Blurred lines

As a number of vendors, including Microsoft and VMware, outline plans to bring a wider variety of partners into their channel businesses, Hannah Breeze finds out what this means for their existing resellers

Service providers, business process outsourcing (BPO) firms and facilities-management companies may not be the types of companies that immediately spring to mind when you think of the IT distribution channel. But all of them have been mentioned in recent weeks by vendors as they conjure up the image of their partner of the future. Although traditional resellers remain an important distribution channel, in recent months it appears vendors are looking elsewhere for firms that can take their wares out to customers.

Last month, Microsoft said it is "encouraging" its traditional reseller partners to team up with service provider and hosting partners. The company's vice president for cloud and hosting, Aziz Benmalek, told CRN that the walls between its different partner types are falling down as it looks to provide its increasingly exacting customers with the "end-to-end" services they require.

"I think it opens up multiple scenarios," he said. "When you look at hosters, their value-add is around what they build in their datacentres from a Microsoft cloud platform [perspective]. What we are hoping for them is [by teaming up with cloud partners, they get] new revenue streams they did not have before."

Further, VMware recently said that it too is looking beyond the usual suspects in its partner base as it makes "dramatic" changes to its channel.

"We have invested a lot of time and effort in profiling the ‘partner of the future' for VMware - our next-generation partner. Pat [Gelsinger, VMware CEO] refers to it as ‘act two'," said VMware's UK channel boss Phil Croxford. "It's interesting to see partners' response to that. We see partners who want to come on this journey to act two with us, but the reality is that some get it, and some don't."

Croxford said that with the changing partner landscape in mind, VMware has rejigged its rebates and benefits so those organisations - whatever their specialism or background - are best incentivised to sell the so-called "act-two" products. But although the company is looking to mould its partners in a certain way, he said the firm is not heavy handed.

"We are not out there saying ‘you need to be like this' [to traditional partners], but we are saying that this is the way our business is shifting and if we want to stay relevant to each other, then this is what we think you need to be looking at," he said.
"None of this is rocket science; it is shifting more towards services... and towards deeper technical skills, because these are not products people ring up and order - they need selling."

Speeding up

While the fast-changing nature of the technology industry means that the channel and its structure never stays the same for long, partners agree that in the past year, the pace of change has accelerated more quickly than usual.

Ian Roberts, managing director of Daisy Partner Services (DPS) - the part of Daisy's business which sells to other partners - said the sorts of firms DPS works with has changed dramatically over the period.

"Really, I think that in the last nine months, there has definitely been a shift," he said. "In terms of the traditional channels for Daisy Partner Services, it has been [made up of] communications resellers... but now we are engaging with BPO companies or divisions, and that is where the whole digital transformation around unified communications has come into play.

"We're seeing channels open up around more facilities or large engineering businesses. IT and communications becomes part of that so our channels are broadening."

Softcat's chief executive Martin Hellawell (pictured) agreed that the lines in the channel are becoming blurred.

"The channel is evolving, but it has always evolved," he said. "It is probably evolving now at a faster pace than it has for some time and that whole ecosystem of VARs, systems integrators and service providers are working together - it is true. If you look at people in those brackets - solution providers, service providers, and resellers - it is hard to put people in those categories.

"Softcat does VAR activities but we also have a professional services arm, we have a service provider business and a hosting business - we are in all those camps ourselves. There are different types of players in the channel these days."

The idea that the channel is changing is not new, and tech vendors have been keen to encourage their partners to move with the times for as long as they have been in business. Hellawell said that although listening to vendors and keeping abreast of their strategies is important, the customer is always king.

"Our strategy is to listen to customers - if they want security, we will sell security," he said. "We go where customers are going, not where vendors are guessing customers are going to go to. I do find a lot of the vendors do a bit of scaremongering.

"One of Mike Norris' [Computacenter's CEO] old sayings, which I have certainly used, is ‘we will never be pioneers with arrows in our backs'. I believe in that. You don't really need to second-guess it. If you have an agile organisation - which I would like to think we have - as soon as customers want to look into this stuff and buy it, we can provide those services. But you don't do it before they ask for it."

Another reseller whose key vendor partners, such as Microsoft, are looking to diversify their channels with a new mix of partners is Insight. The firm's UK managing director Emma de Sousa (pictured, below) agreed that keeping customers happy is essential.

"Here's the thing: when you're in the role we're in, first and foremost, what matters is the client," she said. "What do they need today and what are they going to need in the future? How are we going to build a business to support them? From my perspective, we spend a lot of time with our [vendor] partners, understanding their technology and strategy and so on. But when we formulate our own strategy, understanding where our clients are going - and what the analysts are saying - is important."

Despite acknowledging the influx of different types of partners in vendors' channels, Hellawell insisted that there will continue to be an important role for resellers to play.
"I've read a few things lately which say the VAR channel is [full of] dinosaurs and is going to be dead and that kind of stuff, but I think it is hugely exaggerated," he said. "I've been hearing that for 20 years; that the VAR channel is going to die, and it doesn't - it adapts. Most of the larger ‘VARs' these days [have adapted] - 20 years ago they were sellers of PCs and today they are anything but.

"Computacenter focuses on the large enterprise IT services contracts and SCC is focused on the mobility, cloud and data strategy. We are all adapting and so this model of ‘this is what a VAR looks like' is quite frankly b****cks, because every one of us is different and we have all found different parts of the market. This image of a traditional VAR does not exist."