Ingram CEO Talks Hosted Services, Vendor Exclusivity Concerns

First, what advice to you have for VARs who are looking to slingshot out of this recession and grow their business in a sustainable manner?

Those that are doing well have not leveraged themselves a lot. They're not carrying a lot of debt hopefully, the ones who are more fleet of foot to go after business. If you came into this [recession] leveraged, or you got leveraged through the last 18 months, I fear for some of those. Some are doing pretty well, but that's a big thing. I would also secondarily say, 'Stay close to customers that you have.' Be responsive more than usual. I think now people are starting to open up their wallets. Remain and stay focused on a diversified portfolio. Don't be too narrowly focused on one customer segment. Have a diversified product revenue and service revenue stream. Another major thing in my mind, the most important thing is to keep the key people you need and energize them. It's been really tough but that's so important. The best VARs are the ones that have come through at least two waves [of economic downturn], that's probably the single-best thing they can do. They know who their 'A' players are and held on to them. If you've got a good group of people around you, the better ones are excited to be there. That feeds on itself.

If you were a VAR and only had the bandwidth to do one of these things, which would it be: focus on getting new customers or a new vertical market, or bringing new technologies to current customers?

Probably more of the latter. It's always easier to sell more to an existing relationship than to try to get into new customers at the same time. You don't have to sell [existing customers] on trusting you. The solutions may be new to what you're trying to do, but they'll know you'll make it right if you've done it with other parts of your portfolio. It's all about share of wallet. That's big for us. That's what we try to do for us. We work really hard on that.

During your keynote address here you mentioned that Ingram Micro was talking to companies like Google and Salesforce.com about leveraging the channel. Can you throw Amazon in there too and when do you think we'll see those kinds of companies in the channel?

We've talked with all three of those companies but I don't know the exact timing on each. It might vary by region. Some discussions are different in one region to another with those types.

As those companies have gotten larger, where they have been so successful so far, for Amazon and Google, is the consumer space. Salesforce in the corporate world. They are all starting to look at SMB in a much bigger way. They say 'I've got one sector I do well with an exiting model. As I have ambitions to grow more well known and have financial aspirations, I have to find additional market opportunity.'

That's the SMB market place. Most companies can't reach there very well with a hosted solution. They don't have the feet on the street and there are complications putting applications with other apps sitting on a business. It's one thing to make an applet for the iPhone but it's another to put a Veritas sophisticated screening solution when it has to interact with other servers and other things. Probably over next two years you'll start to see something. The big name companies are looking at doing at. They have to get into the SMB space. There's more interest from them now than there was a year ago.

Next: Ingram Helping Companies Understand The Channel Did you initiate these discussions with large hosted companies or did they come to you?

It was a little bit on both sides. We hope to see some things this year. But discussions could last many, many months. For example, when we brought Cisco into North America, it still took four years to get across Europe. That's just an example, but it shows discussions take time.

In your discussions with the Amazons and Googles of the world, is it a case of them maybe not being ready internally to deal with the channel, or do you think they don't have a lot of trust in what partners might be able to do for them yet?

A bit of both. In the instances with different parties we've been chatting with, they're doing OK with their existing business right now. They're learning to understand what the channel can offer. They're also saying if I can find a new revenue stream and can reach that with partners in an efficient way, that's when we get into discussions about a lot of feet on the street and where they don't put as much expense into the equation from that perspective. They're willing to start to listen on this. And when a vendor has been successful with one route to market, that's hard to change that. Typically with small companies, although these are not small companies, that runs it course for several years. Then new people come in or there's a market that is not reached and they need to think differently to reach those markets.

It seems a popular rhetoric that distribution cannot play a role with these companies, but it seems like you guys are such a great aggregator of accounts, as well as other services that you can provide, that you should have a role, no?

That's exactly it. And that's part of what we're trying to do with Seismic, put together a suite of offerings. We're up to 18 [services offerings] now. This is the early days of the overall business, but the trend is here. Our learning has put us in a good situation to stay ahead of the curve. If you have a decent platform and put together good tools and manage those tools to put in front of the VAR community, they'll love it for us to be successful.

If you signed an Amazon or a Google type of hosted service, would that be part of Seismic?

How that unfolds over the next year or two will be determined. Seismic is the test to do all this, to put something tangible in place. And we have solid revenue there. But in bringing on other partners or infrastructure that is slightly different, I don't know. I can't be concrete because we're just starting to take a look at it. With a bigger scale we might need different platforms to determine that.

Finally, we're hearing more from VARs' that some vendors' strategies toward more exclusivity and more loyalty is a concern because the VARs want to offer and need to offer multi-vendor solutions to their customers. What is the right balance between loyalty programs and offering the best solution to a customer?

Most vendors have a fairly narrow portfolio so that doesn't really apply to 80 percent of vendors, but there are two or three big relationships out there that have a sizable portfolio. And some bigger ones would prefer an all-in play with a relationship vs. you piecemealing what they have.

There's going to be situations where that's going to work really well, but there are going to be situations where I want best of breed. That may be one part of portfolio but frankly you may feel this piece is not quite as good as with other parts of the portfolio. That's a fair thing to say. Then it gets to be a choice.

Some companies work hard to do all-in, but may lose some business because of it. Some VARs, a number of them I've talked to over the last couple days feel they should not be forced to do that. They want to listen to what end customers needs vs. going down an exclusive structure.

There's always risk if a vendor struggles with part of its portfolio or if you don't have something else in your portfolio. [A vendor] might do well for three years and all of a sugdden they're not the best in networking or computing or storage. Or they might struggle with supply. Then you're caught.

I'm not a proponent of exclusivity to the utmost. You have to be careful. Everybody should always deal with the number one or number two player in a sector. If you carry two, great. If you carry three, maybe that's overkill. But you shouldn't be beholden to one. You might have to potentially miss some opportunities.