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Disrupting the IT Distribution Model

June 08, 2017 - Article
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... a deep integration between a new business model that enables the value creation across the ecosystems that they serve and a new generation of digital platforms that support and enable the new approach.

The rationale is simple — a two-tier model provides scale but limits the value-creation aspect, and the ecosystem model offers the possibility to all the members, i.e. producers and consumers, to participate and provide additional value. The new role of distribution should be to position itself as the center part of those ecosystems, making it simple for its members to aggregate or combine value. The new distribution era posits that distribution will work on a multi-point or n-tier schema and bidirectional transactional model, providing value on the core competencies that each ecosystem needs. As such, the value creation is enabled across the ecosystem, eliminating pain points, friction points and generating trust through content curation and compliance checking.

The previous vision is possible because a new generation of digital platforms will continue expanding their functionality to enable “the economy of connections." As described by Gartner in its special report, "Unlock Digital Business Value Through the Economics of Connections." 

The new ecosystem digital platforms will utilize some foundational elements to accomplish this transition:

  • Enable end-to-end digital transactions between all members of the ecosystem.
  • Eliminate friction and pain points across the interactions.
  • Create and facilitate entanglement and instant satisfaction.
  • Enable and capitalize on the use of data to improve the ecosystem, anticipate the needs, and maximize the value creation.
  • The actors of the ecosystem can easily bundle their products and services to deliver a better solution and customer experience.
  • Enable content curation and filtering as consequences of the real value provided and ecosystem member participation.
  • Satisfy the needs that consumers and producers have in order to use, cooperate and integrate into the value-creation process.

The deep integration of technology and new business process to enable the different ecosystems and the value creation across producers and consumers that participate in them will allow for a positive flywheel effect with exponential economic consequences. A new generation of distribution will challenge the status quo and disrupt the traditional approach to the business.

IT distribution is entering a unique chapter to transition from the middle position on a two-tier model to the center position of an ecosystem model. The players who adapt, understand and expand their capabilities will lead the next distribution era; the players that remain on the current models will continue dealing with the erosion of their profitability and limited ability to leverage all the opportunity available. We are leaving incredible times, and to paraphrase Kevin Kelly in his book, "The Inevitable," we are just starting to see the changes that next-generation technologies will create.

Sergio Farache is an IT channel professional with more than 25 years of technology sector experience.

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