Traci Maynard, ICT channel and partnership specialist.
The traditional IT distribution model − where a vendor builds a product, a distributor stocks it, a partner sells it and a customer uses it is rapidly becoming a relic of the past.
This linear hierarchy is being dismantled by a digital-first world that favours integrated, marketplace-driven ecosystems. The channel is shifting from a simple ladder to a complex web where value-added distributors (VADs)must redefine their relevance or risk becoming “digital ghosts” in their own industry.
At the heart of this transformation are managed service providers (MSPs). Currently, more than three in four SMEs rely on an MSP for at least some of their IT and security functions. These MSPs are the frontline defenders for businesses, and they are increasingly desperate for reliable technology and service delivery partners that can offer superior offerings to support them through volatile economic conditions.
The MSP dilemma: Tool sprawl and the TPRM paradox
MSPs today are “flooded” with cyber security tools, leading to a phenomenon known as tool sprawl. This sprawl has become a major pain point, making it nearly impossible for partners to maintain efficiency or drive the returns needed to flourish.
In fact, the most common reason companies seek out an MSP is a lack of internal resources to manage their growing mountain of security tools.
In five years, an MSP that hasn’t mastered the hyperscaler marketplace will be as irrelevant as a video rental store in the streaming era.
Compounding this is the third-party risk management (TPRM) paradox. Recent data shows a widening gap between leader confidence and reality: while 90% of business leaders believe they could seamlessly continue operations if a vendor suffered a breach, 78% admit their internal programmes cover less than half of their total vendor ecosystem.
This leaves massive blind spots in supply chains that are growing more complex by the day.
The rise of the hyperscaler ‘power move’
If you want to understand the future of VAD, look at the hyperscalers. Sales of third-party vendor products through marketplaces like AWS, Microsoft Azure and Google Cloud reached $16 billion in 2023 and are projected to skyrocket to $85 billion by 2028.
This growth is fuelled by the “high-value currency” of cloud commits. Enterprises with large, pre-approved cloud budgets are now buying third-party software through these marketplaces to “burn down” their commitments and maintain lucrative discounts.
This shift is fundamentally changing procurement behaviour. Customers are attracted to simplified, “click-to-buy” options, consolidated billing (one monthly bill for multiple services) and lower deployment costs.
Canalys suggests that by 2027, more than 50% of hyperscaler marketplace sales will flow through channel partners, as vendors prioritise partner-led strategies to manage this complexity.
2026 trends: AI, automation and the circular economy
The 2026 marketplace is no longer just a storefront; it is an integrated platform. We are seeing a massive trend toward vendor onboarding automation, which is currently a primary scaling constraint for 32% of marketplace operators.
AI has matured from a buzzword into a business-critical tool used for pricing, personalisation and efficiency across the entire value chain. However, AI also introduces new risks, with 51% of leaders citing AI-driven threats as their top supply chain concern.
Beyond software, marketplaces are becoming catalysts for sustainability and the circular economy. Digital platforms are enabling the reuse, refurbishment and recycling of electronic devices, with 81% of companies now incorporating circular practices into their daily routines.
For VADs, this presents a new revenue stream: acting as a “vital ecosystem enabler” that provides value-added services like device certification, data erasing and legislative updates.
Furthermore, as automation takes over, the risk of algorithmic collusion emerges − where autonomous software agents may inadvertently maintain prices above competitive levels without explicit human agreement.
This highlights the need for VADs to provide unbiased visibility and strategic guidance that goes beyond what an algorithm can offer.
The ‘act now’ blueprint for MSPs
End-users now demand solutions tailored to their specific environments, operational demands and long-term goals. To meet these needs, MSPs must act now by following a “security-first mandate” where every provider operates like a security company, regardless of their official title.
MSPs should prioritise:
Platform consolidation: Move away from standalone tools and toward platform-based solutions that offer strategic integration.
Accreditations as a safeguard: Rely on providers with third-party validations like ISO 27001, NIST, or SOC 2 to ensure data protection and compliance with emerging regulations like DORA or the EU Accessibility Act.
Unified commerce: Treat e-commerce as a unified ecosystem that connects inventory, orders and prices across all channels.
Specialisation: Focus on deeper vertical focus to gain a competitive advantage in a crowded market.
The role of the distributor is being rewritten in real-time. To survive, they must integrate their own digital platforms with those of the hyperscalers, becoming essential navigators for MSPs in a world of “agentic commerce”.
The window for “business as usual” is closing fast. For MSPs, the call to action is clear: stop acting like a simple reseller in a linear chain and start operating as a strategic orchestrator within the integrated marketplace ecosystem.
This means ruthlessly consolidating your “flooded” toolset to focus on integrated platform solutions that deliver tailored, high-value outcomes for end-users, ensuring their structures can withstand any economic or cyber “storm”.
You must embrace the “power of three” − aligning your deep technical expertise with vendor innovation and the massive financial gravity of hyperscaler cloud commits − to ensure your clients’ investments are spent “smarter” not just larger.
In a world of automated, “click-to-buy” procurement, specialised expertise and unbiased visibility remain the ultimate safeguard and your only defensible moat against total automation.
The uncomfortable truth? In five years, an MSP that hasn’t mastered the hyperscaler marketplace will be as irrelevant as a video rental store in the streaming era.
Food for thought:
If your core value can be replaced by an AI-driven “Buy Now” button on a cloud dashboard, do you actually have a business model, or just a temporary loophole?
Are you truly a “managed service provider” if the hyperscaler is the one managing the billing, the platform and the updates?
In the coming era of “agentic commerce,” will your customers still pay for your human advice, or will they simply trust the algorithm to find the best deal?
