Tech Data Aims to Become the Distributor of the Future

The great paradox of the channel these days is that even as more workloads shift into the cloud, the number of IT products moving through the channel continues to expand. That rate of consumption, however, creates demand for advanced tech skills that most IT organizations and channel partners are having a hard time finding.

To fill that gap, distributors are investing heavily in expanding the base of IT professionals that solution providers can tap into on an as-needed basis. In the case of Tech Data, that requirement helped drive the $2.6B acquisition of Avnet Technology Solutions Group, which further extended the distributor’s reach into enterprise IT environments.

Since then Tech Data has moved to unify all its operations under one global brand. Unfortunately, that shift has not been without a few bumps. For example, Tech Data recently missed earnings expectations because of the former Avnet unit’s decline in data center sales.

Joe Quaglia, president of the Americas for Tech Data, said that multiple factors that are being driven by end customers are leading to a transformation across the channel. In addition to moving workloads to the cloud, IT solutions such as hyperconverged infrastructure (HCI) platforms are more complex. That requires greater investments in training, especially now that solution providers are carrying larger product portfolios, he pointed out.

At the same time, Quaglia added, more customers want to pay for on-premises IT infrastructure as if it were a public cloud service. That requires deeper finance pockets to fund any number of on-demand business models for equipment delivered on-premises.

Rather than simply relying on a distributor to ship products to customers, Tech Data is now serving as more of an IT services company, Quaglia said.  The company is now more involved in lifecycle management, integration and professional services.

The distributor even provides partners with access to customer relationship management (CRM) applications. Those capabilities—coupled with a balance sheet strong enough to finance any number of deals—will define the IT distributor of the future, Quaglia believes.

It’s too early to say how all this transformation will play out across the channel. There are more organizations than ever providing some form of distribution capability, and most solution providers are operating across multiple models. One day, a solution provider might be reselling a product, while in the next breath, it will be acting as a managed service provider purchasing the product to enable a service.

Quaglia noted that dealing with all those permutations of the channel requires a distributor with access to lots of capital and deep technical expertise. If that’s the case, then the future of distribution will be dominated by a few large companies that have the resources needed to sustain what has become a highly dynamic IT channel.