Viewpoint: Listen out for the cull of the dialled

Electronic distribution need not spell the end for resellers that are prepared to adapt, argues Annie Gurtonn

Resellers shake their heads at the prospect of vendors selling direct, and as a long-standing supporter of the beleaguered reseller in the face of the all-powerful vendor, I have been the first to shout ?unfair? when vendors moot an increase in direct business. But I think it is time we took a long hard look at the way things are unfolding. This industry changes direction faster than an antelope trying to outrun a cheetah, but one conclusion is inevitable: direct selling is taking over. It is no longer possible to take the high ground on the issue of direct versus indirect, or think that resellers are indispensable. There has been a sound argument in the past for using the channel instead of a direct salesforce, supported by empirical evidence of the business benefits and financial advantages of the indirect model. But that doesn?t hold water any longer. The consequence is that resellers have to reshape and realign, or go to the wall. The catalyst that has turned everything on its head is, of course, the internet and its potential as a tool for selling direct. Vendors don?t have to keep expensive consultants and sales staff on the payroll any more ? their sales staff can focus on closing sales if that?s what the products need, and the sales function within reseller businesses is becoming increasingly redundant. The other trends which are contributing to the shift to selling direct are the increase in IT knowledge among users and the growing commoditisation of products. Users, whether SoHo, SME or corporate, are increasingly capable of ordering complex equipment off the page or over the Web, and resellers are increasingly being left out of the loop. There is no sign of this trend reversing and there will come a time when there will be far fewer users which require the value-added skills that resellers try to offer. There are some exceptions to this statement, and it is to these that resellers should look if they are going to survive. In essence, they can be categorised as ?services that enable users to optimise their IT investment?. Some areas of technology, such as e-commerce, push technology and business process re-engineering (BPR), remain a step ahead of general user knowledge. BPR is largely a science handled by business consultants, although some resellers are starting to advise customers how to optimise their business processes to take best advantage of their IT investment, and then charging for the service. Nevertheless, smarter resellers are looking toward e-commerce and push technology as key growth areas. Yet it never ceases to surprise me how many resellers are still focused on selling boxes and shrinkwrapped applications. Certainly, there will always be some users that are too busy or just don?t want to do anything about purchasing and installing their IT. However much they understand the technology and however accessible the products are, they just don?t want to be bothered ? they want someone to come in and sort them out. There are some truisms which remain, such as customers buy mainly for business benefits and installed applications, not for the technology itself. So it is the reseller that provides complete solutions which meet their needs, not the vendor with limited product items in its portfolio. Some vendors will remain loyal and committed to the channel, because they have swung so far in that direction that they just can?t face an about turn. IBM comes to mind. But others are playing a dangerous double game of building direct sales mechanisms via the internet and Web sites through which customers can buy, while at the same time trying to appease their nervous Vars. For as long as there are in-house direct sales teams there will always be compromise and doubt. Many vendors will claim that they operate a ?clean channel? policy of only using direct sales efforts to create market pull and the channel for fulfilment, but there have always been questions about how many sell direct on the quiet. Many vendors have speeches prepared about how critical the channel is to their operation, but lots just use distributors for warehousing and fulfilment and don?t have proper resellers. We are heading for another short-term shake-up in the ranks of resellers which will result in yet another cull of those without the foresight or confidence to move with the times. The growth of electronic direct sales will have a great effect on the channel, although it will not cause its demise.