BoB Attendees Upbeat About 2013 Amid Cloud Era Turbulence9:05 AM EST Tue. Oct. 16, 2012
The best and brightest solution providers grappling with the herculean task of rebuilding their business for the cloud computing era are planning for robust sales growth in 2013 even as they view it as another year of transition.
Jere Brown, CEO of Dimension Data Americas, No. 11 on the CRN Solution Provider 500 list with $5.8 billion in sales, said the company, which has made huge investments in building out a comprehensive cloud computing services portfolio, is planning on "midteens" sales growth in the U.S. in 2013.
"We know 2013 is going to be another year of transition," said Brown in an interview at the Best of Breed Conference, being held this week at the Grand Hyatt in Tampa, Fla., and aimed at helping solution providers retool for the cloud era. "In the U.S. we have government change. We have economic conditions that are mixed. We have large corporations still on tight budgets so we have to find new ways to create revenue. We are looking for growth in the midteens in the U.S. and we are looking for growth faster than that outside the U.S. We are looking to grow services faster than we grow products. We want to grow three to four times GDP [Gross Domestic Product].
"I am very optimistic," added Brown. "We have significant investments in sales. We are trying to keep our support infrastructure costs down in Q1. I think it is going to be a pretty good year."
Given the big capital investments necessary to compete in the cloud computing era, a number of solution providers are looking to be acquired. Brown sees continued consolidation into 2013. "Every week I get two to three companies that come to us that are looking to be acquired," he said.
"Capital is still constrained," said Brown. "There are a lot of people in the room today having trouble with their credit lines. How are they going to fund this [cloud computing investment]?"
NEXT: Solution Providers Need To Change For Cloud Computing Era
"The channel is going to have to change," said Brown. "There are going to have to be channel organizations focused more on solutions and creating value around the brand of the company and less around what they are doing with manufacturer partners."
Chris Gerhardt, president of Denali Advanced Integration, No. 119 on the SP500 list with $157 million in annual sales, said he sees the company growing its sales another 30 percent in 2013.
"There is a lot of fear in the market with the election and everything else, but we expect to grow [sales] just as we did in 2012, about 30 percent," said Gerhardt. One of the most explosive areas of growth for the Redmond, Wash., solution provider has been around BYOD mobile device management.
Even with the robust sales growth in its traditional business, Denali is stepping up its cloud computing services assault with a separate technology unit. "We have found over the last three years doing cloud that culturally it is very difficult to get the SI and VAR business to work and be simpatico with this new model."
As a result, Denali, under Gerhardt's direction, is creating a new independent cloud services technology unit. "It still leverages all of the capabilities of a classic legacy VAR but has a brand-new focus," said Gerhardt. "That separation is the biggest initiative we have going next year, establishing those new business models."
Mark Galyardt, executive vice president of Xioss, an Atlanta storage solution provider that was No. 1 on CRN's 2012 Fast Growth list, said he sees another strong year of growth in 2013 even as the company has tripled its sales every year for the past four years. In 2013, the company expects to double its sales to more than $20 million, said Galyardt.
One of the keys to the four-year-old company's success has been a sharp focus on providing storage solutions for the Fortune 100, said Galyardt.
Xioss' No. 1 initiative for 2013 is to develop a robust cloud computing services business. "We are taking steps to move toward recurring revenue," he said.
PUBLISHED OCT. 16, 2012