Connecting The Dots: The Impact of Marketplaces on Routes To Market

I was talking to a Senior Director of a large technology vendor in the Bay area. His company had started out with software, absorbed a hardware acquisition maybe six years ago, and is now building out XaaS services.

We were talking over lunch about the customer’s point of view and how his company – through the channel – can get repeat purchases today and tomorrow. We soon started talking about cloud catalogues and distributor marketplaces. Vendors these days are focusing in on enterprise sales, where they may have partners implementing. In the ‘commercial’ space they are engaging – his experience – with a small select set of partners who have good customer proximity and (he hopes) good vendor fit. But increasingly he recognises – for commercial and SMB – that customers are buying bundles, or solutions. A small business customer might need to refresh its PCs and tablets, get some new networking infrastructure, and layer in applications.

Customer Choices

We talked around this and grasped how a customer has choices. The customer could buy from a preferred local trusted advisor, who might then ‘own’ the whole solution, and most likely will deliver some of it as a service. Perhaps (and maybe more in the future) the customer could buy from a ‘marketplace’. The need might be for HP hardware, Veritas appliances, Symantec software, Office 365 licences and a portfolio of SaaS apps. The customer might buy all of this as a service through a marketplace.

But how does a vendor achieve maximum wallet-share in this marketplace scenario?

Connected Vendors

For many vendors, the only way to make sense of this today is to cover bets and watch developments. Not a great strategy. Perhaps most of all a vendor needs to connect. Connect with the right partners, connect with a suite of service providers and ISVs, and connect with other like-minded vendors.

Some vendors are doing this already. Symantec is exploring cloud and marketplaces. Dell and Intel have expanding models where they sell through catalogues. HPE has built Cloud 28+ to drive marketplace integration. All of these address a piece of the problem, but few actually provide the complete ‘connected’ market solution. The closest you can get today is if you buy a ‘single stack’ from one supplier. Think Apple Macs, iPhones and apps … and even then you’ll need networking, storage, and more.

Connected Partners

If there is more integration and ‘connectedness’ in these developing marketplace models, then the channel gets squeezed (even more). Vendors engage with distributors who provide solution-based marketplaces, squeezing out the reseller. The reseller becomes a service-provider, with consultancy and integration services, to retain customer intimacy and customer value. As this model becomes more successful it will move up from the mass marketplace from ‘commercial’, and provide options for departmental purchases in enterprise companies.

The successful partner has to become adept at service delivery and integration, and most importantly adept at ‘client management’. The marketplaces provides an integrated purchasing, billing and fulfilment capability, connecting vendors, distributors and service-providers.

Connecting for Success

Back to the original discussion with the Senior Director of that technology vendor. What should he do now to be successful? Our conclusion was that he has to have prioritised engagements models for these developing routes to market.

He needs to have a marketplace ‘play’ with more than one distributor. He needs to have partners attracted to these marketplaces, and he needs to have a compelling suite of applications and services as a vendor to put into these marketplaces, as they represent his ‘shop window’.

The only way for him to do this is to make connections in his business and outside it. He has to encourage the lines of business in his company to be open to help distributors, partners and ISVs in making connections with each other, and with complementary vendors.

This is a very different channel model for success than the ‘old world’ and relies on making the right connections. bChannels has experience in helping clients explore how to make these connections. This is becoming a bigger conversation.

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