Brand Management, Competitive Strategy, Positioning

Distributing the Cloud

…and with distribution, I mean the bricks and mortar business of IT distributors and Value Added Resellers.

Last week I spent two days with the marketing team – about 10 managers, and the VP – of one of our principal Value Added Resellers for the Nordics and Benelux. A good piece of the conversation focused on how cloud is changing the game on their level, too – proving it’s not just the vendors rescoping.

Distribution – you can’t live with it, you can’t do without it. If you’re an IT manufacturer, this thought will have crossed your mind from time to time. You spend millions on R&D developing cutting edge, user-friendly technology, throw in some more to have marketing come up with value propositions that resonate really well in the market place, and you do what you can to drive demand and generate leads for those offerings. At the end of the day though, it’s the channel who decides whether you win or loose, since they’re the ones managing the actual customer relationship. And they do so for many manufacturers all at once. So who knows which value propositions make it to market, and what’s left of it once they do?

Nevertheless, this is a pretty clear-cut situation for traditional IT business. The industry has been thriving since the 70s, so the model seems to be working. Cloud computing is throwing things up in the air.

So this VAR I met with, who is in traditional hardware/software/services business, bought another, smaller VAR, who is in the cloud services space. They talk private, external, or hybrid cloud (and anything in between). The result is a bigger VAR, with a portfolio spanning both traditional and cloud-based products, solutions and services – made up of hardware and software from most any of the industry leading manufacturers. It’s quite to make sense of it all, actually. And I am not even buying.

Juxtaposition: data storage as a machine in a box with an electrical cord and a one-time price tag, versus storage in a networked or web-based cloud with a monthly user fee. For option 1, the customer needs an extended IT team and a clear strategy; for option 2, she needs some smart consultants and a clear strategy. In most cases, the latter is without question cheaper, more flexible, more efficient.

Like I wrote before, the vendors will have to decide how they want to position within cloud infrastructure value propositions, which will entail more and more point solutions of various sorts and vendors. Strategic alliances, integration and compatibility between those best-of-breed solutions will be KSFs of tomorrow’s IT industry (which literally is here tomorrow – maybe today). All best-of-breed brands will evolve into Cloud ingredient brands over time. No exceptions.

And the Value Added Reseller needs to sit down and think about their corporate positioning, brand, product and services portfolios, value propositions and rules of (sales and marketing) engagement – in a way that meets market expectations.

At the end of the day, the buyer has the final say. It’s a brand new day for him, too.

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