Vendors will rely more on disties for cloud in 2017 - GTDC

Global Technology Distribution Council report claims distributors will play a more prominent role in cloud tech next year

Vendors are increasingly relying on the channel when it comes to their cloud offerings, according to the Global Technology Distribution Council (GTDC).

In a report looking at the role of the channel in 2017, the GTDC said that distributors will be depended upon to bring cloud solutions to market and wrap services around cloud offerings.

The GTDC - whose members include Tech Data, Ingram, Avnet, Arrow, Westcon, Exclusive Networks and Scansource, surveyed over 70 channel executives and interviewed more than 20 distribution executives as part of the report.

"The emergence of cloud has transformed distribution along with the IT industry," the report said.

"Increasingly, vendors are relying on the channel to bring cloud solutions to market and that won't change in 2017.

"In addition, look for more services and solutions built around cloud from distributors as cloud adoption reaches critical mass, said executives."

Jon Strausburg, cloud sales director for SMB and distribution at Microsoft, said in the report that the vendor is expecting to use distribution more in 2017.

"Industry analysts see a $127bn public IT cloud services opportunity worldwide in addition to a $256bn managed services opportunity around public cloud by 2018 - distribution plays a critical role to capitalise on this forecast," he said.

"Consequently, Microsoft is placing increasing emphasis on the cloud business through distribution, giving them more and more opportunity as we expand our public cloud assets.

"In 2017 more than any other time we'll see the greatest variety of technology to sell and we'll continue to expand that selection to help transform their business and expand the channel."

The role distribution will play in the cloud has often been questioned, with some in the industry warning distributors need to evolve or risk becoming irrelevant.

This was refuted in a recent CRN article by new Nuvias cloud boss Karl Roe, who said that distributors will be more relevant than ever as cloud adoption gathers pace - highlighting areas such as local language support and local currency as key areas distributors can help in.

"In 2017 more than any other time we'll see the greatest variety of technology to sell and we'll continue to expand that selection to help transform their business and expand the channel."

Carl West (pictured below), supply chain director at analyst GfK, explained that, while there was a period a few years ago when vendors questioned the role of distribution when it comes to cloud, they have now reviewed their position and see the benefits that distributors offer.

He said that it is much easier for a vendor to deal with a handful of distributors rather than going directly to thousands of end-users.

"If you look back five years there was a lot of fear regards to the potential for cloud going direct, cutting out indirect channel," he said.

"This was going to play out in some way short term but if you consider distribution's part - not only client roster, their product enable, their breadth of experience, the up-gearing of distribution to sell cloud services - they are becoming a very efficient way of getting to the end user through resellers.

"There was fear of cutting out distribution, but those fears have turned round, or diminished, and rightly so because distributors have a lot to offer in terms of the reseller of cloud to managed service providers and resellers."

West explained that distributors are now acting as marketplaces when it comes to managed services, so smaller MSPs can provide services they'd otherwise be incapable of doing so, while also still providing services around logistics and finance.

In the GTDC report Wayne Peters, senior director of Arrow Capital Solutions at Arrow, also highlighted financing as an important role that distributors will play in 2017.

"Cloud financing is becoming a critical component of selling cloud," he said. "In many cases, it takes what has traditionally been called non-traditional financing, but soon will become traditional financing as more solution providers get used to selling cloud and customer demand accelerates.

"We are also seeing a shift in the market with respect to the cloud ecosystem requirements and our partners being in a position to sell and finance cloud.

"Some of the things we do around recurring revenue and bringing new partners into the ecosystem helps our base become broader and makes cloud easier for partners to sell."