Some of us attended Gordon Graham seminars in the 1990s. He is widely regarded as the father of distribution inventory management principles and the driver for getting those principles built into most of the first- and second-generation distribution software packages. He helped define state-of-the-art in information technology for distributors for more than a generation. What a new world today by contrast.
 
Consider that in the mid-1990s, only a few providers had revenues more than $10 million. The three biggest were Prophet 21, NxTrend and Eclipse. Prophet 21, estimated to be the largest, reported 1996 revenues of $36 million. By 2005 when it was sold to Activant, its revenues were pushing $90 million. Today it is part of a company several times larger (and includes Eclipse).
 
There are parallels between how wholesale distribution sectors consolidated and how software providers into this industry evolved. Small, undercapitalized software providers were losing customers through consolidation. It doesn’t take too many lost customers for a small company to feel large constraints on its ability to support and grow. While any IT transition holds its share of pain, weigh that against trying to get adequate service, support and development of new features from a company required to cut back on resources to survive.
 
The range of software providers to distributors looks completely different today. I think distributors have benefited. There’s a better chance today to find software out of a box that matches most of your needs. There is a new tier of specific tools to complement a primary business system more effectively than a few years ago.
 
This is not a one-dimensional story about the big acquiring the small. Wholesale distribution has long benefited from large-scale, leading-edge IT development as well as the focus of the niche solution provider. IBM’s longtime involvement in this industry comes to mind. More recently, other large software companies have targeted wholesale distribution as a growth market. In turn, their networks of independent resellers have driven industry-specific development not just for specific platforms, but for the entire industry as competition has increased. That’s translated into better value.
 
The increased rate of change in technology and providers means distributors have to be more hands-on in managing IT platforms. But without a doubt, distributors have won from the entrepreneurial forces at work in today’s IT environment.