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New GTDC report focuses on European tech distributors’ foray into services

Services have always been instrumental in the success of technology distributors over the past 50 years. The breadth and depth of those offerings have changed dramatically, however, creating a new era of innovation within their business models to align with digital market trends. A new Global Technology Distribution Council (GTDC) report depicts how these forces are redefining distributors in the European region, mirroring related developments throughout the world. Terms like "pick, pack and ship" that largely defined the early days of distribution no longer differentiate the top distributors – GTDC members that drive more than €120 billion in annual business worldwide.

"Distributors haven't always received the credit they deserve relative to how well they've evolved in accordance with technological innovation", commented GTDC CEO Tim Curran, noting that more than 600 new vendors enter distribution partnerships every 24 months in the US and Europe alone. "Although the industry and IT players have changed dramatically over the years, distributors have proven their staying power regardless of dynamics affecting hardware, software and services. They've continuously honed business models through acquisitions, diversification and movement in specialized directions. This report sheds new light on these trends in the European market, which is particularly unique given the range of countries, regulatory requirements and other unique differences involved in serving solution providers, retailers and e-tailers across the region."

Released today, the new report entitled Services Capabilities Transform IT Distribution in Europe, is available for free download from the GTDC Research Center. Key findings include:

  • Dozens of new services now differentiate technology distributors. Check out a list of examples released in conjunction with the report and published on the GTDC website.
  • There’s a unique contrast in the expanding world of distributor services. On the one hand, European distributors interviewed for the report con­firm substantially higher utilization by both vendors and solution providers – yet neither are typically leveraging the full depth and breadth.
  • On the vendor side, many see distributors as an extension of their operations while distributor channel service portfolios address widening skills-gap challenges and shortages.
  • European distributors surveyed for the report view Demand Generation, Solution Development (including pre- and post-sale support) and Education & Training as among their top services today.
  • As distributors increase their investments in services, ROI doesn’t necessarily come easy. While some are reporting their highest margins in history, how they get compensated for services varies signifi­cantly. Some bundle services into the cost of goods sold while others take a more “a la carte” menu-driven approach.
  • Distributors also note that it is a challenge for many vendors to differentiate value from commodity in their programs – and to define the right compensation models for ensuring their mid-to-long-term strategic objectives.
  • All distributors interviewed for this report underscored advances and growing value in the cloud. Channel adoption has been relatively slow, however, with many traditional resellers struggling – or not yet even attempting – to build cloud services models. This creates both a challenge and sizable opportunity for distributors. Education will be as critical as the cloud solutions they offer in coming months and years.

"The decades of progress that distributors have made since their 'pick, pack and ship' formative years brings to mind the agility and versatility they've come to represent today", observed Peter van den Berg, the GTDC's general manager of EMEA. "Many naysayers have wrongly predicted the demise of distributors in past years, characterizing them as unnecessary 'middlemen', for example, not delivering enough value. The reality is distributors have proven their extraordinary cost efficiencies and distinction on the services front. Indirect has prevailed. Vendors now embrace distributors in numerous ways, in areas that are remarkably advanced as well as intensively demanding from more fundamental account management standpoints, for example. What's particularly impressive is the range of services now inherently part of what they deliver on behalf of solution providers and vendors."