Aptec Distribution is completing its transformation from a broadline to value added distributor and is expected to be the largest player in this space
Vendors and tier one system integrators and value added resellers traditionally operate within key customer accounts as a single team. A tier one partner usually has full access to vendor technology and consulting and in the market their roles are interchangeable. A partner doubles up for the vendor during end customer deliverables and a vendor engages in presales activities along with the partner. But vendors in the region are now looking at replicating this success model across the medium and small business end customers also.
Distributors are expected to replace the vendors in this strategic role and enable partners to deliver a much broader range of services and support activity. The name of the game across the channel now is to deliver to end customers outside key accounts, the same degree of service and support standards that vendor and tier one partners have been delivering for some time. For some distributors an additional role as been added to their traditional fulfilment role and that is partner services enablement.
“Why do vendors need distributors? They do not have the bandwidth to manage everyone and anyone,” says Santosh Kumar, Business Unit Manager, Aptec Distribution. “And we provide the best feeds for the mid market space.” During go to market activities, Aptec does not carry its own tag. It carries the tag of its partners. “We say we represent the partner and that is why the partners are loyal to us and we do not compete with them.”
The task of enabling reseller partners also means that Aptec has to initially build those capabilities internally for each vendor partnership that it has on board. Amongst the vendor partnerships that have a higher degree of reseller enablement responsibility include the recent Microsoft Office 365 tie up, Microsoft’s Hyper V, Microsoft Link and other solutions, Vmware, Veeam, Symantec, SAP Business Objects, Netapp, Oracle, Mcafee, Cisco and others. During partner and end customer engagements in the market, Aptec supports them with presales consulting, solution sizing, BoQ, proof of concepts, implementation and post sales support. “Depending on the requirement and capability of partners we fill the gap, whether small or big and we tell them to make use of us,” says Kumar.
Along with the transition of the industry from selling commodity hardware products to selling customer specific business solutions, Aptec Distribution has also adapted its business model for reseller and vendor partners. “We are evolving from a broadline distributor to a value added distributor, from products into solutions. This is very much in line with what is happening in the market today,” says Bahaa Salah, Managing Director, Aptec Distribution. From a portfolio that used to dominantly include printers, PCs, notebooks in the past, Aptec’s ramp up is across security, storage, networking and cloud solutions. “These are all value add products rather than broadline products,” remarks Salah. In Aptec’s new value added role, it is expected to train partners to help identify optimal solutions with best performance for the end customers.
“Aptec has stopped dealing in consumer products and components. On the other hand, vendors with solution based products have come to rely increasingly on Aptec’s model,” says Dr Ali Baghdadi, CEO and President of Aptec Group.
During its broadline go to market days, Aptec Distribution had a flat sales structure covering the whole range of products. It was upto the product manager to get the mindshare of the partner, train them and get them to sell his line of products. Now the sales structure has evolved into business units and product groups that deliver and support the sales cycle end to end. While some of the previous sales staff was repositioned in the new structure, presales and consulting teams had to be brought in. “This is the price you have to pay for developing yourself into a value added player. The one good thing about all this is the margin that justifies the investment you are adding,” says Salah.
“Today we have a team that can take care of best quotes, build the right relationship with the customer and is tied up with Advanced Technology Services for post sales if needed. Now we are able to provide an end to end sales cycle if needed, with a specific line of products, that is working good in a value add setup.”
The current sales structure also avoids conflict of interest amongst the various product groups and the teams compete in the market place for a reseller’s top of mind. Resellers do not mind talking to multiple product managers for the best solution and the best price to get the best deal from the distributor. “As long as there is a guy who knows the best and is able to drive the pricing factor to the bottom they prefer to deal with this person”, says Salah.
So what is Aptec’s mantra in its evolving role as value added distributor? It is following a four step process of first recruiting partners to play the role of value added resellers. The second is to enable them through training and skills development. The third is to engage with them in business development and provide them with presales consulting, proof of concept and BoQ services support. And the fourth is to help them deploy the final solution at the end customer by guaranteeing time bound implementation and meeting post sales service level agreements.
“For presales services we believe it is our responsibility and we have to go along with the reseller to help close the deal and put forward the best solution,” says Salah. The cost of Aptec’s presales support team is therefore carried forward and justified by the increased opportunity conversion through a wider base of value added resellers, which it is now supporting.
“We are not just helping the partner to get enabled and then leave them alone. We help them to do deployment, configuration, installation, and enhancement, even when they do not have the technical capability,” says Mario Veljovic, Operations Director at Aptec Holdings. Veljovic is also responsible for managing Advanced Technology Services, which is responsible for the pool and delivery of professional services to channel partners through Aptec Distribution and directly to vendors outside the distribution portfolio. Aptec Distribution markets and sells professional services from ATS like any other vendor solution in its portfolio. “We manufacture services within the group”, comments Veljovic on a lighter note.
