New Tech Data Marketplace Aims To Connect Channel Partners, ISVs and Cloud Providers
Two-and-a-half years ago, the board of directors of IT distributor Tech Data issued a directive that software sales should account for 25 percent of the company's revenues, up from 17 percent at the time. The reason was obvious: Tech Data wouldn't have to carry as much inventory which was eating into its capital.
To get there, Tech Data knew it had to revamp its supply chain in order to connect software vendors and ISVs with implementation partners. Last year, the company launched its Software License Selector, a Web-based portal that allows systems integrators and VARs to locate correct SKUs and place orders right away.
"We figured the only way to scale that business and drive net new incremental revenue was to revolutionize the way software licensing is done in the channel," said Joe Quaglia, Tech Data's senior VP of U.S. marketing. "It's is a complex, tedious, slow and resource-intensive process requiring a lot of knowledge in identifying the right products and getting the products to the right customer."
The Software License Selector lets Tech Data manage orders for hundreds of thousands of SKUs (taking into account the multiple permutations of SKUs) more quickly, accurately and with a much higher level of automation. Since its launch, 70 percent of orders are processed without human intervention, up from 30 percent, according to Quaglia.
While he wouldn't say whether Tech Data has reached that 25 percent threshold, Quaglia indicted the company has made meaningful progress. "We are gaining market share. We have more resellers buying software than we did previously," he said. "That tells us we have reduced that complexity for them, and more resellers are coming back to buy software."
This week, Tech Data is taking that effort to the next level. The company has launched the StreamOne Solutions Store, aimed at letting VARs procure cloud services and electronic software downloads (ESDs). StreamOne is a single platform that emulates an application store not unlike the Apple iTunes App Store.
Once approved by Tech Data, cloud providers and ISVs can market their offerings on the StreamOne Solutions Store and channel partners can resell, provision and bill their customers in an integrated manner, company officials said. Later this year, Tech Data will allow partners to run their own rebranded white-labeled version of the store.
Initial entrants to Tech Data's line card include smaller players such as CloudBasic, HyperOffice, LeadMaster, Message Solutions, RazDog, Retrieve Technologies, Reviora, SiteLock, Sonian and Storage Online. The only big names on the list were Amazon Web Services and McAfee, though Quaglia said the roster will become more comprehensive over time. "We are signing vendors every day," Quaglia said. "There are a couple of big names coming up."
All of the major distributors, including Ingram Micro, Avnet and Synnex, have launched programs to help connect solution providers (VARs, systems integrators, ISVs and MSPs) with cloud providers. An IDC study last summer found 28 percent of those solution providers surveyed have not reported any revenue from cloud services and another 43 percent said less than 10 percent of their revenue came from cloud services.
"Clearly the upside is great and solution providers are looking to their distributors and vendors for assistance in capturing this market," said Virginia Shepherd Agee, IDC's research director for infrastructure channels and alliances. "With StreamOne, Tech Data is addressing that need and offering its partners access to a variety of proven, integrated cloud services for their end user clients. Tech Data's resellers will be able to connect with suppliers of SaaS, PaaS and IaaS offerings which have been vetted by Tech Data, and those suppliers, in turn, gain access to a vast network of resellers."
Tech Data says it has 60,000 active VARs that procure IT products through its distribution channel. By using StreamOne, Tech Data believes it will offer numerous benefits to procuring cloud services and ESDs. It will offer a billing model to support monthly recurring revenue, a consolidated monitoring dashboard, marketing, digital rights management, returns management and vendor blogs. Partners can comment on their satisfaction (or lack thereof) with the products and services they procure or evaluate.
Existing partners can use their current lines of credit to make purchases from StreamOne.
Posted by Jeffrey Schwartz on January 25, 2012 at 11:59 AM