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Rage-making, anxiety-inducing tech distributors: An ode

One reselling man tells his tale of woe

Sysadmin Blog As vendors don't seem all that interested in selling equipment directly, value-added resellers (VARs), managed service providers (MSPs) and the like must buy our gear from distributors before selling it on to our clients.

Oh, not all disties are totally awful. There's always one we can point to and say "I love those guys". Unfortunately, that's usually followed by a statement such as "I wish they carried more of what I need to buy" or "too bad they're getting bought by [distie that is awful]".

By and large, however, IT distributors seem to exist for no reason other than to impose a burden of paperwork and rage-induced cardiac events on anyone seeking to actually buy technology.

Once you've waded through the red tape around actually getting signed up as a reseller and are allowed to purchase from the distie you will inevitably get a login to one or more web pages. Here, you'll find access to promotional materials about various products, access to training (read: indoctrination) sessions and so forth.

If you're really lucky, there might even be a catalogue or "online store" where you can browse the wares the distie has available and attempt to purchase them. More fool you if you try, however, as the online store will use a different authentication system that never works and the help desk doesn't understand. The online catalogue will be out of date, have entire sections missing and a bad formula somewhere will make everything seem like a good deal that suddenly has to be changed after you've already committed to buying something.

If you're a new customer, don't expect any help from your sales rep. You're only as valuable to them as your last quarter's sales, and if you are trying to actually use the distie's website, you clearly didn't bring in enough last quarter for them to care about you.

To top it all off, these disties keep buying one another! The effects of all those mergers and acquisitions on the back-end IT is to take an already bad situation and make it a horror on the level of an American presidential election.

Changes in the mirror are larger than they appear

Disties don't feel they have much incentive to change. They're quite comfortable being the second-most-awful part of the channel, right after large three letter VARs, who shall go unmentioned. Disties are at the top of the heap.

Anyone wanting to play the on-premises IT game – vendor, reseller or customer – has to play by their rules. If you want to drive, you need a licence: there is no reason for the registry/DMV to actually care about customer service.

It's a common enough attitude in IT. All the big players have suffered or currently do suffer from it. Maybe the disties should have a talk with HP or IBM about how arrogant complacency served them once Amazon entered the fray. Maybe the disties should check their rearview mirrors and see if they can see Amazon stalking them as well.

Amazon is readying a double gut-punch for the channel. The first is coming in the form of declining on-premises IT sales. Amazon sets the pace of the public cloud, and their focus on ease of use is winning hearts and minds.

The few vendors that have figured out that ease of use is the only way to defend against Amazon aren't willing or able to put enough resources into creating viable alternatives quickly enough to staunch the loss of customers. This is combined with the fact that all these new vendor goodies have to be bought through the channel, and disties make everyone's lives downstream of them miserable.

The second of Amazon's punches comes in the form of their Amazon online store. Far from simply selling books, one can purchase virtually any kind of IT gear imaginable there. Yes, it costs more than going through the disties, but not enough to matter to most end customers. And the whole "costs more" thing may well go away once vendors decide they've had enough of the channel's shenanigans and start selling through Amazon.

The transformation of the channel

All of the above is backdrop to a larger transformation in the channel. The roles of VARs and MSPs are changing. Public cloud computing is something VARs and MSPs must embrace in order to survive.

Keystone vendors such as Microsoft, which have for decades been a core part of channel revenue, have decided to put real effort into killing off everything on-premises. What meagre margins are on offer exist only if you resell Microsoft's cloud services, and Microsoft isn't the only vendor making this push.

MSPs – especially smaller MSPs – have largely decided that they need to become cloud providers in their own right in order to survive. It's normal for an MSP to buy some servers, toss them in a colo and start offering Backup as a Service (BaaS) or Disaster Recovery as a Service (DRaaS) in the hopes of augmenting regular revenues.

The lines between small cloud providers, MSPs and VARs are blurring into insignificance. As they do so, selling hardware and software is becoming a smaller and smaller percentage of channel revenues. In many cases, it is a perfectly rational business decision to simply take the minor margin hit on the gear and buy it from Amazon and thus bypass the hassle of dealing with disties - because it is services where the real money is now being made.

If disties want to survive, they need to adapt. They need to be as easy to use as Amazon, and they need better customer service. In short: competition exists, so it's time for disties to grow up. It will be interesting to see if that is what they choose to do. ®

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