Editorial: The proof of the pudding
- 09 October, 2006 14:39
Industry opinion is divided on whether Ingram Micro can make a success of its Solutions Division. But even its most ardent supporters realise there is a long road ahead.
There are plenty of reasons for believing it can work. Firstly, the distributor has major support from heavyweight vendors like HP and IBM that are eager for it to transition a significant proportion of business away from box dropping. They will invest heavily in an attempt to make this stick and have pockets deep enough to make it a long-term play.
From a global perspective, Ingram is working hard to move up the value chain where possible and has created a solutions business in a number of other markets. The US has been its most notable success but similar models can also be found in India and Singapore.
The local Solutions Division is led by John Walters, who is no stranger to value-added distribution having earned his spurs at LAN Systems. Ingram will market the concept heavily to try and convince resellers it can hold its own when it comes to more complex technologies.
But for all its strength, Ingram faces some major challenges in trying to make its big idea a reality. History tells us that some distributors have been very successful using a time and place model while others have taken the value-added route. No company has managed to do both in this market and, although there is a first time for everything, this is an indication of how difficult it will be.
The Ingram model works something like this. It has about 180 sales people in its Commercial Division, who all sell the products of more than 100 vendors into reseller lists. But the sales of 21 vendors - including Cisco, HP and IBM hardware; software licensing sales; and complementary technologies like F5 Networks security and VMware virtualisation - will be attributed to the Solutions Division.
A combination of more than 50 staff including vendor management teams, business development managers, solutions architects and pre-sales engineers make up the Solutions Division. They are brought in by the Commercial Division sales team to cross-sell and up-sell wherever possible as Ingram looks to make sure it makes the most of every reseller engagement.
Ingram has avoided creating a separate Solutions Division sales team for fear of creating silos and having resellers pestered with repeat calls. But you have to wonder whether the sales team will be motivated enough to drive the value-added section of the business.
Another problem will be convincing resellers to pay more for purchases where the Solutions Division is called in. Avnet, Express Data and LAN Systems do that every day but that is the value proposition when buying from these distributors. It remains to be seen whether resellers will feel they are getting the same value from a supplier that has traditionally tried to differentiate on having the largest vendor list, more SKUs in stock and logistical efficiency. The proof of the pudding will be in the eating.