Ingram's latest business unit is designed to help VARs make the transition to service-centric models and keep distribution relevant to the channel.Ingram Micro, the world's largest IT products distributor, plans to launch a new business unit on Oct. 1 to support VARs delivering professional services to end-user customers.
The Ingram Micro Services Division will provide tools to help VARs refine their service practices, such as warranty maintenance contract tracking, and services for resale, such as IT labor from Ingram Micro service providers and subscription content delivery. The division also will shepherd VARs making the transition to more service-centric models.
"We recognize a fundamental shift in the channel," said Justin Crotty, vice president of the new division. "VARs are becoming more services-centric. A larger percentage of their revenue is derived from services. We need to make sure we stay relevant as they evolve down that road.
"If you look at the evolution of the product supply chain, the key value of distribution was supply chain efficiencies, reducing the duplicative investment, the drop-ship-configuration factor," he said. "We shipped it to the customer, took out the touch cost and duplicative investment. We added a wider and richer portfolio of service to customers than a VAR could build on its own."
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Four Priorities
The unit, built on the foundation of the distributor's Ingram Micro Services Network, or IMSN, will focus on four areas:
Labor-based services—Ingram will identify, educate and train new partners on labor-based services built upon Ingram's current IMSN through the Ingram Micro Help Desk, IT Staffing Solutions, IM Outlet, Ingram Micro OfficePac, Reseller Services Portal, and content and project management services.
Warranty maintenance contracts—Ingram will leverage systems and processes to attach more warranty sales to product sales, capture renewal at the end of the contract and initiate end-of-life conversations as products age.
Currently too much money is being left on the table because VARs aren't managing the warranties they sell.
Recurring and subscription-based services—Ingram will host and deliver applications and infrastructure to customers, aggregating the investment over an economy of scale, Crotty said.
The program could include NOCs (network operation centers) and SOCs (security operation centers) hosted by Ingram for VARs, he added.
Managed services—Ingram would reveal no details of the offering other than to say announcements would be made before the end of the year. Sources have speculated it could include an agreement with a managed service provider platform such as Level Platforms, Kesaya or N-able to deliver a platform to VARs.
The division will have dedicated support and sales personnel, mostly from new hires. Ingram would not reveal specifics about finance attributed to the division.
Resellers, especially at the SMB (small and midsize business) level still need help making the transition, said Christina Richmond, research manager of Hardware Channels and Alliances at Framingham, Mass.-based IDC.
"Attaching [support] services is like printing money," Richmond said. "But I'm amazed not everyone is doing it. Everyone in the IT market needs a reason for being other than hardware.
"Like any other human behavior, we hate change and some think they're already doing it," Richmond said. "They're doing presales assessment, but [many VARs are] not charging yet. They think they're doing managed services, but they do only parts or pieces. It's the perception-equals-reality game."
VARs report attaching maintenance services about 75 percent of the time (for VARs with one to five employees) and 80 percent (VARs with six to 25 employees), but incidence of charging was about 40 percent for SMB VARs, according to IDC's 2005 Channel Partner Profitability Study.
There remains a lack of awareness about professional services and how to build a practice about a core of services (in the SMB), Richmond said.
Ingram's new division may act to accelerate the transition for VARs to service-oriented practices, said Scott Goemmel, executive vice president of PMV Technologies, in Troy, Mich.
"Making the transition involves a distracting level of change with personnel and process and metrics," Goemmel said. "It is so different and it has to change at all levels of company."
Ingram's services division will handle the infrastructure and "commoditized" pieces of building manages services offerings, such as building a NOC, for example. This allows VARs to focus on the actually delivery of the services.
"Those aren't managed devices," Goemmel said of monitoring and NOCs. "Those are just the pieces that enable it. [With Ingram's services division], you should be able to get there faster and spend time on the things that are harder more culture driven."
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