Arrow Buys VAR500 Company To Enter UC Space

Arrow Electronics has agreed to acquire Shared Technologies, No. 158 on CRN's VAR500 list.

The purchase is a dramatic departure for Arrow, which for years marketed itself as the only enterprise distributor that didn’t sell to end users. But Andy Bryant, president of Arrow Enterprise Computing Solutions, believes that Shared Technologies, which focuses on unified communications and managed services, is a different business model than Arrow’s traditional VAR base.

“The obvious thing I’d like to communicate is that our commitment to our reseller base is unwavering. The only way we can be a strong enterprise value-added distributor long term in the market is by moving to stay in a leadership position,” Bryant told CRN. “The more we stay in that leadership role, through new technology, new capabilities, the more we are able to offer our partners profitable growth.”

“Perhaps the world is changing, the market’s moving. The value-add that will be required three years from now by our reseller base will be very different than the value-add today. Things like cloud, managed services, the way IT is serviced, the way hardware is procured, will be very different. You can count on Arrow to be in a leadership position and being committed to [resellers’] profitable growth in the IT space.”

Shared Technologies, based in Coppell, Texas, was founded in 1974 and has about 1,000 employees and reported sales of about $252 million in 2009, according to CRN's VAR500 list. Like many VARs, it saw sales decline precipitously from 2008, when it did $331 million in sales, according to the VAR500 list.

Shared Technologies was known as Nortel Networks’ largest VAR in the U.S., as of 2009, before Nortel was acquired by Avaya. It’s now one of Avaya’s largest partners and also lists Siemens, Mitel, NEC, AVST, Microsoft and layerX technologies as vendor partners on its Web site.

“They have IP telephony, unified messaging, the collaboration piece, Web and video conferencing. We see this as complementary to where we want to go, which is into more services,” Bryant said.

Bryant said he believes Shared’s business model doesn’t compete with his existing enterprise two-tier model.

“We want to enter the unified communications space and we think this helps us leverage more business for our VAR base long term. Any time we can solidify our position in the Fortune 5000 space that can only be good for the VAR base,” he said.

Shared will operate as a separate entity within Arrow ECS but Bryant said cross-selling opportunities with infrastructure VARs is something Arrow intends to pursue.

“That is very much an opportunity to leverage. As we move into the Fortune 1000 space, there’s no question we might be able to bring larger projects to the VAR space,” Bryant said. “This is a business that has tremendous [opportunity] in services. We’ve been looking at a big services strategy and this is a way to build out our services portfolio. Acquiring this accelerates our effort. As we build services capabilities long term, we will become stronger where makes sense to our partners. All of that has to play out. We have to see where we can offer services long term.”

Finally, Bryant wouldn’t comment on whether Arrow was looking to acquire other services or solution provider businesses.

“We have to wait and see where we go. This is our entry. We bought Sphinx in the U.K. By no means does it mean we’re not looking at more acquisitions in the distribution model. We will continue to evaluate acquisitions based on strategy, capability and performance.”

Chad Berndtson contributed to this article.

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