The Global Technology Distribution Council (GTDC) says that the channel will see increased reliance on distribution, but that many vendor execs still do not understand the commercial merits of the two-tier model, according to its latest research.
The channel consortium, which claims its members drive more than $130bn in annual worldwide sales, said that more than 60 per cent of vendors will see both the value and the share of business going through two-tier distribution increase over the next three to five years.
However, CEO Tim Curran said that many other vendors risk missing out on scaling their businesses.
"Top executives don't understand what is going on with on the ground," he said.
"Sometimes a high-level executive will complain, 'why are we giving all this margin to a distributor?' But the channel people will get the value.
"An example of this is that recently I was talking to a small vendor, who had new software and they were trying to go to market, and they were very full of themselves. They told me 'We're just getting started and we're at $5m in revenue.'
"I asked them a simple question, how are you going to get from $5m to $50m? He said 'I don't know,' to which I said that's why you can benefit from working with a distributor because they can scale you up without a big spend on people and logistics and infrastructure.
"The key thing is this: it is not just important for the channel people, this is something a CEO should recognise."
He added that this level of understanding will only become more important according to the report, which suggests that distributors' share of vendors' margins are likely to increase.
The report, which also questioned 31 vendors, states:
"As expectations on distributors increase, to provide new enhanced value-added services, we (the vendors) need to recognise that there is no such thing as a free lunch. Margins are going to have to be increased to accommodate these new offerings... Much of this growth will be in the mid-range or SMB market."
Curran added: "Increasingly now, almost every solution in the market is a multi-vendor solution. It's much easier to procure and install those solutions if you go with a distributor who has all those products on their line card.
"For end users it's simply more efficient and vendors and service providers should consider this."
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