David Dicker - Chairman, Dicker Data
“We have just got to execute as best we can and see where that approach takes us.”
M&A mania
Despite Dicker Data’s strong stance in the face of increased market competition, news of a potential expansion goes against the grain of conventional channel speculation, with many across the industry expecting the company to be snapped up by a global titan seeking entry to the local market.
And it wouldn’t have been surprising, following Arrow Electronics acquisition of Distribution Central, and previously Observatory Crest, alongside Ingram Micro taking control of Connector Systems and Exclusive Networks buying WhiteGold Solutions.
Not forgetting further mergers and acquisition mania with Ingram Micro sold to China’s HNA Group, Tech Data swooping on the distribution business of Avnet and increased speculation that Westcon Group is up for sale.
“Everyone is up for sale,” Dicker said. “We’ve never really been actively up for sale and have never really tried to sell it. Especially being a public company, the dynamic is a bit different.
“In a public company, if someone comes to you and determines the correct price, you virtually have to sell because you have shareholders to consider.
“Say a business offers you a 20–30 per cent premium, you have got to recommend it to your shareholders because you would be damned if you didn’t.”
Potentially hindering future growth is a new player to the Australian market however, in the form of Tech Data, the world’s second largest distributor.
After entering into an agreement to acquire the Technology Solutions business from Avnet in September 2016 — in a transaction valued at approximately US$2.6 billion — the deal represents the tech giant’s first move into the local market, creating channel ripples in the process.
“Well, you would think so,” Dicker questioned. “But historically nothing has ever changed. Tech Data bought Avnet worldwide so they inherited operations in Australia, and it will depend on how they conduct business going forward.”
As explained by Dicker, this is not an Australian motivated deal as such, rather part of the bigger picture as Tech Data aims to significantly enhance its footprint across Asia Pacific.
From a Dicker Data perspective however, nothing stands to change.
“All we can do is operate in the market, hit our number and be important to vendors,” Dicker added. “Cisco is a good example of this, we have spread Cisco through the mid-range market exceptionally well which has put us in a strong position.”
With a portfolio of 55 vendors, Dicker Data has expertise across cloud, software, hardware, networking, security and mobility to name a few, illustrating its reach at a national level.
But in order to create a healthy and thriving stable of products and offerings, Dicker is meticulous in which vendors come through the doors at Dicker Data.
“If a vendor can’t reach a certain amount per month over a period of time, then we will re-evaluate that relationship,” he said.
“And from a vendor’s point of view, if they can’t reach a certain level then they’re not in a position to be serviced in the way they want to be serviced.
“Instead they should probably move to a smaller distributor where they will be a bigger percentage of the business. It’ll be a better outcome for all parties.
“We need a vendor to reach that level because it’s not viable for us to provide the level of service they require otherwise.”
Delivered through sales and pre- sales teams of experienced product specialists, Dicker Data is evolving into a modern day distributor, one that is capable of playing in the volume space, but also now excels through value.
“We’ve become much stronger on the value side,” he said. “So much so that we’re getting better results in the market because of it. We’re not the same distributor as we were 20 years ago.
“Some of our vendors have complicated solutions and as a distributor, you have to be able to support the reseller. I think we do that better than any other distributor which is why we’re still going well in the market.”
In becoming a value-focused distributor, the business has changed with the times, amidst a challenging economic climate and tough market conditions.
Looking ahead, 2017 promises to be as predictable and profitable as 2016, such is the Dicker Data way.
“We’re looking at a few options but we’ve got a projection number for this year and we all know what our result needs to be,” Dicker added.
“The team is entirely focused on hitting their number and I’m focused on the expansion side, and they run in parallel.”
As the industry knuckles down for another year of blood, sweat and tears, the market is advancing at breakneck speed.
Dicker Data meanwhile is at a crossroads, with its final destination currently unknown.
