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What is the Future of Distribution for MSPs?
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Predictions and Perspectives from Industry Leaders
A Patreon subscriber asked me what I thought would be a simple question: what is the future of distribution?
But when I went to draft up my reply, I realized I couldn’t form a full answer. Though I’ve worked with distribution folks for a long time, I struggled to pinpoint an accurate vision for the future of this field.
So, I turned to the experts. Five experts, in fact: Frank Vitagliano, CEO of the Global Technology Distributor Council; Jason Bystrak, Senior Vice President of the Modern Solutions Business Unit at D&H Distributing; Paul Hager, Vice President of Services at Ingram Micro; Ryan Walsh, Chief Strategy Officer and Co-Founder of Pax8; and Sergio Farache, Chief Strategy Officer at TD Synnex.
In this bonus episode of the Business of Tech, everyone shared a different perspective, but by the end, I finally had a fully formed answer to my member’s question. Keep reading to see how we got there.
The Current Role of Distribution
In order to understand where we’re going, we have to know where we’ve been. My first question for the experts? What they think the core value of distribution is in the present moment.
Vitagliano summarized it like this: the core value is very similar to what the core value has been for the last 30 years. That’s helping vendors get products and services into the market through solution providers.
Farache zeroed in on the services portion, noting that services are now a significant component of that because it’s a significant gap of skill in the market. Hager believes that distribution extends business for service providers, and Bystrak flagged that distribution has been more consultative in recent years.
Pushing this even further, Walsh believes that his organization Pax8 is barely a distributor any more, because they’ve begun adding value to services in other ways, ultimately shifting the value of distributors.
So what’s changed lately? It feels like services and services offerings from distribution are an increasingly important component of that. I asked everyone how they believe that mix has changed over time.
Bystrak sees this shift as financial – service partners make a lot more than the low margin distribution businesses, so they’ve started seeing more success when they work hand in hand with MSPs and channel partners to optimize profitability. He also sees value in this because clients don’t want to deal with separate contracts for every subscription – they want a common experience where all support is centralized in one place.
Hager, however, pointed out that some distributors don’t really want to become service delivery engines, preferring to keep those partner relationships open and turn to them only when needed.
Farache agreed, saying that their main goal is not to do services to end users, but to enable their partners to maximize their results in the delivery of service.
“I want to dispel this notion that distribution is just a bank or just for pick packing and shipping product. That might’ve been where distribution used to be. Value is, right? My value is the solutions I give to you, the problems I solve for your business. That’s value,” said Hager.
The Marketplace Impact
I wanted to know how marketplaces fit into their thinking. How much of this is enabled by them, changed by them, even held back by them?
Walsh pointed out that marketplaces provide instant provision. You can now put multiple things together quickly, and you can add and take away things quite efficiently. This is positive, according to Walsh, because customers really want that handy self-service experience.
“The majority of our MSPs, the majority of our partners, don’t have the capacity to invest in all the digital needs for consumption, subscription, lifecycle management, and all those activities,” said Walsh. “So the future is how we enable the digital delivery to the partner, to the end user.”
Hager and Farache had similar responses, explaining that their companies are “the marketplace of marketplaces” and “the ecosystems of ecosystems.”
“We have a digital twin where you can meet up and gain access to all the things that will help remove friction from your business and grow your business,” said Hager.
Long story short, the experts aren’t worried – it seems that marketplaces enable everyone to compile value into one platform.
Where Everything’s Going
So, how can we answer my member’s initial question? I ran it by the experts, and I’ll summarize their responses with a quote from Bystrak:
“The future is the past.”
In essence, not much will change, except for a few key enhancements. For example, according to Farache, the main difference will be digital delivery, and how distributors enable that digital delivery to the partner.
And according to Vitagliano, that digital distribution method will also enhance analytics, in turn enhancing the product:
“The future is every distributor is going to have a platform and a marketplace that they do business with. It’s going to be connected to the vendor community, going to be connected to their customers, going to be seamless, and it’s going to work. But most importantly, the piece that people are underestimating, I think, is their ability to utilize all this data that’s been out there for years and years, that’s never effectively been utilized. I think they’re now going to have the ability to do that. And they’re going to be able to do that in a way that helps their customers in a bunch of different areas, but most importantly, helps them drive business.”
The Final Answer
After our conversations, I finally have an answer to the question, what is the future of distribution?
Distribution is your most valuable partner, more so than any single vendor. They’re your extension of the business, filling in any gaps you might have. Distributors are more than just logistics partners and are integral in orchestrating that complex ecosystem space. As my belief is that the service provider will continue to move up the stack, moving further into business and productivity layers, then distribution is the rising waters that fill in the rest of your offering.
More specifically, the future is…
Distributors embracing being a solution provider themselves, yet their customers will be the MSPs and IT services companies, not end-users
Distributors solving the problem of last-mile sales and customer management via partners
An interconnected, data-driven, platform-centric ecosystem where distributors play a pivotal role in enabling MSPs and IT services companies to navigate the landscape
Distributors increasingly acting as financial facilitators, offering credit, financing, and cash flow management services
Distributors using data and analytics at scale, providing providers and MSPs with insights they would not be able to achieve on their own
I’ll leave you with this final answer: the future is the past, but with better margins for everyone.
Do you have another big question to throw my way? As always, I’m available to connect.
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