Business-to-Business is Still Person-to-Person in the Age of AI

I most recently discussed Xvantage, the “digital twin” at the heart of Ingram Micro’s bid to be a “platform company,” in last week’s post. The first time I wrote about it in Channelholic, though, was some 20 months earlier in a piece that began with a confession. My previous coverage, I admitted, had failed to reflect just how strategic Xvantage is in the distributor’s master plan to win the hearts, minds, and wallets of 21st century resellers.

Well, here we go again, because a jam-packed day of briefings with Ingram’s top brass last week has me belatedly recognizing that a very important dimension of that master plan has been absent from my writing until now.

What I got right in 2023 is that Ingram’s significant investment in Xvantage is aimed at bringing the speed and convenience associated with consumer vendors like Amazon and Netflix to what have traditionally been slow and inconvenient distribution workflows.

“On average, if you look at the reseller, vendor, and distributor relationship, there are three parties, up to 12 people, and 72 hours involved just to get a quote out the door,” says Jim Annes (pictured), vice president of Ingram’s global platform business. “That’s longer than it takes to assemble some automobiles, by the way, with fewer people.”

Xvantage users, by contrast, can complete complex processes like that in minutes, and simpler ones even faster, according to Sanjib Sahoo, who was named president of Ingram’s Global Platform Group last week. “We can price every single SKU right now in real time,” he says, and provide special pricing in minutes. That, in turn, lets partners devote less attention to processing orders and more to driving growth.

“It allows them to spend more time, more quality time, on their end users,” says Sabine Howest, Ingram’s SVP of platform services and support.

Which is about where my earlier analysis of Xvantage ended. Self-serve automation through Xvantage equals less time on the phone with Ingram equals more time for customers equals happier, more loyal partners.

All true and definitely key to Ingram’s vision, but on its own incomplete. To understand that vision in its entirety you must zero in on an observation by Ingram CEO Paul Bay that my 2023 post breezed past.

“We’re still in a relationship business,” he said.

Meaning the person-to-person versus person-to-server kind, as Hans Mize, president and founder of Irvine, Calif.-based data analytics solution provider Data41 will attest.

“What I don’t want to have happen is that we have to do everything in [Xvantage] and then talk to a chatbot,” he says. “The ability to make a phone call, to set up an online meeting, to send an email or something is very, very valuable.”

Indeed, interactions like that are the right cross to Xvantage’s left hook in the strategic one-two punch Ingram is throwing. The company’s goal for Xvantage has never been to spend less time on the phone with partners. It’s been to spend better time. Turning the support center into what Howest calls an “exception center” by outsourcing all but the thorniest calls to Xvantage, Ingram believes, frees up time for something far more valuable.

“A reinvestment of that time into activities that actually help you grow,” Annes explains. “We’ll still have as many conversations as [partners] want about a quote that needs pricing or if we can add an additional service to help them win a deal for sure, but we’re really spending the majority of our time now talking about how can we help you transform segments of your business.”

It’s a measure of just how little time was available for that kind of activity before that teaching one-time order takers to have more meaningful conversations with partners is a major priority for Ingram’s U.S. business this year, according to Bill Brandel, the distributor’s U.S. chief country executive.

“We’re going to run our entire organization through a skillset training to help uplevel their knowledge of the industry and be able to have a more consultative sales approach,” he says.

It’s not hard to see how the right-left combo of consultative talk time and automated order management could work well for a company like Ingram at a time when (latest evidence, from last week, on page 12 here) partners want fewer, deeper vendor and distributor relationships.

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Hyperscaler marketplaces are friend more than foe for distributors like Ingram

About a month after that previously mentioned Xvantage post from 2023 ran here, I posted another one about Pax8’s then freshly unveiled next-gen online marketplace. That one began with a memory from an Ingram Micro conference in 2022 in which Victor Baez, the distributor’s SVP of cloud and global vendor engagement, described SaaS vendors selling direct to end users as a large and growing threat.

“We’re quite comfortable in referring to direct, non-channel go-to-market routes as potentially our largest competitor,” Baez said during a keynote.

And today, a little less than three years later? “It’s much less of a concern,” said Baez (pictured) in an interview last week.

Sure, sometimes a SaaS software maker will give a 100% product-led growth strategy with no role for distributors, resellers, or service providers a shot. But it’s increasingly rare for reasons Nick Heddy, Pax8’s president and chief commercial officer, echoes in the latest episode of my podcast. Selling a bunch of licenses directly is easy.

“But then who does the lifecycle management? Who deploys it? Who migrates it? Who monitors it? Who optimizes the cost?” Baez notes. “When you start to ask those questions, the reality is the vendors can’t do it on their own.”

And don’t want to. “Over millions of transactions, it’s physically impossible,” Baez observes.

