This Is Clear: Distribution CEOs See Cloudy Future Too

As cloud computing becomes more of a reality, the role of distributors has become a wild card subject, with many VARs and cloud software companies debating the value that distribution can bring.

For their part, distribution CEOs say they’re betting big on the cloud, though in some cases they’re not sure how they’ll get there (or at least they’re not ready to reveal their plans). CRN’s Scott Campbell caught up with several distribution executives at the Global Technology Distribution Council’s recent CEO Insight conference in New York. Here’s what they had to say:

Tom Dolan, Chairman, Westcon Group

There’s room to play. In our environment, both internally and externally, we intend to participate in distributing cloud services. Our internal IT infrastructure is morphing into a cloud-based environment. Like most businesses, you like to have a fixed expense turn into a variable expense with 1,800 employees. We have an e-mail system. We used to have a fixed investment in staff to support it. Now we use an outsourced solution and pay seat per month. As our headcount scales up or down, expenses scale with it. It’s very appealing.

As far as external, we’re not prepared to talk about that now. But the tradition of bringing scale still applies. In the case of larger competitors, it’s global scale ... First you need to attract a broad base of customers. In addition to a global base of customers, there’s aggregation. Rather than getting 140 bills a month for services pass-through, to get one account where you can properly maintain sub-billing down to customers will be a big thing.

Bob Dutkowsky, CEO, Tech Data

I think there’s a lot of energy around cloud computing. It’s interesting, but I think it’s a little ahead of its time. Are these really sea changes happening in the market, or are vendors trying to create energy around things?

The fact of the matter is there are public and private clouds. Do you know where your Google cloud is? I don’t think customers care where it is. They just care where it gives you service.

I don’t see it as a major change in the way computing works. Tech Data and companies like ours have adjusted adjusted for 35 years. We started selling diskettes. As sea changes happen, there’s always going to be a need for the most efficient route to market.

If you think of a distributor as pick, pack and ship, why would a cloud company need that? If you think of us as a sales and marketing engine, we can sell and market anything. Tech Data has upwards of 2,000 sales and marketing people across the world. Last year we sold $22 billion worth of stuff. It just so happens to be technology. It could be services. It could be sneakers if we wanted to focus on that. We’re a sales and marketing cloud. The HPs and Ciscos of the world view us as a virtual sales organization. Cloud is a virtualization application engine. If anything over the years, we’ve proven we’re resilient and can adjust to anything.

NEXT: Avnet, Synnex And Ingram Micro Execs Chime In Roy Vallee, CEO, Avnet

We don’t have a current plan to move aggressively from infrastructure to application software. We’re building out our CloudReady service offering. Cloud is more than just software delivery. But let’s focus on software being delivered in a cloud. Within that segment of cloud computing, it strikes me that it’s early and nobody has all the answers. There are going to be a couple of dimensions that determine what’s channel and what’s direct. One is size or scale. I don’t know that a software company or software author can call on every customer on the planet for his product, or need a sales force that is a variable cost. Maybe they have some applications with a limited customer base and they’ll target those direct. Typically if you want to serve a broad account base, it’s going to have be cost effective. Typically, the channel is the most cost effective route to market. The second dimension, within software, is varying degrees of complexity. Some is completely intuitive and standard. There’s not a lot of need for intermediaries. But to the extent that software is complex, there will need to be a plan in place to transition into the software and to an extent any customization and an intermediary is required for that.

Phil Gallagher, president of Avnet Technology Solutions

We have a cloud council internally. We meet regularly and our top suppliers look to us to figure out cloud because they’re still trying to figure it out: what is the cloud, how to ’channelize’ it, how to ’partnerize’ it. I can’t tell you how many conversations we’ve had from vendors. We’re looking to participate in all of them.

Kevin Murai, CEO, Synnex

The way we address it, it’s evolving. Our vision is that our role in cloud will be more than one role over time. From a SaaS ISV standpoint, many ISVs are small businesses themselves. Just like anybody else, especially companies looking to address the SMB market, they need distributors to deal with VARs and reach the market effectively.

Unless your offering is a full business suite, you will have to coexist with other ISV offerings. We have single sign-on capabilities that enable you to co-exist. We can help you with hosting. In addition to that, as these apps get deployed, the whole role of the traditional systems integrator pops up again. Who's going to do that [integration] work? It has to be the VAR doing it upfront. We can develop capabilities to go deep into an app suite and help with app support. It’s hard to imagine an ISV going to market on their own.

Greg Spierkel, CEO, Ingram Micro
Right now cloud is over-talked and over-hyped. I’ll be very clear on that. But it’s a trend that you have to continue to pay attention to. There are some companies that are very focused on that. Salesforce.com would be the best example, or Amazon. As you know Ingram has been involved on several fronts. One, we have a Seismic offering now we’re up to 18 different applications or offerings within that umbrella capability.

Second, we’re working with major vendors like Microsoft to roll out BPOS. So that’s very much in our bailiwick.

Third, we’re selling the infrastructure that’s going to drive the enablement of in-house hosted solutions, call it cloud. There’s been cloud for years. Telcos are cloud companies, as are cable companies. They’ve all been doing this for years. Now people coming into this sector with software and new applications that we need to take advantage of. Without question, the VAR community is looking for us to help them. And I would say the vendors we talk to say ’We need to reach the SMB space.’ That’s really what I’m hearing. Is it as big as everybody would like it to be? No, it’s being talked up a 10x factor above what the market’s doing right now. But it will grow and it’s important.