The Term VADs (Value Added Distribution) has been around for more than a decade. Sometimes it refers to broadline distributors’ (Ingram, Tech Data, etc.) offering value add on top of pick, pack and ship services, other times it refers to distys like Avnet who have historically focused on wholesaling complex hardware offerings.

So what’s changed? A couple of important things:

• Vendors are now ‘starting’ to see VADs as managers or co-managers of their extended channel. Companies like Cisco are now looking to distributors to manage a part of their SP/VAR channel. This role is in contrast to the distributors prior role as a wholesaler of the vendors’ products where the vendor still ‘owned’ the channel relationship.
• Distributors realize that they need to align their business models more closely with their tech vendors. This means that they need to help vendors enable, on-board, and create demand for channel partners through value added services vs. relying on back end sell through. Distys have always offered recruiting and marketing services, to attract VARs to a vendor and help them sell vendor offerings, but that’s not enough; now Distys get that they have to recruit, enable and ramp VARs (in partnership with vendors) to create a win/win/win. The BOTTOM line is that if a disty can’t show a VAR how a particular vendor offering will help them grow their TOP line, the VAD value prop falls apart!

Unfortunately, there are some broken pieces in these evolving trends, that Vendors and Distributors need to attend to insure collective success.

1. Vendors need to design the DNA of their channel programs FIRST and then look to distributors to execute against that blueprint. Its fine for distributors to be active partners in the creation of the DNA, but vendors still fall prey to fantasy that distys actually know what the vendors Go-To-Market and channel strategy should be and that if the vendor gives the disty its products, magically, VAR sell through will result. This fantastical thinking leads to disastrous results, because as good as a VAD is at the foundations of channel building, each vendor has a unique Go-To-Market and channel strategy that has to be clearly defined BEFORE a VAD can engage successfully with the vendor.
2. VADs need to create a more compelling demand generation foundation that vendors and SP/VARs can leverage. Ultimately, VADs need to help VARs build demand around multi-vendor offerings that combine a group of non-competing vendors. VADs execute pieces and parts of this machinery, but lack the right multi-vendor engagement models and a mass customizable back end to scale their VARs’ pipelines.