What’s The Future Of IT Distribution? These Five Execs Weigh In

Executives from TD Synnex, Arrow Electronics, Ingram Micro and D&H Distributing talk about AI and digital transformation.

In the IT industry, distributors continue to invest in capabilities, play a crucial role in facilitating collaboration and providing valuable insights to suppliers.

Sustainability is also a key aspect of the industry, particularly in their vendor and MSP partnerships.

“In 30-plus years there has been a presence and an ongoing value of the distributors in the go-to-market supply chain,” said Frank Vitagliano, CEO of the Global Technology Distribution Council. “It's not just the unwavering stability that they've demonstrated over the years, but it's also the capacity to continue to invest and evolve their capabilities to provide the enhanced services and support that all of us in the industry need.”

Vitagliano spoke to a room with more than 200 people from key distributors and vendors at the GTDC summit in Oceanside, Calif. last week on the ever-important role of distribution within the channel.

While he said some believe that distributors will be disintermediated, they’re the ones who have the upstream relationships with the supplier community and the downstream relationships with their customers.

“Somebody has to orchestrate all of that, somebody has to manage it, somebody has to work through it and provide the service that's needed,” he said. “The reason for that is the go to market requirements are significantly more complex than they've ever been before. The distributors have those relationships. Who's better positioned to orchestrate than distributors?”

And the next evolution in digital platforms and marketplaces is underway.

“It will create a hub for enabling seamless collaboration among all the ecosystem system participants, and clearly that's required,” he said. “It will facilitate multi-vendor, multi-cloud solutions in bundles, which the distributors are the only ones capable of providing that kind of support at scale as they provide sourcing, provisioning and consolidated billing. It will also enable proactive, data-driven business outcomes and insights.”

Multiple executives from global distributors such as Ingram Micro, TD Synnex, Arrow Electronics and D&H Distributing took to the stage to discuss the future of distribution.

Here's some of the highlights of what they had to say.

Dan Campbell, president of North America for Arrow Electronics, on distribution helping the ever-evolving market.

Things are moving so fast. It’s looking at both aspects of that from a distribution perspective to say, ‘How do we keep doing what we've traditionally done and continue to serve that market?’ And then, ‘What do we do for the innovators that are coming in that need distribution?’

In looking at distribution…you’ve got to think through things like cash flow, credit and being very intentional on where those fit for you at the stage of your company. It becomes important relative to how you then face off with us and to be able to come in and say, ‘These are my priorities. How do you help enable that?’

If you look at security, data, AI and cloud tools, most of those are earlier stage companies, and that's where the investment dollars are going.

Kristin Russell, president of global ECS for Arrow Electronics, on services that are crucial in distribution.

It comes down to three things, people, products and platform. We're in a relationship business.

From a product standpoint, Arrow really focuses on the high end of enterprise IT. We do that so we can have a very broad portfolio of products that work together. Technology is becoming much more complicate. It's a multi-solution environment so we have to be really thoughtful about how products work together.

Then services, what are the services that we need to provide? We're being asked, as distributors, to get more involved in a lot of services in the go to market value chain, everything from marketing-as-a-service to lead gen to integration, support services and renewals.

Because of the complexity of technology, I really think about how the digital distribution platforms of the future have to almost be digital workbenches for people to come in, figure out what products to find, and buy and manage through a digital platform.

Patrick Zammit, COO of TD Synnex, on distributors having a good view on the market.

We have played a role, and continue to play a role, all around operational excellence. Because of the richness of technology, partners have asked what they should invest in. That's where I think distribution has the chance to play a good roll as we have access to all the technologies. We have a good visibility of what technologies are going to have momentum. What we did over the last three years is help our partners diversify their businesses as enablement is a core competency for us.

Kirk Robinson, EVP and president of North America for Ingram Micro, on helping IT service partners.

If you look at the industry trends, more partners are moving towards digital transformation, and adopting advanced solutions which is great because it gives the partners the ability to expand their services offerings down to their end customer. When you look at that, there's a couple of things that we can all do, distributors and vendors, to help our partners. One of them is how do we help them become more of a strategic partner with our end customer? How do we help them deliver value that goes way beyond the classic IT support? How do we help them focus on business outcomes? If we do that, I think we all prosper.

If we’re looking at some of the new areas today, like AI and machine learning automation, they are still the difference maker in the ecosystem from the end customer. For the partner, distributor or vendor I would say they're more valued than ever by the corporations they work with, big or small. The partner is also getting a lot of attention from the vendor community, from their peers and from PE firms because they're driving more and more of their business to ARR (annual recurring revenue) and MRR (monthly recurring revenue) and becoming more profitable.

Marty Bauerlein, chief consumer and commercial officer for D&H Distributing, on AI in the market.

I actually spoke with a $40 million dollar MSP, and 95 percent of their revenue is recurring. I asked them, ‘Where are your largest labor costs?’ they said it was level one and level two support. So I asked, ‘How are you going to leverage AI in your business?’ They said in the next three to five years they were willing to spend $10 million to have virtual assistants literally talk to their customers when they call in for level one or level two support. They are definitely going to eliminate roles but they will make so much more money that it’s going to allow them to buy more MSPs. So I see huge consolidation that could happen in the market because of AI.