What Does TSB Consolidation Mean for Vendors? Channel Reacts to PlanetOne-Avant Deal
The pack of national TSBs just grew thinner. Is this good?
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Francesca Bowen serves as global head of partnerships for Darktrace. The AI-based cybersecurity partner entered the advisory channel earlier this year through a partnership with PlanetOne.
Bowen said the acquisition doubles the amount of sales partners Darktrace works with. Bowen also said the transaction provides more third-party customer resources.
“Culturally, it is a great fit because Avant and PlanetOne both take a consultative approach and love to solve real-time business challenges with cybersecurity rather than just selling products,” Bowen said. “We’re thrilled to be a premier security partner for a company that is on the road to becoming a $1 billion partner organization. As Darktrace continues to grow our channel and global presence, we are excited to see Avant growing the same way.”
Zane Long is RingCentral‘s senior vice president of global partner sales.
“We are very excited about the merger between Avant and PlanetOne. These are two TSDs that we have a long history of success with, and we believe their combined expertise will be a net positive for the channel at large,” Long told Channel Futures.
Jason Ness is the CEO of CommandLink, which PlanetOne recognized as its 2021 Provider of the Year. Similarly, CommandLink named PlanetOne its top revenue partner.
“This gives us deep perspective, and partners are coming to us about the Avant acquisition for guidance,” Ness told Channel Futures.
And the CommandLink team is offering a positive outlook.
“We tell partners PlanetOne has some of the best enterprise agents, as does Avant. The people at PlanetOne and Avant are exceptional, making this a great cultural fit. The capital behind Avant will accelerate the partner as well. Ian [Kieninger] is an industry visionary perfect for driving a growth company. The acquisition should provide more innovation, solution engineering, and post-sales support. I think the new Avant will crush it in 2022 and beyond for agents and CommandLink,” Ness said.
Jim Glackin recently joined Nitel as its executive vice president of channel sales. He worked closely with both PlanetOne and Avant in his former role at Masergy. Now he’s leading channel efforts for a company that recently named PlanetOne its first $1 million partner. Both TSBs are among Nitel’s top five partners, Glackin said.
Glackin praised the deal, calling the two companies complementary.
“In many of these mergers, it seems like it’s a merger for the sake of merger. It’s almost like playing Monopoly and just acquiring. But in this case, what makes this so interesting is, there’s almost no overlap between PlanetOne and Avant. There is very real incremental value.”
First, Glackin said the companies fit very well from a in terms of their regional footprints. Avant operates out of Chicago, while PlanetOne hails from Scottsdale, Arizona.
“Avant is nationwide, but they’ve tended to be more Midwest-East. PlanetOne has been more West-Southwest with a big presence in California and Arizona,” Glackin said.
Glackin also pointed to synergies around the customer lifecycle.
He said Avant has built a reputation for pre-sales support, while PlanetOne has developed a strong back office.
“I think it comes with a really interesting value prop to a lot of partners, because Avant has always really lasered in on sales enablement as a service – upfront training certifications and the upfront process in the sale, while PlanetOne has had a lot of focus and success providing support in the post-sales process and then the ongoing lifecycle,” he said.
Glackin said he expects more and more consolidation in the TSB space. However, he also said he believes more players will enter the space, giving vendors options.
Consider, for example, Upstack, which has signed multiple direct agreements with suppliers.
“They weren’t around just a couple of years ago, and I think they’re going to continue to grow, and they’re going to be a dominant player in this industry,” Glackin said.
Social media conversation has also swirled around the legacy IT distributors. Will they seek to capitalize on the growing agent channel?
“Every one of those traditional hardware distributors has been watching this from the sidelines, and they’re seeing their hardware revenues and their traditional revenues fall, and the ‘non-traditional’ as-a-service revenues are growing,” Glackin told Channel Futures. “I think they’re ready to jump in full force. So I don’t see fewer TSBs; I see more TSBs coming.”
Peter Radizeski, founder and president of Rad-Info, has noted that the distis have already been operating in the brokerage arena to some extent.
There are multiple examples of these companies partnering with vendors for commission-based sales.
“Ingram has contracts with UCaaS providers, CenturyLink and more. TD Synnex already has a decent portfolio of connectivity and cloud communications on top of the hardware UC&C they offer,” Radizeski told Channel Futures.
Radizeski pointed to relationships that already exist between TSBs and distis. For example, he said TBI and Ingram are currently working together.
