How the nature of distribution is changing, and is an agent of change

At the recent Canalys Channels Forum in Hong Kong, Tech Data’s Michael Costigan, joined distributor panel, The Future of Distribution, to share his insights into the opportunities and risks faced by the channel in 2019. In this blog post, Michael delves deeper into this topic, specifically around next-generation technologies.

The Asia Pacific region undoubtedly offers tremendous opportunities and represents a theatre in which nextgeneration technologies and new delivery platforms are transforming the industry. This, in turn, is driving change in the role of distribution within the overall value chain. However, as we know, with opportunity also comes risk.

According to the IMF, growth in Asia Pacific is forecast at 5.6 percent in 2019, accounting for nearly twothirds of global growth, and the region remains the world’s most dynamic by a considerable margin.1 Asia Pacific is also the fastest-growing region for cloud infrastructure revenue, adding some 74.7% year-on-year according to a recent IDC report2. What we are seeing at Tech Data is that cloud, IoT, analytics, Artificial Intelligence (AI) and security are creating immense opportunities and challenges as companies focus on this next-generation technology to enable their organizations to compete and thrive.

A key driver in the industry is the ability to provide local market specialization and expertise, coupled with economies of scale which come with a global business. Globalization of supply chains is being enabled by the digitization and standardization of processes, and today’s more mobile and connected workforce operating closer to the customer. Being global is great, but there must be a simultaneous and intimate understanding of local markets. A key consideration for a regional operation now is one of in-country compliance. Operating in multiple jurisdictions means being aware of local cultural sensitivities e.g. in advertising messaging, but also taxes, certifications, warranties and the impact of fluctuating exchange rates. From our experience, operating for over 20 years in the region, we understand it is essential to have the right people in place who are able to translate the benefits of a global business to the local market and to mitigate any risks arising from doing so.

Our partners want to deliver advanced mobility solutions, endpoint devices and consumer electronics with security applications and services to safeguard against malware. Risks are now arising in greater number and scale than ever before, especially with the integration of more devices; some of which are connected to networks beyond the immediate security firewalls of the organization. IoT brings the possibility of professional and consumer devices all generating, accessing, and sharing data, however, with this expanded population comes the greater risk of infection from malware. One device on a network, as with the cheap router blamed for the USD80m loss at the Bangladesh Bank in 2016, can provide a gateway to a network for theft. Distributed Denial of Service (DDoS) attacks, in which a perpetrator seeks to make a machine or network resource unavailable to its intended users, often in return for compensation, are growing as a threat to organizations regardless of size.

Security – the need for a swift emergency response plan and use of robust cyber-security solutions – is one of the key focus areas, not just in Asia but worldwide. In this aspect, the ability of a distributor like Tech Data to arm our partners – locally, regionally and globally – with the best-in-class technology and knowledge they need to protect their customers is a compelling advantage. Working with partners and their end-customers in a transparent and collaborative manner is key to combatting malware in all its forms and from all origins.

The other major trend we are seeing in region is a due to the economic and political factors which are not a function of technology. The impact of the rising cost of production in China, allied to the trade tensions with America, have led some companies to consider shifting production to places like Indochina. Singapore was recently named as the location for a car manufacturing plant by British entrepreneur, James Dyson, in spite of the high labour costs of the nation state. Singapore was cited as a location with highly skilled labour, sophisticated digital infrastructure, and within the most attractive market for the next generation of electric vehicles. The promise of consumer demand in Asia Pacific, the impact of digital evolution, and our transition to the Fourth Industrial Revolution in which cloud, AI, machine learning and IoT converge to create new value chains, is driving new consumption models and new partner types. There is a blurring of the lines between resellers, managed service providers, independent software vendors and many other business models as the market continues to evolve. As change takes place, compliance, security and trusted partners are essential in ensuring opportunities in the region are sustainable and profits remain with those companies that add the most value. 

Michael Costigan
vice president, Marketing, Education and Vendor Management, Asia Pacific at Tech Data