Reseller partners focussed on small and medium end businesses are usually hesitant to invest in development of technical staff since the returns are sometimes later in the future. There is also the challenge of technological obsolescence and retraining their staff for every new product launch and release and this can be operationally taxing. “If the partner cannot see the return on investment, we need to step in ourselves and to cover up for whichever shortfall they have,” is the role that Salah has now taken up. In the initial stages Aptec will provide the technical skills support for reseller partners. Once the partner has been enabled and has received a return on sales it will be upto them to reinvest and grow their skills accordingly.
Salah’s immediate action plan is to penetrate and enable this segment of resellers through Aptec’s pool of available professional skills resource with a two-fold objective. Firstly, Aptec will support resellers who have the basic technical skills but insufficient resources to scale for a project or a particular go to market activity. Secondly, Aptec will support resellers who have a go to market strategy around a certain vendor portfolio but have not invested in technical resources of their own.
“We help the reseller to bridge the gap when they are faced with the question, does it make sense to train up a person without knowing what you can really get out of the business?” adds Veljovic. Interestingly by operating alongside, Aptec can actively reduce the entry barrier for a reseller to cross over into becoming a value added reseller. With Aptec talking responsibility for the end to end delivery of a solution a partner is assured of meeting end customer timelines and therefore timely payments. This also ensures a positive cash flow situation making it easier for a partner to assess the benefits of investing in technical skills and resources and following a value added reseller business model. This is a win-win situation for both reseller and distributor.
Aptec’s vision is to keep replicating this success story in regional markets. In the words of Baghdadi, “We are recognised as an innovation centre and will therefore continue leading and replicating the model in emerging regions as they expand.”
Aptec’s services factory
Five years ago Advanced Technology Services or ATS was set up with the objective of servicing vendors with professional support services. However in the last one-two years vendors have increasingly moved out of this space and want reseller partners to start building the demand base for professional services.
“In 2006, there was not that much demand from resellers but there was demand from vendors. Today there is a paradigm shift. Vendors are pulling out of professional services business and they are saying I want to empower the reseller channel,” says Mario Veljovic, Operations Director at Aptec Holdings, who also manages ATS.
This aligns with certification based global vendor partner programmes, wherein resellers are being encouraged to certify their skills base and scale them based on market opportunities. A key facilitator in this model is the availability of a value added distributor, a role adopted by Aptec Distribution.
Today ATS exists within Aptec Holding as an independent business entity with a separate profit and loss statement. ATS has the advantage of off-setting its skilled manpower cost against the total opportunity base of 4,500 resellers that Aptec Distribution services through its new VAD delivery model. ATS operates as a vendor neutral, high end consulting supplier with the distinction of not trading in products and focussing solely on services.
“We offer resellers a chance to shadow us as a partnership and the partner gets trained from scratch.”
The final objective is to grow the overall business and this is accelerated if partners are enabled by lowering the barriers of entry. “We start challenging ourselves as an independent company to deliver profits as per our budget,” says Veljovic
Value based announcements at Aptec
– Appointed as distributor for Microsoft Office 365 cloud solutions across UAE, Qatar, Kuwait
– Tied up with Veeam Software for VMware data protection, disaster recovery, backup and replication management solutions for virtual datacentre environments
– Received the status of VMWare authorised training centre for the Middle East region. Roll out starts with UAE, Saudi Arabia and Egypt.
– Availability of end to end outsourced logistics support through Advanced Logistics Services operating in UAE, Saudi Arabia, Kuwait, Egypt and Lebanon. Including contract logistics, supply chain solutions, management and consultancy, custom clearances, IT assembly and reverse logistics.
An interview with Dr Ali Baghdadi, CEO and President of Aptec Group
On the vision for Aptec group
Aptec has focussed 100% on value added distribution and associated services across the group. This includes selling solution based products to small and medium focussed resellers and increasing local presence and services in the region.
On significant changes in market, industry dynamics
Within our targeted segment, solution selling and service provision is a must for profitability and survival. Technical and commercial know how needs to be deeper within the reseller community. This has led to Aptec’s establishment of a training division for technical and commercial enablement across the region.
On significant shift in vendor relationships
Aptec has stopped dealing in consumer products and components. On the other hand, vendors with solution based products have come to rely increasingly on Aptec’s model. Be it cloud services, virtualisation, storage solutions, data centre solutions or networking. We are focussed on major vendors and at this stage are receiving applications from many vendors who wish to be represented.
On market challenges for the group
The economies of Europe and the USA are facing major challenges. Our Middle East and Africa markets and in particular the small and medium business segments have proven to be resilient to the economic recession of 2008 and 2009. We are optimistic the market will continue growing in the coming years even if the West suffers from an economic downturn. Our region has petro dollars and economies will grow following the Arab springs in North Africa and Egypt.
On internal challenges for the group
Growing and increasing the knowledge of our talent pool, enabling our partners and ensuring their profitability so that our partner network which is an extension of our teams remains healthy and profitable.
On forward looking vision for the group
We are in the lead as the major value added distributor in the Middle East and Africa. We are recognised as an innovation centre and will therefore continue leading and replicating the model in emerging regions as they expand.