Distribution Watch: With New Programs, Avnet Attacks Digital Transformation

2016 has been a tremendously disruptive year for the channel. The Digital Transformation is in full effect as emergent third-platform technologies including cloud, analytics, mobile and the Internet of Things (IoT) come out of the theoretical realm and into practical application. From IT vendors to end users, business activities, processes and models are changing in order to capitalize on these digital technologies. And at every level, businesses are struggling to adapt, feeling their way through unmapped territory.

In the past few weeks, distribution giant Avnet has been busy announcing partnerships and programs designed to help their partners navigate the Digital Transformation, particularly in the areas of cloud and the Internet of Things (IoT). The challenges range far wider than just educating partners in new technologies. Because cloud-based solutions are sold primarily on a subscription or consumption basis, traditional VARs have to rethink their approach to business—and disties like Avnet are trying to find creative ways to help.

“The challenges are that your monetization doesn’t happen overnight like it has for the past 20 years, where you sell big chunks of hardware or software,” says Hash Malik, CEO of SPS, Inc. “It’s a different sales model. It’s a different business model. It’s even a different survival model for people like us because in the future we are not counting on making these transactional sales. We are going to have to have these monthly recurring revenues and that monthly recurring revenue is coming from some kind of a service that we are providing.”

That service revolves around technical knowledge that may not be typical of a VAR today. Many VARs rely on solution architects, deployment specialists and developers, so today’s VARs need programmers more than they need system admins. From electrical engineers to networking specialists, application developers to security experts, today’s solutions are dependent upon a complex system of technical specialists.

There’s a whole spectrum of skillsets Malik says most VARs will not be able to grow organically. And that creates a monster problem because as the market share of transaction-based revenue dwindles, it’ll become harder and harder to retain or maintain current revenue streams of income.

This is the problem that Avnet’s new programs are trying to address, in both IoT and the cloud marketplace.

Cloud & Managed Services

Helping partners embrace the Digital Transformation is an ethos that Avnet is embracing across its business groups. Tim FitzGerald, vice president of digital transformation at Avnet, says there are a couple of main pain points the distributor is most focused on helping the channel solve. Notably, they have little to do with technology. Instead, partners seem to be struggling the most with the business model shift that cloud has ushered in.

“In the beginning, it was about how to bill and invoice the customer when they have services from multiple cloud providers,” says FitzGerald. More than that, it was about how to provide all the detailed information to substantiate each charge on a single invoice. This sort of complex and recurring billing isn’t familiar to many traditional VARs, and Avnet found it needed to provide training and tools to teach partners how to make the shift.

The second pain point FitzGerald mentioned is how to sell to LOB buyers rather than the IT department. Partners need an efficient way to leverage a broad array of providers in order to offer comprehensive solutions, and they need help showing expertise in specific verticals. When you’re used to talking about broad IT solutions, it can be tricky learning the language of the marketing or accounts payable department. And if partners can’t become fluent in that language, then Avnet can’t leverage the LOB market to push its cloud products.

Like most other distributors, Avnet stood up a cloud marketplace. But FitzGerald says this one is different because it was purpose-built to support both subscription and consumption models. Most partners today, he says, are looking for a platform that allows for a combination of the two since different cloud providers have a disposition toward one or the other. AWS, for instance, is an all-consumption cloud: you pay for what you use on a monthly basis. Most software is evolving from a license model to a subscription model, where customers are billed the same amount each month over a contract term. Cloud providers like Microsoft Azure or IBM Softlayer operate in both models. Partners need a marketplace that can support any combination of the two.

Last week, Avnet announced two new partner programs from AWS and Oracle that fall in line with the comprehensive, flexible mission that was the genesis for its cloud marketplace. The AWS CloudFront Reseller Program centers around content delivery network (CDN) specific workloads like websites, APIs, video content or other web assets. Avnet’s Oracle Reseller Program lets partners resell Oracles Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) solutions from an out-of-the-box branded storefront. Both programs offer Avnet’s cloud-agnostic training and enablement for both technical specialists and sales teams at no charge for partners. In addition, Avnet is one of only three companies that currently deliver AWS-specific training.

It’s all about deepening the ecosystem, leveraging born-in-the-cloud technology and evolving alongside traditional vendors that are also making the journey toward as-a-service models.

“We want to arm the broadest array of partner types possible to deliver digital transformation solutions,” says FitzGerald. That means broad and deep specialized solutions geared toward multiple market challenges and able to be tweaked to achieve innumerable unique business outcomes. “We have to complement what our partners are developing to make sure they stay relevant, at the fastest rate of innovation.”

IoT

“There are a lot of people that look at IOT and they see the shiny objects of devices and the ability to call on different constituencies of the line of business,” says Colin Blair, VP of Big Data & Analytics, IoT, and Cognitive Computing at Avnet. There’s certainly a little opportunity there; all those devices have to be sold and installed by someone. But once you start to look at the world the way Blair does, you can see use cases everywhere.

“There are thousands and thousands of people that are monitored walking through large shopping malls. There are thousands of oil wells in the field. There is 400 to 500 bits of data that get thrown off an elevator’s device management system and there are hundreds of thousands of elevators in the world. You drive down the street and see nothing but opportunity.”

Today, VARs are making a lot of money from devices and data centers, but that’s just the tip of the IoT iceberg, says Blair. Distributors like Avnet can help partners connect to vendors and providers in areas with which they’re unfamiliar. Avnet wants to leverage its relationships in order to package technology so that it’s practical to the channel, from areas like the data center, cloud, communications networks, data analytics and even down to designing and developing sensors.

“In an IOT solution, there is no one monolith that can do everything—not one supplier, rarely one system integrator and not one reseller. It really is an ecosystem of companies and solution providers that have skills in each one of these areas.” Blair says Avnet came to understand that it had to dive deep with partners to get a grasp on their install base, what they’re selling and to whom and where the opportunities are.

Two weeks ago, Avnet announced a partnership with relayr, which provides an enterprise middleware platform designed to enable faster adoption of IoT solutions. With the partnership, one of the first things relayr and Avnet are offering partners is a formal consultative “innovation-as-a-service” engagement. This isn’t a quick fix, one-day training seminar. It starts with the partner and Avnet together going to the client and for five days talking about innovation and ideation around what’s possible with the available data, sensors and applications to drive the monetization of data and competitive differentiation.

That’s followed by four weeks of prototyping and design that can include network infrastructure, cloud infrastructure, software development kits and APIs that are driven by the relayr solution, and which connectivity gateway to utilize. What emerges is essentially a proof of concept that over the next three months is vetted and put into production. After that, the customer pays per month for the solution.

Blair envisions the burgeoning Avnet IoT ecosystem enabling partners to expand their reach and trusted advisor status in order to escape the confines of the IT department or the CIO. He wants partners to be able to talk to broader lines of business (LOB) about solving for business outcomes. Malik thinks partnerships with programs like Avnet’s will be the fastest way for VARs to ramp up to making money from selling emerging technology. VARs already have longstanding relationships with their customers selling IT solutions. Now they can leverage those relationships to sell digital solutions without necessarily having development resources, a deep understanding of cognitive computing or an arsenal of analytics knowledge.

“It almost productizes the skillset that VARs would have to otherwise develop themselves,” Malik says. “It enables them to do what they do best, which is to go to their customers and sell them some product. In this case it’s a services product.”