Today’s modern IT environment can’t thrive on the products of one or two vendors. It often takes a technology village to design and implement a complete solution. There are a finite number of organizations with deep, strategic relationships with a broad portfolio of tech vendors to design a comprehensive package.
As a result, the term “solution aggregation” emerged used to describe the way distribution is evolving to deliver pre-packaged solutions for resellers and solution providers to bring to market. Historically, distributors are evolving from the pick-pack-ship model to the value technical model, with a heavy emphasis on moving vendor products through the linear supply chain. This article looks at why the definition of distribution has evolved and how solution aggregators are rising to meet the new standard of service for the technology ecosystem.
Historically: Serving as an Intermediary
The evolution to better serve technology customer needs change has been a long time in the making, especially as you compare it to the direct definition of a “distributor” on TechTarget:
“An IT distributor is a business that acts as an intermediary between vendors and VARs or Sis in the distribution of software or hardware.”
For decades, the tiered system (better known as the technology distribution channel) of vendor – distributor – reseller – end user helped to bring vendor products to world-changing technology projects in every kind of business around the world. Distribution’s historical value was to make the procurement and, you guessed it, distribution of products easier for:
- Vendors that want to streamline their channel access
- Resellers and system integrators who need direct access to vendor products
As technology evolves and end users have increasingly complex demands of reseller relationships, traditional distribution needs to deliver more than an outstanding logistics practice. Today, “distributors” add training, enablement, technical support and robust services offerings to add more value to the channel.
There has been a paradigm shift from the linear model to one that offers a multi-touch experience to address increasingly complex customer demands and new modes of consumption. End users now rely on companies to aggregate multi-vendor solutions to meet the requirements of a hybrid workforce. They are looking for simpler solutions to complex problems with data-driven agility so that the IT sector can continue to evolve through digital transformation.
The Big Picture: Business and Business Model Disruption
Next-gen technologies are inherently disrupting many industries as we know it. Channel partners and their end customers are looking for cutting-edge technology that solve a business need, which is becoming increasingly complex, requiring multiple products from multiple vendors, and solution aggregators are the ones in a perfect position to simplify the building, delivery and support of those solutions. Areas where next-gen technologies are benefitting from multi-vendor solutions:
- Cloud computing – More companies are embracing a hybrid cloud strategy; in fact, 87% of cloud users are taking that step to hybrid cloud. With a mix of on-prem and cloud infrastructure comes a more complex technology stack, which will likely merge vendors for modern hardware, software and solutions, and hyperscalers that can bring it all together.
- IoT and Data – The IoT ecosystem requires the connection of a lot of dots, especially when you think about the edge device itself, their connection to the network, the security and platform to support it, and then the analytics to optimize.
- Security - Countering modern cybersecurity attacks requires security expertise in multiple areas. Solution aggregators are capable of bringing together vendors that specialize in application security, advanced threat detection, backup and recovery capabilities, encryption, malware prevention, network security, and VPN, to name a few.
Value creation in traditional distribution models is essential but finite. When combined with solution aggregation, that model becomes exponentially more valuable, putting the solution aggregators’ differentiation and positioning at the center of the IT ecosystem Traditional distribution limits the value-creation aspect, and this next-gen tech disruption is allowing solution aggregators to differentiate themselves and unlock the potential of the ecosystem. As identified by our own Sergio Farache, executive vice president of strategy, innovation and next-gen technologies, in Channel Futures, the technology ecosystem of the future requires deeper technology integration with new business processes to challenge the status quo. The companies adapting well are the likely leaders of the next generation of distribution.
Why it Matters: The Importance of Solution Aggregation
A solution aggregator is at the heart of the ever-changing technology ecosystem with a dedicated approach to uniting IT solutions that scale to customer needs today and unlock growth for tomorrow. Solution aggregators have insight into the full universe in an optimized way. When distributors become solution aggregators, they’re now customizing the entire experience so that our channel partners and their customers stay competitive in today’s market.
“As a solution aggregator, the benefit we bring our partners is solutions and ecosystem simplicity so customers can accelerate time to market, reduce cost and minimize the skill gap.”
– Sergio Farache
Solution aggregators have a thorough understanding of the complex market opportunity and can streamline those complexities. As a solution aggregator, there is a responsibility to enable and empower channel partners with the most relevant IT information, solve complex market challenges, deliver multi-vendor solutions and ultimately evolve to the next step to unlock growth for the future.
Where the Demand is: Solution Aggregation Use Cases in the Internet of Things (IoT) Market
The IoT market is one of many areas benefitting from the rise of solution aggregators. Before the pandemic, CRN highlighted several distributors helping solution providers meet IoT needs by aggregating pre-packaged solutions with value-added services. Tech Data created the IoT and Data Solution Factory, a program matching channel partner’s ideas with a specialized combination of vendor solutions to make the idea a reality.
Software-focused vendors, like Microsoft, lean on solution aggregators for hardware relationships to maximize their solutions. Microsoft indicated it typically takes anywhere from 10 to 40 partners to implement an edge-to-cloud IoT solution. By working with solution aggregators, IoT solutions are effectively pulled together across many verticals, like manufacturing, retail and healthcare.
What’s Next: Moving Toward the Future
In a recent blog and report by Forrester, Jay McBain, principal analyst at Forrester, discusses what the future of distribution looks like. COVID-19 was a significant contributor to exposing organizations that kept a very linear value chain, and instead boosted the growth of distributors that embraced digital transformation, subscription and as-a-service models and higher interaction with customers.
As more businesses move to cloud-based digital adoption, distributors face an immediate threat to provide the value-add services to become the platform of choice. It even moves beyond solution aggregation; successful distributors will also clearly showcase enablement opportunities, flexible subscription and consumption models, as well as influence channel innovation. Per the blog and report:
“To be relevant in the new world of digital natives, subscription models, and direct-to-consumer businesses, distributors with deep industry expertise must reorganize themselves to aggregate, facilitate, and orchestrate ecosystems of value creation.”
At Tech Data, we have several resources available to help you learn more about solution aggregation, including a blog from 2018 that has accurately predicted the rollout of an evolving distribution model into solution aggregation. For those in the public sector, our DLT team has also defined solution aggregation and what this means among those in public sector infrastructure. Also, be on the lookout for additional posts on solution aggregation here on the Authority Blog over the next few weeks.
About the Author
Mike Fitch is a content marketing expert with more than 9 years of experience in B2B marketing, specializing in marketing automation, branding, social media, and content strategy. Mike currently serves as a Senior eMarketing Strategist for Tech Data’s Americas Communications team