IT Distribution Preps To Ride A Wave Of Changes: GTDC's Frank Vitagliano

Distributors will be key to bringing emerging technologies to market as customers go through digital transformation, but they and vendors need to better understand end user requirements, Vitagliano told members of the Global Technology Distribution Council.

As the IT industry moves to embrace a wide range of emerging technologies that together make up IT the digital transformation that is taking hold among businesses large and small, IT distribution continues to evolve to meet those requirements, according to Frank Vitagliano, the new CEO of the Global Technology Distribution Council.

Vitagliano, speaking Thursday during the opening keynote at the GTDC Summit 2019 in San Francisco, told an audience of distribution and vendor executives that distribution, which started as an industry in the 1930s to provide inventory management and logistics and by the 1990s was focused more on integration services and global channel development, is now moving to embrace digital transformation.

"We're now entering into, and some would argue we are in, the digital era. ... It's cloud marketplaces. It's AI, machine learning, analytics, integration, and it's obviously all the emerging technology solutions that are in the marketplace," he said. "Frankly, there's a lot of them, and they can be really complex."

[Related: GTDC CEO Frank Vitagliano On The Value Of Modern Distribution And The Opportunity Ahead]

Distribution will be key to bringing these emerging technologies from the vendors to the solution provider community, particularly with distributors' ability to work with multi-vendor solutions, Vitagliano said.

"What I would argue is, the skillsets and capabilities, with the volume operational excellence, with the valued technical excellence, that distribution has built up over the last 60 years, is critical as we enter into the digital era," he said. "And each one of our member companies are making significant investments in these areas. And I would argue they have an advantage over folks that don't have that foundation built and haven't experienced how to make the transaction, how to deal with the volume operational world that requires that level of excellence from a quote-to-cash scale."

The impact of the coming digital era is one of several topics GTDC will explore in a new report, Distribution 2025, expected to be published in the next couple months. Vitagliano said the upcoming report is based on conversations with industry leaders in the distribution, solution provider, business user, and venture capital communities.

Vitagliano previewed several key findings from the Distribution 2025 report highlighting many of the changes that distribution and its customers will experience in the next few years.

About 95 percent of respondents expect distribution to continue to grow in importance over the next five years, which Vitagliano said is not surprising, Instead, he said, what was surprising is that over 57 percent of industry respondents expect growth to be in excess of 10 percent annually. "That is a bullish number," he said. "We were quite pleased to see that."

Respondents expected virtual warehouse support for SaaS and cloud solutions to be by far the most important service distributors will offer through 2025, Vitagliano said. That was followed by global logistics, integration services, inventory management, and asset lifecycle services, he said.

"This does give you some indication of why the investments that are being made in this space by a number of companies is really critical," he said. "Because the folks that have participated in this survey clearly feel like virtual warehouse support for SaaS and cloud solutions is absolutely going to be the number one service [required] five years from now. That doesn't mean that global logistics and integration services and inventor management doesn't matter."

As expected, the top security trends that will impact distribution through 2025 will include, in order of importance, security, artificial intelligence and machine learning, cloud, and IoT, among others, Vitagliano.

"What I would tell you I think we're experiencing right now in the marketplace, and I experienced it as a solution provider executive, is that when people talked about cloud six, seven years ago, we knew it was coming, and we knew it was going to be a big deal," he said. "But what nobody really understood was how exactly it was going to get monetized. How are we going to make money at it in the marketplace. And I'm talking about from all aspects of the industry, whether it was the solution provider, whether it was the vendor, or certainly the distributor. "

The IT channel is currently asking the same question about IoT and AI and machine learning because everybody in the channel knows they will have a significant impact, Vitagliano said.

"But we haven't quite figured out what the business model's going to look like," he said. "I know it's going to be inclusive of more services, obviously. And different types of services that are needed to be provided by all players in the supply chain. But we haven't really quite figured it out. And five years from now, when we're having this conversation, I think the IoT piece of it will have been sorted out. And we'll know what that business model looks like."

Vitagliano, who spent over 30 years as a sales and channel executive with such companies as IBM, Dell EMC, and Juniper Networks, also said distributors and vendors have not spent enough time talking with business users to understand their issues.

"I was guilty of it," he said. "I never had a discussion with a set of end users until I actually became part of a solution provider organization."

CIOs today face multiple issues including the compressed time they have to meet business outcomes, the increasingly complex environments in which they operate, and difficulties in aggregating and integrating hardware infrastructure, cloud services and support, and consultative services, Vitagliano said.

"I would argue that means opportunities that I believe our member companies can and will provide those services," he said. "And they're doing it today. But what's not readily apparent is tying it back to what the end users need. Because there are entities in the middle that aren't seeing the value that distribution is providing. I would argue nobody but our distributor member companies can provide that level of aggregation services. [Vendors and solution providers] can provide pieces of it. But distribution's tying it all together."

Vennard Wright, chief information officer and vice president at Iron Bow Technologies, a Herndon, Va.-based solution provider who later appeared on-stage to discuss CIO issues, put on his CIO hat and said that a successful business strategy requires end users partner with companies that understand their business.

It is important that technology sellers show end users what other organizations of a similar size and complexity have gotten, and what it means to the end user's business, Wright said.

"We really are not leading with technology," he said. "We really are leading with strategy and seeing how technology can support that. And sometimes that's where the breakdown comes in, because someone will come in and sell a technology and say the technology can do this thing without understanding how our business operates. So what we're looking for is people helping us to get to the next level, who can really help us become more efficient, who can really drive ROI (return on investment). And that's really what our [chief financial officer] and everybody across the company is looking for."