November 25, 2009

Success Factors for a Valued Distributor – IT Solution Products

 

1.0 Introduction

IT distribution business is very competitive and margin is eroded due to competition amongst distributors in IT markets. IT distributors provide high quality and valuable computer products. IT vendor like HP, IBM, Microsoft, Cisco and etc usually appoint at least 2 to 3 distributors for their products and a quota was set to distributor on yearly basis. To meet vendor expectation (quota) some distributors will throw price to sell larger volume (hardware or retail box moving) which will may caused price war among distributors. Other then sales quota, vendor is looking at what value added that a distributor can provide to enhance their supply chain. Instead of continue distribute volume products which is getting very slim margin (2-4% GP), distributor need to expand the distribution portfolio to some higher margin solution base products (i.e. Networking products, Firewall product, storage for Data Center solution).

 

2.0 Problem Statement

Thus, the research is focus on what are the success factors to be a value distributor in selling solution products, i.e. provide pre and post sales services /consultation services to channel partner rather than just a pure box moving distributors. The second questions is can value added service be a competitive advantage (differentiation) for an IT distributor to gain more profitable product portfolio from vendor which will generate more profit to the business. As such, the study will answer the following questions:

1)     What makes a distributor a valued distributor to companies?

2)     How value adding services provide IT distributors with the competitive edge?

 

3.0 Study Objectives

The main aim of this study is to investigate success factors that make an IT distributor effective, sustainable and valuable. In lieu with this, the following research objectives will be addressed:

·        Determine how value adding services can make an IT distributor an indispensable element in IT supply chain

·        Distinguish how IT distributors could be a source of sustainable competitive advantage

 

4.0 Methodology

The research will be approached based on an interpretivism view. Interpretivism is the necessary research philosophy for this study because it allows the search, of the 'details of the situation, to understand the reality or perhaps a reality working behind them. It is necessary to explore the subjective meanings motivating people's actions in order to understand their actions.

The study will be exploratory in nature because it aims to determine the present facts as well as facts that are not yet explored about the critical success factors inherent for IT solution distributors. Exploratory research will enable the study to look at the problem in both descriptive and exploratory manner. It will look into the problem by exploring the views of different sets of respondents, as well as by exploring different literatures related with the study.

Primary and secondary research will be conducted in the study. In primary research, the study will survey IT distributors and the success factors that make them valuable. A structured questionnaire will be developed and it will be used as the survey tool for the study. It is planned that the questionnaire will have a 5 point Likert Scale, as well as yes-no questions.

Questionnaires will be used as the survey instrument. The questionnaires will be divided into two parts, the first part being demographic profile including commercial information and the second part on the success factors of IT distributors.


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