VARs and value from distributor services
Westcon is only the latest distributor to bulk up on services but what about the rest of the supply chain, asks Larry Walsh
Westcon Group, the New York-based distributor of networking, security and storage hardware products, joined other distributors in bulking up its professional services capabilities on last week's buy of Intact Integrated Services.
Through Intact, Westcon gets professional services capabilities in project management, managed services and technical support for information and communications technology. Intact also comes with significant capabilities in the Cisco Systems Inc. product family.
Intact's assets and resources will be the centrepiece of Westcon's global services solution practice, which supports providers with professional services in security, unified communications, datacentre development and cloud computing.
"Each of our practices is designed to help partners benefit from the deep technology expertise and real-world business solutions we bring to the table - reflecting how Westcon provides greater value-add than any other distributor in the market today," claimed Westcon CEO Dolph Westerbos.
"As a leader in channel services, Intact will become a strong foundation in our services practice, helping partners generate new revenue streams via value-added services."
The deal is more a consolidation of assets by the two company's mutual corporate parent, Datatec. By merging the two companies, Datatec is infusing Westcon with significant capabilities around the Cisco product portfolio sold and supported by channel partners in the Americas, Europe and Asia.
Intact's specialty is providing full lifecycle management - assessments to deployment to ongoing maintenance - of the Cisco unified communications and networking products.
"With strong experience in the networking, security, datacentre and cloud space - and one of the deepest global footprints - Westcon is the perfect match to take our leadership even further," said Intact CEO Alan Rosser in an announcement.
Westcon's bolstering of professional services available to the channel follows other distributors. Arguably, Avnet leads the distribution segment in professional services, having acquired several IBM, HP and Cisco technology specialists in recent years.
Ingram Micro continues to build out its professional services capabilities, making its own as well as the resources of participating providers available to the channel. And other distributors, including Tech Data and Synnex, have similar programmes.
Some view distributors acquiring resellers as a competitive threat. Distributors say they're addressing several issues that hinder third-party IT provider growth and potential.
As product margins decrease, VAR types are increasingly reliant on professional services for their profitability. However, the channel struggles with the cost of supporting professional services organisations, the lack of talent in the market, and the difficulty in capacity planning.
A study by the 2112 Group and Ingram Micro has suggested that the majority of solution providers with professional services are operating at 70 per cent capacity utilisation or higher, leaving little room for taking on new work or expanding business.
Moreover, some third-party providers tend to focus on rudimentary technical tasks with decreasing value because they can't staff their professional services with qualified people.
By having professional services available for on-demand or contract use, distributors say they're helping solution providers address their customer needs and capitalise on sales opportunities without the management or expense burden.
In theory, distribution supporting resellers with professional services makes a lot of sense, but the channel isn't necessarily buying into it.
Our professional services study found the vast majority of solution providers would rather live with limited professional services capabilities and capacity.
They fear that bringing in distributor or third-party providers will diminish their perceived value to the customer.
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