Not coincidentally, perhaps, Ingram’s relationship with hyperscaler marketplaces has followed the same arc as its relationship with SaaS vendors in recent years. “If you asked us three years ago, I would’ve said, ‘they’re trying to disintermediate us completely,’” Baez explains. Today the relationship, while still complicated, leans much closer to the friend part of “frenemy” than the enemy part.

“We’re suppliers to them, we’re competitors, and we’re partners all in one relationship, and I would say that the partnership relationship is the strongest one by far,” Baez says.

The same capacity constraints that vendors encounter when going direct are the biggest reason why. As of Q1 2024, AWS alone was sitting on close to $158 billion worth of pre-committed cloud spending, according to Canalys. Converting those funds into cash as quickly as possible is understandably a major objective.

“And this is where Ingram comes in, because the only way that this scales effectively is if you have an active ecosystem not only selling the service but also deploying the workloads and making sure there’s consumption,” Baez says.

As a result of that and other factors, Ingram’s decade-plus relationship with AWS has grown significantly closer in the last few years, most recently through an agreement disclosed last November to integrate Xvantage with the AWS Marketplace and a follow-on announcement last month.

Ingram’s relationship with Microsoft, and Google to a slightly lesser extent, is comparably solid, Baez notes. “Do we have friction here and there? Yeah, but compared to what it would’ve been three, four years ago, it’s minimal.”

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Aggregating services

Like Brandel, Jason Beal sees more synergy that friction between hyperscaler marketplaces and distributors these days.

“I certainly am a believer in marketplaces and the place in the ecosystem for the hyperscalers,” he says, “but there is still a lot of enablement, a lot of awareness, a lot of training, a lot of teaching that is required at the partner level in order for more partners to be helping more end users to buy off of various marketplaces.”

Beal (pictured), who you’ve met here at Channelholic on a few past occasions, was global channel chief for Barracuda Networks until Monday, when he officially stepped in as the new Americas president for value-added distributor Exclusive Networks. And the specific value he thinks distributors like Exclusive add for hyperscalers through enablement, training, teaching, and more ultimately scrolls up to services, which loom increasingly large in the channel.

“You look back maybe a decade ago, an average partner business model was eighty, ninety percent product sales and maybe ten to twenty percent services,” Beal says. “Now it’s more likely to be a fifty-fifty split.

“And in fact, many partners have more top-line and bottom-line coming from services than they do from product resale,” Beal observes. As a result, he continues, what they want from a distributor is shifting as well from packaged products to professional services. Exclusive Networks, accordingly, has been beefing up its services capacity in recent years through its acquisitions of service providers like Consigas late in 2023, NEXTGEN early in 2024, and Cloudrise two months ago.

D&H, TD SYNNEX, and Ingram Micro are all investing in professional services too. “That’s an area where we’ve spent a lot of time to differentiate ourselves and build a meaningful practice,” Brandel says, adding that his team will be “doubling down” on services in 2025 in response to rising demand for advanced solutions in complex, unfamiliar areas like IoT and AI.

“Most partners are going to struggle with some of these new technologies, getting them out and getting the right personnel due to a shortage in the industry,” Brandel says. Distributors, he notes, can fill that people gap, either on a temporary basis while a partner hires and trains its own employees or on a permanent basis as an outsourced provider of niche skills.

Niche skills, in fact, are where Beal thinks distribution specialists like Exclusive Networks—which focuses on security and networking—have an advantage over broadline distis like Ingram.

“Vendors are asking partners to go deeper,” he says. “They’re asking for more services delivery, consulting, pre-sale, post-sale, managed services, customer success services,” Beal says. That requires know-how that companies with targeted expertise in specific markets like Exclusive are best qualified to offer.

Not just qualified to offer, actually, but resourced to offer. In the past, distributors aggregated hardware and software on a scale that individual resellers could never hope to match. Now it’s services, but the basic partner value proposition is the same and more relevant than ever.

“I genuinely believe that we’re in a golden age of two-tier aggregation,” Beal says.

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A note about hardware

Canalys expects PC sales worldwide to climb 5.8% this year to 272.1 million units. Ingram’s Brandel sounds, if anything, even more bullish. All those laptops businesses bought in a hurry back when the pandemic hit will start turning four years old in March, he notes, and Microsoft will stop supporting Windows 10 in October.

“There’s a refresh that has to happen,” Brandel says. “I don’t care if people come along kicking and screaming, it’s going to have to happen in 2025.”

The only wild card, he continues, is the inauguration Monday of a new, tariff-friendly administration, an issue that IDC has on its radar too. Ingram is stocking up on devices ahead of time just in case.

“We’re trying to hedge ourselves a little bit and say, ‘okay, let’s make sure we’re aggressive and we go grab what we can go grab right now from an inventory perspective,’ so that in the event that tariffs do come, hopefully we’re able to support companies and still be able to provide cost-effective solutions,” Brandel says.

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