Interim Tag Could Become Permanent For Insight CEO

Insight expects to name a permanent CEO within 90 days to 120 days after utilizing a third-party firm to assist an internal search committee, said Tim Crown, chairman and co-founder of Insight, which was No. 28 on Everything Channel's VAR500 list this year with $4.96 billion in sales in 2008.

Tony Ibarguen, an Insight board member and former Tech Data president, was named interim CEO Tuesday after Rich Fennessy was ousted by the board.

Ibarguen would not detail his interest in securing the CEO job on a permanent basis, saying only "we're not limiting the search [for a new CEO]."

One industry observer said it wouldn't surprise him if some former CDW executives get a serious look by Insight as well. "It wouldn't shock me. You know Jim Shanks and Harry Harczak are no longer there [at CDW]," said the observer.

Harczak was an executive vice president of CDW until a buyout in 2007 and is currently a board member of Tech Data. Jim Shanks, another CDW executive vice president, resigned last year, reportedly for health reasons.

In an interview with Everything Channel, neither Crown nor Ibarguen would detail the circumstances that led to Fennessy's departure, but they hinted that it had more to do with Fennessy's long-term performance in his nearly five years on the job than with any recent issues.

"You're on the right track for where we are. This was a thoughtful and deliberate decision. Early in the year, we saw demand fall rapidly. We resized the business and had some external issues that were [finished]. The business has some clear skies right now," Crown said. "That's where the board was in evaluating what we want to do to maximize the opportunity in front of us. That led to a change of the CEO slot. It's not that Rich is a terrible guy. We thought we weren't maximizing the opportunity."

Brian Alexander, managing director of equity research for technology hardware/distribution/EMS at Raymond James & Associates, said Insight's results have been inconsistent and acquisitions have proven to be either poorly timed or have had hefty premiums since Fennessy became CEO in 2004.

"While we believe that these acquisitions had strategic merit, they appear to have contributed to the company's decline in [return on invested capital]," Alexander wrote in a report Wednesday. "Moreover, they have detracted from management's focus on executing in the core business, where profitability metrics remain suboptimal."

In the past year, Insight has had several rounds of layoffs as the company looked to meet declining demand for IT products. Crown said Fennessy's departure was not related to any personnel moves made. However, Insight was not gaining the share of wallet with current customers that the board expected, said Crown. Ibarguen is now tasked with rebuilding relationships with both midmarket and enterprise clients, a tall challenge given that many clients are delaying purchases now.

Ibarguen said there's opportunity to provide more higher-margin services to clients, services that haven't been heavily marketed to Insight's customer base, particularly to midsize businesses.

"While the midmarket is suffering just as much as any [other space], we think these services are particularly attractive to them and can help them save money," Ibarguen said. "We think even in a flat market, we can grow our share by doing a better job getting out to [the] midmarket customer base and making sure they know who we are and what we bring to the table."

Ibarguen is perhaps best known in the channel as having served as president and COO under CEO Steve Raymund at Tech Data, but he's kept his plate full over the past several years.

For the past year, he has sat on the boards of two nonprofit organizations and four for-profit companies: Insight, Codi Inc., Alliance Global Services and Alliance Life Sciences.

Prior to that, he was CEO of Alliance Consulting Group, an IT consulting arm and outsourced software developer that split into Alliance Global Services and Alliance Life Sciences. He said he was able to sit on the boards of Insight and another IT consulting firm simultaneously without conflict because they serve different parts of the IT industry.

"Alliance Consulting Group was a consulting shop. There was no integration work or hardware revenue. The other half was life-cycle services to pharmaceutical companies implementing BI solutions," Ibarguen said.

Ibarguen cited Insight's 4,900 employees and access to $3 billion in inventory from 5,000 manufacturers as its key assets to improve relations with customers.

"In tough times, we are making money and generating cash. As demand picks up, as business conditions improve in all segments, we think we are well positioned to emerge as the winner in this industry," Ibarguen said.