“In the past, Microcorp and XO tried working with Tech Data. It is an uphill battle with VADs. It is about SKUs, MDF, and other hurdles like sell through when the contact with the VARs is through a portal only,” he said.
But would a disti purchase a TSB?
“There has been talk in the last couple of years that Ingram Micro was looking to buy a TSB to augment a small telecom brokerage department they already have,” Radizeski said.
But Radizeski said private equity investment into the TSB space has raised the price for what a value-added distributor would have to pay.
“Intelisys is the only public TSB. It is showing growth of about 16%, yet top line revenue when acquired in 2015 was $120 million and now sits at $80 million,” Radizeski said. “Something happened there. ScanSource paid about $200 million for Intelisys. What would a private-equity infused TSB go for? Plus, who would a VAD buy that could integrate the TSB into the VAD and grow the top line effectively? I don’t have any names for them.”
Glackin said vendors are evaluating their partnerships to see where they get the most value. The PlanetOne deal, he said, is contributing to the conversation vendor channel teams are having.
“And as a vendor, you’re always looking at where you invest time, energy and resources, because every one of them is coming to you, telling you that they want you to invest in them with marketing, sponsorships and things like that. I think it adds more clarity to the channel,” he told Channel Futures.
Craig Patterson, Aryaka Networks’ channel chief and vice president of sales, said many vendors are carefully evaluating their various routes to market. For example, Aryaka recently joined the AppSmart marketplace and is exploring relationships in the IT distributor space.
“Providers like Aryaka need to be mindful on the investment we make, being very strategic in terms of with whom we’re making the investment. Especially with all these other routes to market starting to merge. And we need to be considerate about making sure that we’re making those investments as well. There might be a shift to a little bit from the traditional telco model to some of these next generation routes to market like marketplace. That’s going to require a lot of investment to really build the API integration to really have that digital experience,” Patterson told Channel Futures
Jay Morris, previously worked on the vendor side but now runs advisory firm MOReCOMM Solutions. He said vendors need to reconsider the way they approach their TSB channels. Specifically, he questioned the value of partnering with a large number of TSBs. Not only do these partnerships cost money, but typically cases the TSBs are working with overlapping subagent bases.
“Look at what doing business with two or three TSBs costs. If you want some decent exposure, you’re not even going to get out of the gate until you write a check for $100,000. 90% of the companies doing business in the channel don’t have those kinds of budgets to pay marketing dollars for for TSBs,” Morris said.
He suggested that picking a primary TSB and perhaps adding a second one as insurance might be the most cost-effective way to go.
“They all have the exact same agreements with the exact same providers,” Morris said. “I think you’re better off being a bigger fish with fewer players.”
Jay Morris, previously worked on the vendor side but now runs advisory firm MOReCOMM Solutions. He said vendors need to reconsider the way they approach their TSB channels. Specifically, he questioned the value of partnering with a large number of TSBs. Not only do these partnerships cost money, but typically cases the TSBs are working with overlapping subagent bases.
“Look at what doing business with two or three TSBs costs. If you want some decent exposure, you’re not even going to get out of the gate until you write a check for $100,000. 90% of the companies doing business in the channel don’t have those kinds of budgets to pay marketing dollars for for TSBs,” Morris said.
He suggested that picking a primary TSB and perhaps adding a second one as insurance might be the most cost-effective way to go.
“They all have the exact same agreements with the exact same providers,” Morris said. “I think you’re better off being a bigger fish with fewer players.”
Avant‘s acquisition of PlanetOne continues to send shockwaves through the channel.
The companies last week announced the merger, which will bring Arizona-based PlanetOne under Chicago-based Avant’s brand. Partners have publicly responded with largely positive feedback to the deal, citing complementary skillsets of the companies. Suppliers of both companies agreed with the agents in a recent round of interviews with Channel Futures, citing geographical and operational fits.
Vendor channel leaders also spoke about how TSB consolidation impacts their outlook for the upcoming years. Many in the channel anticipate the number of national TSBs to decrease to a very small number – perhaps as low as three. Others predict the space to actually grow as super-agencies sign more direct agreements and traditional distributors expand their agent efforts. More and more vendors, including Cisco and Masergy, are turning to both multiple distribution routes to widen their partner bases. And other providers are weighing the pros and cons of joining a marketplace.
Several suppliers, as well as a couple of partners, weighed on how the deal impacts them and the wider industry. See our slideshow above.
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