A Nuanced Impact

By Pedro Pereira  |  Print this article Print


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The conditions that tempted vendors to bypass their channel partners in the 2001 recession are no longer in place.

But lest anyone think the ongoing economic recession will have no impact on vendor-channel relations, think again.

It’s just that this time the effect will be more nuanced. For one thing, big-name vendors appear to be getting more serious about service-based models, such as managed services and software as service, for which customers pay their providers on a fixed-fee basis. As customers put off spending on products, vendors view the service models as an alternative to generate revenue.

A new study by Channel Insider and Amazon Consulting found that 41 percent of vendors believe the global economic crisis is boosting demand for MSP (managed services provider) programs.

Bradley says the economic situation is no doubt accelerating the adoption of service models. That, of course, plays into the hands of Ingram Micro’s Seismic Services division, which sells subscription-based technology services, such as remote systems monitoring and management.

Bradley sees an opportunity for distributors to expand their role in managed services, especially as credit for businesses tightens. While credit for solution providers has remained unaffected by the ongoing crisis, their customers are having more trouble getting credit approvals.

This challenge can be met through service-based delivery models, says Bradley. Be it software as service, hardware as a service or managed services, the models allow customers to pay for only what they use on a subscription basis, and that means they won’t have to pay upfront for technology, some of which they may never consume.

Aside from accelerating service-based models, the recession is forcing vendors to re-examine their channel infrastructures. Citrix, for instance, has decided to stick with a single distributor—Ingram Micro—as opposed to a broader, multipartner distribution structure.

That kind of thing, says Bradley, is likely to happen with other vendors as they look to "rationalize" their channels. Some vendors, he says, may conclude that having one or two distributors, as opposed to three or four, helps them control costs.

In addition, he says, as vendors reduce their staffs through layoffs, they will be looking to distributors to handle more business functions. In addition to the logistics of delivering physical products and technology as a service, Bradley says, vendors will also transfer to distributors such functions as technical support, credit management and telesales.

"We’ve actually had a number of conversations already about this with vendors who are definitely going down that path," Bradley says.

Tech Data’s Quaglia also sees an increased role for distribution during the hard times. "At a time when all eyes are on the bottom line, I expect smart vendors to leverage distribution and their partners even more," he says. "Vendors see that we have the most highly optimized fulfillment model out there."


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