Ingram's Diversified Portfolios

Keith Bradley calls it a culture change for Ingram Micro, where he serves as president of the North American business. The $31 billion distributor monolith is trying to reinvent itself into a nimbler company predicated on individual business divisions geared to the technology segments that are driving the most growth and profit.

A recent example is the company's new Infrastructure Technologies Solutions (ITS) division, a business unit launched earlier this month that's aimed at serving the channel for servers, blades and networked storage and infrastructure products. ITS joins similarly spun off divisions—including one focused on managed services and another on networking and security—that aim to offer more in the way of services, resources and sales assistance to solution providers. It's an elevation of Ingram's core business model that has long been based on volume and product fulfillment, according to Bradley.

While a somewhat radical shift for the distributor, creating individual business units is necessary to optimize and grow the business around those markets that are in most demand, Bradley says. Key to this is getting Ingram's workforce to identify with their individual businesses above all else, he adds.

"My overall vision is that in a couple of years Ingram will be so diversified and differentiated from its core business that people will have to ask the question, 'What division do you work for?'" Bradley says.

If you look at last year's financial performance, the addition of business units seems to be paying off. Ingram grew revenue by 9 percent for the year, including double-digit growth during the fourth quarter. The growth and diversification has come both organically and through acquisition.

Among those acquisitions is Avid, which has enabled Ingram to break through in the consumer electronics space. That deal saw Ingram pick up 6,000 customers in the custom-installer space—essentially the technicians that set up electronic systems throughout homes. They run that business separately from the rest of Ingram, set up at 35 locations where custom installers can purchase equipment and receive training.

In the long term, Bradley sees the convergence of the traditional solution provider market and the consumer electronics space as boosting Ingram's business unit further as demand grows for IT-related solutions such as networking, security and even remote backup to be coupled with home entertainment systems.

"The synergy here is coming as the home becomes more digital," he says. "It's not collided a ton yet, but it's coming."

With the new ITS business unit, Ingram is targeting customers with fewer than 1,000 seats to sell a linecard of myriad midrange servers, blades, storage and related products. Blade servers alone are growing at nearly 30 percent for the distributor, one of the main reasons that the separate business unit has been formed. Ingram, which is looking to expand its vendor relationships in this space, is currently in talks with existing partners IBM and Hewlett-Packard, and also with Hitachi Data, EMC and Quantum. The disty is aiming to identify a greenfield of untapped customers to target.

The new unit will have 100 additional employees dedicated exclusively to this market segment. Ingram is expected to pour $15 million over the next few years into this space and will emphasize lead generation, sales assistance and other resources to provide to their solution providers.

John DeRocker, senior vice president of sales and marketing at Nexus Information Systems, says the divisional approach to technology segments makes sense on many levels for Ingram.

"Simply from the influx of income and margin, this helps Ingram solidify itself as an all-around tier-one player and not just a pusher of boxes," DeRocker says.

He sees this as a way to streamline his sourcing. As it stands now, a company like EMC, for example, is in the closed distribution model and doesn't sell through Ingram. DeRocker has to source EMC products elsewhere, when he'd rather be getting all the pieces to a solution from Ingram (as much as that's possible). If the establishment of ITS opens up EMC to Ingram, he just might get his wish.

"I just want to streamline," he says. "The time to market is quicker, and Ingram has many more technical resources and more support. I don't care about the price [on products]. It's the back-end processes that [Ingram] brings to the table."

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