Changing tides in the channel: differentiating on value, not cost

Disrupt or be disrupted – this is the digital transformation ultimatum all businesses are facing, and it is causing a significant problem when it comes to infrastructure. Managing the adoption of new technologies for any business is tricky, but it is especially pronounced in sectors with a reliance on hardware. Here, the gaps between old ways of working and the benefits digital transformation can offer need to be bridged, creating both a challenge and an opportunity for resellers.

Designing and implementing the requirements of digital transformation has proven to be a highly complex process, which has completely changed the role of channel partners in the IT food chain. They’re no longer exclusively middlemen supporting the strategy of vendors. Instead they are taking on the role of consultants – partly out of necessity. After all, IT infrastructure can seriously impact the running of any organisation. And with new systems becoming the lifeblood of modern business, taking the right approach has become more crucial than ever.

This fundamental shift for the channel has been gathering pace for some time. However, in 2018, it’s now come to a head. It’s no longer enough to simply be a low-cost provider. Resellers must now also be problem solvers and offer strategic business advice to their customers in order to come out on top.

Digital transformation challenges, real opportunities

The education sector is a prime example of where this changing role in the ecosystem has already taken hold and how resellers are capitalising upon it. Universities and colleges have long had extensive IT networks in place and haven’t been spared from the heightened demands of digital transformation. Increased connectivity expectations from students and faculty alike, together with the ongoing battle to lower operating costs in order to help grant money go further, is putting renewed pressure on these institutions to introduce more flexibility when it comes to the environment they run.

Some of this is straightforward; migration to cloud-based systems, setting up a VPN to allow secure remote access, and improving connectivity speeds across campus. All these challenges can be tackled quickly, and often with the help of a reseller partner. However, not every issue is quite as easy to address, particularly for universities or colleges that are involved in research.

End-users in environments like this depend on high-value software that can’t be delivered as-a-service. Instead, it’s often protected through USB-based hardware authentication that’s physically plugged into the target machine to verify the license and allow the software to run. It makes sense from a licensing perspective but presents a stumbling block for educational institutions looking to achieve that flexibility goal.

Yet this perceived barrier to modernisation is actually an opportunity for the channel. It gives resellers a chance to add the extra value for their customers that is needed in order to stand out, taking them beyond merely competing on cost and presenting the natural evolution of what the channel can offer to its customers.

A different route to getting ahead

This shift is all the more important when you consider how the race to the bottom on price has become such a significant issue in the channel market as a result of high competition, and how it can be difficult to find an alternative differentiator as a result. Yet more forward-thinking resellers are still managing to get ahead – not only by reacting to and resolving issues as they arise, but also by anticipating the specific issues their clients will face ahead of time.

Take the aforementioned stumbling block of hardware-level software protection. Here, thinking differently and looking for advanced technologies that tackle niche challenges, such as software licensing, can set resellers apart from the competition. Dongle servers, for example, are not necessarily a staple in the arsenal of all resellers. But they do create a workaround for enabling businesses that depend on hardware-level software licensing to take full advantage of digital transformation.

Technology like this can overcome the issue of hardware-based authentication by plugging licensing dongles into an extra piece of hardware – a dongle server. In an environment like this, hardware dongles can then be made available over the network, working in much the same way as if they had been connected directly to the user’s computer. This means the location of the user becomes irrelevant, extending the flexibility offered by cloud computing to physical systems too.

What does this look like for a reseller?

For the reseller, the benefit of taking an approach like this is a much stronger differentiator than simply the lowest price to deploy. Take the University of Missouri; it had the exact issues outlined above, requiring the flexibility to use high-value software across different sites. Not only this, it wanted to legally reduce the number of licences needed for its Dalton Cardiovascular Research facility, which cost $3000-$4000 each.

By incorporating dongle server technology into its IT infrastructure, 17 labs at Dalton and any other lab associated with the University could be served by five licences, minimising costs without impacting ease of use, and within the terms of the licensing agreement. The result was a significant positive impact on the bottom line in a sector that is notoriously squeezed from a funding perspective.

Delivering a solution like this, as part of a broader network rollout, is paramount to building a longstanding relationship. By solving IT challenges in a way that has a knock-on effect in reducing costs elsewhere, it eliminates the need for the race to the bottom on price. It builds trust, too, and shows a true understanding of the clients’ business needs.

Ultimately, to make this a reality in an increasingly crowded channel market, savvy resellers should not only look to partner with the right vendors but also to those that have a strong focus on innovation as a way of solving sector-specific issues before they arise. Those that take this approach will set themselves apart with a sustainable business model that differentiates on value rather than price.

Joachim Sturmhoefel is a managing director at SEH Technology.

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