In this interview, Alberto Cocco, Senior Relationship Manager at Global Supply Chain Finance Ltd. (GSCF), reflects upon the IT industry dynamics, particularly what refers to the Distribution Channel. Alberto is a Hewlett Packard veteran, having worked for HP for 30 years in senior positions including Head of Credit & Collections in EMEA. He understands the IT Distribution business and landscape inside out, having been on the Vendor side, and presently on the financing side.
What are the main changes you have noticed in the IT industry over the past years, mainly in regards to the distribution aspect of the business?
I see two clear trends in the IT Distribution Channel that I think will go on; firstly, the consolidation of players, and secondly, the increase in value added in their offering. The current distribution model is more than just moving boxes and includes things like e-commerce, Pay per Use, e-Retail, etc. But the heart of distribution remains untouched: it is still a matter of having the right product available at the right time and place, and at the right price. The appearance of COVID-19 has accelerated the need for digitalization and automation, which in turn required IT products to make it happen. IT companies getting stuck with the same distribution model will suffer and miss the opportunity to grow, potentially losing market share to more innovative companies.
What issues do IT Vendors normally face when dealing with the Distribution Channel and, on the other hand, what are the most frequent concerns of IT Distributors?
From my perspective, the most important concerns of IT Distributors are profitability margins, inventory turns and payment terms. For IT Vendors, on the other hand, amongst the most important matters when dealing with the Distribution Channel are: having an easy-to-buy approach, measuring and managing Channel performance, and having an integrated Order to Cash process within the IT Vendor itself and also integrating the Distributors to avoid duplication of data. On the financial side, distribution needs working capital to have the ingredients for a solid growth strategy; this affects IT Vendors and Distributors alike.
How has GSCF Group been of assistance in the development of solutions for such issues?
At GSCF, we have people with many years of experience in the IT Industry who understand the needs of Vendors and the Channel very well. Therefore, over the years we have developed innovative products to support both IT Vendors looking to enhance their relationship with the Channel, bring in automation in the processes and grow sales without impacting DSOs[1], mainly via our popular Distribution Financing product, and also support IT Distributors in need of balance-sheet efficient ways to finance working capital, via our Trade Payables Financing offering.
Which are the key aspects of GSCF Group´s offering that players in the IT Industry should consider?
The most compelling aspects of our offering for IT players are the following:
- Tailored financing programs that prompt sales growth with balance-sheet efficient structures
- Scalable solutions suitable for large, cross-border portfolios of IT Distributors
- Flexible facilities suitable for IT Distributors who want to extend pay-terms towards their major IT Vendors
- Automated processes with state-of-the-art technology, which maximize speed, accuracy, and transparency
- Credit risk management features and risk transfer
- Credit and collections tools
- Comprehensive reporting, including customer and business monitoring (KPIs).
Lastly, I would like to mention that our solutions are highly proven in the IT industry, with multi-billion Distribution Financing programs successfully running on the GSCF platform for decades. In 30 years of existence, GSCF Group together with partner funders and credit insurers, has helped numerous IT Vendors and thousands of IT Distributors from around the world to prosper and achieve their business objectives. This makes us feel very proud.
Senior Relationship Manager
Global Supply Chain Finance Ltd.
[1] Days of Sales Outstanding