IT and Business Insights for SMB Solution Providers

A Distributor’s Forecast: Opportunities for SMB VARs

Specializing in solutions and services for SMB resellers, D&H Distributing’s Dan Schwab talks about opportunities in the market for manageable, long-term growth. By Cecilia Galvin

Dan Schwab is president of Harrisburg, Pa.-based D&H Distributing Co., which caters to the IT needs of SMB resellers and has been in the distribution business for 97 years. That history has taught Schwab a thing or two about helping his reseller customers separate hype from reality, leverage the latest solutions, and keep an eye out for market opportunities. Schwab recently spoke with ChannelPro-SMB about those opportunities and how D&H educates and prepares its resellers to take advantage of them. This is an edited excerpt of that conversation.

ChannelPro-SMB: The economy seems to be gaining some momentum, and I have heard from several resellers that they expect to do better financially this year. What do you hear from your SMB IT customers?

Dan Schwab: The general perception is the economy is clearly better. It's improved from Q1. Some of our resellers shared that they had strong results last year because of the XP refresh. And, from their perspective, it accelerated their business and pulled business that normally would have been spread over a two-year or three-year time period.

For the people who had systems that were four, five, or six years old [and] on the normal upgrade cycle, [XP] really drove a larger upgrade cycle than typical. By the same token, they see a lot of technology opportunities they can talk to their customers about, [including] Windows 10.

Server 2003 end-of-support has been a very big focus for D&H and our customer base because, unlike the XP refresh that maybe [was limited] to some operational peripherals, [Server 2003] is more of a client play. The Server 2003 refresh is similar to the XP refresh insofar as it occurs up until a certain date, but especially for small business, it continues well after the end-of-support date. If anything, it sometimes accelerates after the date. And it will bring with it a much greater upgrade cycle as it relates to not only the servers, but the networking and the security and the entire back-office infrastructure. So we have been very bullishon the opportunity for our resellers.

ChannelPro-SMB: Have you been working with your resellers to prepare them for the refresh? Any promotions or training?

Schwab: Absolutely. We started in October of 2014, a full 10 months before the end-of-support date. After 30 days, we launched our campaign to educate our resellers with webinars, our trade shows, and the entire gamut of training [about] what the opportunity is.

In January, we kicked off our 2015 campaign and took it to a whole new level. We created end-user demand-generation communications. We created the ability for our resellers to take a PDF and email and banners and all sorts of collateral, and communicate the information to the end user. That was very powerful, and we've gotten rave reviews from our resellers because we've [enabled] them to communicate the message.

So it's really about what the end of support means, because while we're talking about your server, let's talk about the things that drive true business value. Putting a new server in is not necessarily going to make a business more profitable, but upgrading their security is the insurance policy—it’s a requisite today because of all the data breaches that have occurred.

Then you can talk about upgrading the networking, whether it's Power over Ethernet, faster services, upgrading to wireless within their offices or multiple offices, [or] whether it's Voice over IP and reducing their costs. [Or maybe it’s] increasing their storage and replacing tape backups with a different storage technology to save costs—that’s the conversation we're having.

D&H acts as a trusted adviser or a consultant as much as a distributor to help our VARs [understand] where the opportunities lie. First, train our VARs and then arm them with the tools.

ChannelPro-SMB: While we are talking about newer technology, have you seen more adoption of cloud computing among your customers now than, say, last year at this time?

Dan Schwab: We are. We've had tremendous success in the last year leveraging some of our vendors' offerings. For instance, Microsoft's Office 365 has become wildly successful within our customer base, and it's growing month after month, quarter over quarter, at a compound rate. Another good example would be Cisco's Meraki solution [cloud-controlled Wi-Fi, routing, and security], which is both a hardware and cloud solution. So far, that's where we've seen the biggest uptake from our customer base. It's with the most trusted vendors in the industry, and solutions that are easy for [resellers] to integrate into their technologies.

ChannelPro-SMB: What new or existing opportunities do you see that your SMB resellers might take advantage of?

Schwab: There is now talk about virtualized desktops, which is a natural evolution with the cloud discussion. I think it makes perfect sense. But I don’t see any one major new product or technology that’s causing a seismic shift in our reseller base and our opportunities with our customers. It really is more of a vertical [focus] that we see, still within healthcare, because of the HIPAA requirements. We see tremendous focus on storage and security and data integrity, so that has not changed.

Within K–12, there’s a huge focus on wireless and one-to-one student computing technologies. Within retail, we're seeing a lot of POS opportunities because you [now] need to have systems that can utilize the new credit card chips or the liability of fraud falls on the retailer, not on the credit card company. Also in retail, digital signage is still an opportunity.

From a horizontal standpoint, it’s the enterprise-level technologies that have come down into the small business marketplace, either because the technology is required or the price and features finally make sense for those customers. We're now selling technologies from HP and Lenovo that were reserved more for enterprise or midmarket customers that we're now seeing horizontally across our small business customer base—everything from storage to security to upgrading networks to upgrading servers to virtualized servers.

ChannelPro-SMB: What do you want resellers to know about D&H’s approach to new opportunities?

Schwab: When you see a huge rise, there typically is a huge fall, just like with the XP refresh. It's much healthier when there is broad-based foundational growth that is manageable and maintainable, so that it creates long-term, diverse opportunities. That's why we are very bullish on D&H's long-term growth potential, the opportunity that's in front of us, and hopefully the value-add we can create for the growth of our resellers.

About the Author

Cecilia Galvin's picture

Cecilia Galvin is Executive Editor of ChannelPro-SMB.

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