases. Main functions are specifying, designing and support services. This channel encompasses consultants, software maintenance companies, professional services organisations.

Software Developers

More than 90 per cent of revenue is derived from the provision of IT services (including own software development). Main line of business is the development of customised software solutions for end users in the large and medium business sector. Own software development accounts for more than 50 per cent of its revenue. Generally does not sell third-party products although, in some cases this may be an associated activity.www.informbd.com.au


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