Distribution in the UK

As a Value added distributor of business telecomms solutions ICON is in a privildge position to see the changes and pressures taking place in the distribution market and reseller channel.  Mark Shane, Sales Manger at ICON reviews the distribution landscape in the UK

The changing distribition landscape:  Improving profitability per se is as much an imperative of the distribution business as it is of all the channel but it is not the factor which has the potential to change the distribution landscape.  Technology innovation and the slow but inexorable move towards VoIP and UC will shape the distribution landscape of the future.  The emergence of solutions which require a high level of technology support during their introduction and market adoption stages will be the catalyst for change in the sector.

The pressures in the distribution sector over the next few years will be to assimilate and launch these technologies into the channel.  The skills required to do this focus on technology competencies rather than the logistics of box shifting.  Distributors which already have technology value services as a core competency will see new opportunities as a result of these new technology solutions.

ICON is already exploiting these developing opportunities with the products such as TalkSwitch the small business IP_PBX, uMobility the vendor agnostic FMC solution, and unified communication (UC) products such as MESSAGE Manager and Wave with its integrated business applications and services, ICON are already finding that the channel need more flexible solutions such as the Fusion messaging and alarm integration modules for their already successful Polycom DECT and IP DECT solutions.  Adding application integration is now being driven by the end user as technology awareness is reaching a critical mass.

The new technology solutions require a much more consultative sale and support infrastructure than the traditional solutions.  Those distributors with logistics at the heart of their business model will find it difficult to offer the market a compelling proposition for the emerging products such as these.  The issue for these distributors is not whether they can maintain profitability (with good business governance they can) but whether they can maintain their market share, turnover and customer base.

The importance of matching the product with the distributor : In the early stages of market development the emerging technologies are support intensive.  This demands a distributor with a skill set which can deliver the level of technical and sales support required.  Vendor marketing tactics match product requirements with distributor capabilities.  Get the match wrong and the vendors solution will languish in the lower regions of the distributor’s catalogue.

For the distributor such as ICON which already operates a value added distribution (VAD) business model the emerging technologies are creating new opportunities.  

Solutions which are part of the converged ICT marketplace means new channel opportunities for the VAD.  With more and more products looking like an IT solution the reseller profile is changing.  Resellers need to understand networking and ICON is finding new opportunities in the IT reseller channel for its IP-PBX solutions TalkSwitch and Wave.

Vendors are looking for distribution partners which have established VAD competencies.  When TalkSwitch was looking for a distributor for its small business IP-PBX solution a key factor in its decision to work with ICON was ICON’s VAD services.  Jan Scheeren, president and CEO, TalkSwitch, said

“We are very pleased to partner with ICON to build on the increasing popularity of TalkSwitch in the UK market. ICON is an experienced value-added distributor specializing in VoIP products, with nationwide regional account managers, and a strong focus on channel and technical support”

ICON's core strengths and the emerging technologies:  ICON’s business model is firmly in the value added space where the focus is on sales and technology support of cutting edge communications solutions.  The product portfolio includes solutions which in one way or another exploit the emerging technologies - MESSAGEmanager (a unified Fax, SMS, Telex messaging solution) embraces virtualisation, Wave IP the IP-PBX includes integrated business applications out of the box, and the on site mobility solutions from Polycom works in hosted environments.  The MESSAGEmanager channel offering is about to increase with MMOD (MESSAGEmanager On Demand) which is a cloud based enterprise FAX and SMS solution. 

ICON distributes VoIP, professional DECT, business phone, alarm, and messaging systems.  These require a skilled solutions sale, sophisticated specification and installation, and ongoing support.  In these markets Icon has positioned itself as a value added systems distributor.  This has meant differentiating the total business model so that adding value is at the core of business and not just part of the marketing process. This means distributing products that really need a value-added service, are compatible, and will add depth rather than breadth to the portfolio. That way icon can provide unrivalled advice on the interoperability and suitability of the products and how the functionality can be exploited across the applications. 

Responding to a dealer’s individual need requires the understanding that only a true VAD can provide.  Without core strengths of specialism it is hard to offer real expert advice.  As part of our individual treatment we offer to;

• Actively work with dealers to win the sale, provide sales and technical training which suits their needs.
• Maintaining sufficient stock to make deliveries.  Stock availability is the key to adding value.  As a key UK distributor for the products in its portfolio icon has often supported dealers who have been let down by a box shifter.
• Extending commitment to the dealer into post sales service.  ICON provides a problem solving telephone based support experts, out of warranty repair and an ongoing commitment to a solution sourced from it.  In some cases it also works with the dealer to train the customer.  
• Focusing on relationship building and positive communications.  The knowledge that a dealer can call and speak to someone that knows about an order or client installation and will be able to walk them through the problem, make suggestions and offer a solution all adds to the value of a boxed product.

Icon believes that many distributors who claim to add value do not meet best in class benchmarks.  The test is to look at the commitment given to value added; is advice available at time of order, is real time support provided during installation, is there a depth of application knowledge at the end of the phone, does the distributor actively support the sales process, and finally will the distributor’s commitment to the solution continue after the bill has been paid.

The impact of new technologies on distribution: The emerging technologies and new solution will create opportunities for the VAD and its resellers which will not be available to the logistics based box shifter but there is unlikely to be any evolution in strengths or development of new identities.  

Products which require support will naturally gravitate to the VAD sector.  The TalkSwitch small business IP-PBX is one case study initially placed with a logistics based box shifter but now supported by ICON.  

The era of the broad based box shifter is unlikely to come to a sudden end and similarly it is unlikely that they will suddenly become VAD distributors.  The transition from the logistics based skills model of the broad based box shifter to a technology focused VAD skills business model is probably too much of a step for the box shifter. 

For the VAD specialisation in a narrow technology niche is not a viable option in a market which is moving to greater and greater interdependence of technologies under the umbrella of UC. VAD distributors will need to offer the capability to support UC focused solutions. This means skills in mobility solutions, IP-PBX, messaging and FMC.  ICON has built up its solution portfolio to include all these emerging technologies. Our IP-PBX solutions Wave and TalkSwitch lead the field in cost and innovation and MESSAGEmanager is setting the pace in Fax over IP and support for virtualisation.

The future of distribution in the UK: Our view is that there will no major structural changes in the distribution sector over the short term.  Box shifters may find pressure on sales but good business governance should maintain profitability even if sales dropped.  Individual VAD distributors may become stronger players in the market as they take advantage of the increasing demands for the emerging technologies.

Distributor driven channel innovation and improvement: In terms of supporting the uptake of new technologies by the channel the VAD sector is key to channel innovation and improvement.  Access to technology support is key to take up by channel of new technologies. A significant part of the launch of the emerging technologies is the distribution of knowledge to the channel. This is not a role for the logistics focussed distributor and the vendor is not able to provide the coverage or penetration down to the grass roots level needed.

VAD managed training and support to the reseller channel in the emerging technologies is a key enabler to product launch. ICON provides cost free, training in sales and technology of the UC VOIP solutions such as Wave and takes on responsibility for channel education when major product changes occur. None of this is done by the logistics based box shifter.