In another effort to bring higher margins back into the channel, distributors are offering more software-as-a-service and managed services options to their reseller partners.Just last week Tech Data Canada announced a usage-based licensing program from Trend Micro, which will give them access to the vendor’s anti-virus and content security software through a pay-as-you-go pricing and subscription model.
Tech Data says this model is targeted at SMB-focused VARs, which will allow them to deliver security services while generating recurring monthly revenue. It will also allow them to attract new customers and expand services to existing clientele.
This makes sense. For smaller resellers, focused on smaller customers, going through a distributor can make them look bigger than they actually are – and provide their customers with confidence they can support those service offerings.
But what do vendors get out of distribution? A vendor, like Trend Micro, gains access to a larger customer base – in this case, even though the program originated in Canada, it’s available to solution providers across North America. And this opens up a lot of new opportunities for Trend Micro, even if they have to take a cut on their margin.
The vendor said it designed the program to align with the evolving business model of managed service providers. Distributors, like Tech Data, are also pushing their reseller partners to move in this direction, since resale is a pretty difficult way to make a living these days.
And that is, ultimately, one of the biggest advantages of this type of program: VARs don’t require an up-front investment in licences, significantly reducing their financial risk. Pricing remains constant for the subscription period, so that revenue is predictable – and pretty much guaranteed. Good for the VAR, and good for Tech Data – particularly since reseller credit can be a big issue for distributors.
One nice aspect to this particular program is that customers must maintain a relationship with the VAR who originally deployed the software. If they establish a relationship with another VAR, they risk losing that security solution.
This addresses a problem that many resellers face, where they do the groundwork on a deal, then lose the customer to another reseller who undercuts the original price (but didn’t have to do any groundwork to get there). And this is something we definitely need to see more of.
Resellers who are authorized to be part of the program will receive a Trend Micro software licence with no up-front investment required; Tech Data will provide sales and technical support. No licence renewal is required on the part of the reseller either.
It’s all about flexibility and building long-term relationships with customers. This isn’t always easy for the smaller VAR. But programs like this can help them make that transition from a reseller to a managed service provider, and bring in those higher margins.