What other initiatives are you working on?
DD: There are a great deal of additional services our customers are looking for. It’s very important for us, and me personally, that we don’t compete with our customers. I’ve been in businesses before that have done that and it never works. I was a hero in one business I ran because we grew it so dramatically, but if you got to the core of things it was because we stopped competing with our customers – it was that simple. But a lot of our resellers are looking for more services and our global businesses is one of these services we can provide. Software-as-a-service activity, as well as process-as-a-service, are things we can do for our customers that they find expensive to do themselves. We have the scale and can do things much more efficiently. Good economy or bad, you’ll see Westcon investing in doing more of these services. It allows us to establish customer affinity, and the side benefit is that when you talk about processes with a customer, understand them and adapt them for their use, then you can provide advice and counsel as part of the business relationship that adds real value. That kind of rapport is very important for a distributor like ourselves. Westcon’s not going to do a lot of outsourcing per se, but we are going to do these process-as-a-service activities and I hope it creates the same awareness and ability for us to provide strategic and operational value.
Do you see the role of distributors changing with the introduction of new delivery mechanisms such as software-as-a-service?
DD: I come to this with a little bit of deficit in my background, because I haven’t been in the distributor side for the last 20 years. But from my perch at IBM and Motorola, I understood they were out there and role they played, but what I thought back them was that distributors just provide a logistic capability. As I’ve come to understand Westcon, I realise it’s about managing the portfolio of products so that as a reseller, you have the availability there, and as a vendor the right product mix in the market and channel. But secondly, you need to look at what integration activities need to be done in order to provide a configured product to the user. We can bring together disparate vendors for a solution and help resellers provide more rounded solutions. We have talked about financing, and now as we evolve, these capabilities with regard to SaaS or process-as-a-service will continue to add value.
How far can distribution go in terms of the services it provides?
DD: I think we all appreciate the fact that vendors will ensure they’re not left out. At the other end of the spectrum, we won’t compete with our resellers. But there are a broad reach of capabilities and gaps we can fill. There are boundaries, but I think these are widening. The reason is that from a vendor’s standpoint, trying to manage hundreds or thousands of resellers is an expensive proposition – not just inventory and financing, but also putting together the organisation for them to interact with resellers leads to bureaucracy. By allowing distribution to do more, especially services, means they have a leaner organisation. Security vendors are already looking to us to do that activity.
On the reseller side, it’s really a question of what they want to be good at, but to address customer requirements there will always be a gap. If you think about the cost of people, such as bench time, can destroy a business. Why not utilise a firm like ours to help mitigate that risk?
Software-as-a-service and on-demand computing are about very small, multiple transactions. Are your processes strong enough to handle that, and is there enough margin for everyone?
DD: It’s absolutely an area we’re focused on. Our single IT system and investments in our logistics capability are very important to that. The good news is that more electronic interfaces save our customers money. I believe, and I may be proved wrong, that distribution is essential to that – you really can’t affect those smaller, electronic transactions efficiently if resellers are just going to vendors. Vendors can’t respond fast enough, and there has to be a weigh station in the middle to allow more efficient processes.
Westcon is well entrenched in several markets experiencing vendor consolidation, such as security and networking. Has that affected your business so far?
DD: We haven’t seen that as a negative – I think they all play to our strength because the more robust and sophisticated the vendors are, the broader the set of capabilities and value-added offerings we can put together for our market place. In some situations, we help with these integrations because we can act as a de facto channel as we’re dealing with both vendors.