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State of the Distribution Software Industry, Part 4: The Next Steps for Distributors

Moving forward as technology's pace of change increases

This is part of a series looking at the distribution software industry. This article examines challenges and what distributors should expect in the next five years.
 
In the year or so leading up to Y2K, many distributors upgraded their computer systems to protect their businesses from what was supposed to be a widespread system breakdown when the clock struck midnight on Jan. 1, 2000. The scare fueled massive technology investment in businesses worldwide.
 
And now, thanks to technological improvements making viable solutions more affordable and scalable to distributors of all sizes, many are looking to invest again or transition from their legacy systems to an off-the-shelf solution or a modernized interface.
 
In a recent MDM survey, about 24 percent of respondents said they plan to make a technology investment in the next year, and another 24 percent are currently researching options to upgrade or buy new technology. Distributors say they face many challenges, including finding the right fit for their company, agreeing on a price tag that fits their budgets, and ensuring support and training from the software provider post-purchase. Keeping up with the rapid changes in technology can also be difficult, especially for smaller distributors.
 
Forces of Change
Consolidation of software providers has both constrained and opened options for distributors looking to upgrade or invest in technology. The Internet continues to change the way technology providers and distributors look at their businesses. A generational shift will force many distribution companies to keep pace with technological advancements, lest they miss out on the best and brightest in a young work force.
 
In addition to these factors, the twists and turns in the economy may put a crimp on technology investment on a larger scale -though some providers say that distributors are showing increased interest in software that helps them better manage their costs.
 
Mike Briglia, vice president for wholesale distribution/consumer packaged goods at IBM Corp, says current economic conditions haven't necessarily slowed investment, at least from IBM's point of view: The larger and more capitalized companies are doing all they can to protect their capital plans and are continuing to move forward with significant technology investments despite the current trends. We're not seeing any company tap on the brake with major initiatives."
 
Keeping Up
Luke Bucklin, president of Sierra Bravo Corp., says that technology is growing at such an accelerated rate that distributors and software providers to the industry face challenges in staying up-to-date. He gives online videos as an example. "Everyone knows how easy it is to upload a video so everybody can see it,"he says.
 
The challenge comes when a 22-year-old in the position of product manager asks why he can't make a video of how a product will work and upload that video to the distributor's Web site, where people can then buy the product. "The availability and ease of use will put pressure on software vendors to keep up with the generation that is populating the work force,"Bucklin says.
 
Distributors are also challenged to meet the needs of their customers, whose work force is also seeing a generational shift. The move from faxing an order to emailing an order is one example of such a shift that has already happened. "Two to three years from now, how will customers want to interface -with instant messaging, their cell phones, Twitter? People will be attracted to this new technology,"Bucklin says. "The distributor's problem is not new. It has always been keeping up with technology and making sure you are doing business the way your customer wants to. It just keeps getting worse faster."
 
But deciding when to bring in new technology can be tricky, says Don Waltzer, president of distributor

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