CDW, Berbee See A Win-Win Situation

Industry Editor Craig Zarley spoke with John Edwardson, CDW chairman and CEO, and Paul Shain, CEO of Berbee Information Networks, about how CDW will integrate Berbee into its business. Following are excerpts from that interview.

CRN: What do your respective organizations gain from the merger?

EDWARDSON: The CDW relationship gives Berbee more financial resources and even more customers, and also other support things such as a large distribution center with a big configuration center where we can do staging for them on big product rollouts. If you look at where we do overlap in terms of doing business, by and large the business we do and the business Berbee does is completely different. Berbee is typically not selling desktops, notebooks, printers and Microsoft licenses. For example, we are a Microsoft LAR and Berbee is not. We do want to move [Berbee] into new geographic areas. If you go into any city in the U.S., and you can pick any of the larger ones, we are doing business with thousands of customers in the city that we can introduce Berbee to.

SHAIN: On the IBM side of equation, [it will enhance] our capabilities in the Microsoft space around Intel xSeries [industry-standard servers]. CDW has deep capabilities and deep inventory around supporting the Intel space, and that's an example of where having distribution and procurement capability partnered with a VAR is a powerful combination for customers that yesterday we didn't have.

CRN: What about your Cisco business?

SHAIN: Our biggest practice is on the Cisco networking side and Voice-over-IP. And while we have a large IBM business, we have an even larger Cisco practice. I think some of the value that you see in Berbee is a result of a well-diversified revenue stream that touches on multiple vendors, including Microsoft, Cisco and IBM. A lot of acquisitions in the small end of the VAR community [are because] they are finding it difficult to grow their businesses. The world today is seeing a convergence of folks like Berbee who historically have been working on large-scale projects and have deep engineering and technical skills in the marketplace. On the other side, you see the technical capability of folks like CDW continuing to expand. For a relatively small partner that hasn't made a big investment in technical services, I think their ability to survive with both ends of the market coming together is going to be challenging. That's why you've seen so much volatility on the merger and acquisition front, particularly in the smaller IBM VAR space.

CRN: Is it your intent to scale Berbee's services business to offer managed services and VoIP, for example, to CDW's SMB accounts?

SHAIN: What we see today is that technologies that start in the enterprise space are quickly getting sized and priced and packaged by the manufacturers to work in the SMB space. So the strength of CDW's relationships in the SMB space with some of the evolving solutions coming out of the manufacturers combined with our capabilities on the implementation side are very attractive to us. It's a very rapidly growing part of the IT space, and we are looking to capitalize on that in server consolidation, virtualization, VoIP and unified communication. These technologies that have had a faster adoption curve in the bottom third of the enterprise space are rapidly moving into the SMB space, and we are well-positioned to take advantage of that. [Managed services] is an area of tremendous growth for us. Our hosting and managed services business has been extremely strong over the last 24 months. It's very compatible with advanced technologies in the SMB space because by their nature many of the smaller customers don't have the IT staff that is required to support these integrated complex systems. It's a wonderful extension that our managed services business can now be extended into [CDW's SMB] client base.

CRN: As you go into new markets with Berbee, do you intend to use the Berbee or CDW brand name?

SHAIN: We will go through a thoughtful transition, but certainly in new markets the Berbee brand does not nearly have the quality and visibility and recognition of CDW. We haven't talked about this, but it makes sense to get under one umbrella fairly quickly.

EDWARDSON: We simply don't know the answer at this point.

CRN: How do you expect to handle the clash between CDW's high-volume model and Berbee's solution-oriented approach?

EDWARDSON: Berbee is going to be an independent, strategic business unit of CDW.