Behind The Scenes of Avnet's SolutionsPath Success

Avnet executives recently celebrated the distributor’s 50th anniversary on the New York Stock Exchange by ringing the closing bell. Afterwards, Phil Gallagher, global president of Avnet Technology Solutions, talked with CRN’s Scott Campbell about how the company is preparing itself for the next 50 years.

You’re celebrating five decades as a public company. Can you take us through what your message was to investors [at the NYSE]?

We went through how we identify opportunities and the SolutionsPaths we take to get there. We showed a chart for example that showed HealthPath, RetailPath, GovPath, energy and financial, the verticals we’re focused on. We intersected that with the growth in technology being storage, virtualization, mobility, networking and collaboration. Then I showed how we take that to market. Our real primary charter is adding value to the IBMs, Ciscos, HPs, VMware, EMC, NetApp, et cetera. I showed how we build that ecosystem, develop SolutionPaths, take that to the end user community via our VAR network.

You came out with some new SolutionsPath strategies in 2010. What’s next for 2011?

We’re going to drive that globally. Now we’ll take SolutionsPaths into Asia-Pacific and into Europe.

Can you quantify how fast your business in the different verticals and technology groups is doing compared to the business overall?

The aggregated growth rate [of the IT industry] toward 2011 is in the range of 5 to 8 percent, single middle digits, which is pretty solid. We’ll compete well within that. These markets are growing at a greater rate. The other area that we’ll focus on is acquisitions in global expansion. With the aquisitions we did last year, the growth rate of our [total available market] is a $141B incremental opportunity for technology solutions. As we look at our acquisitions over the last year, into Latin America, further into Australia, Vietnam and Asia, there is growth opportunity in those regions.

Can you provide some numbers for how the specific SolutionsPaths are doing compared to the overall market in that space?

When we’re making these investments in the market, we track market growth vs. our growth. Overall, we measure FY10 vs. FY09. Our NetworkPath [revenue] is up 121 percent, revenue. IDC reports [networking sales] increasing 3 percent. VirtualPath is up 110 percent to 115 percent vs. the industry up 20 percent. StoragePath is up in the 35 to 40 percent range, the industry is at 5 percent. SecurePath is up 15 to 20 percent, while industry is at 14 percent. The point is we’re growing at or above the industry rate. We’re very proud of this.

How many VARs do you have in each SolutionsPath?

Well in the hundreds for each, and increasing. The vertical practices are also growting. GovPath has a 30 percent increase in revenue through partners that have [registered], HealthPath is growing at 40 percent, compared to 8 percent for partners that [are not in HealthPath] but claim to be serving that market. It’s causing more demand.

Next: Helping VARs Find The Right Path

Is there a lot of overlap between the vertical and technology paths? For example, is someone in HealthPath and VirtualPath?

It’s possible to have partners focus on security and healthcare. It’s not always a one for one. We got a lot of questions from analysts about how do you built the paths and solutions and go to market. We’re very sensitive that we want to sell across a spectrum of technologies into those respective verticals.

What we’re finding and what suppliers want us to do, Rich Hume was recently quoted as saying he want to add more value in the supply chain and you need to specialize and focus. We are enabling VARs to help them become experts.

Some partners we find out there are struggling and not growing at the rate of the market. They haven’t really declared what their focus is going to be. If you don’t do that, your value is going to be diminished.

So how is Avnet helping VARs make that transition?

Avnet occupies what we think is a unique place in the value chain for IT distribution for both maximizing our suppliers, leveraging our marketplace, building an ecosystem that services the needs of today and well into tomorrow, via the SolutionsPaths we put together and we want to be the partner as the next century evolves from an IT standpoint. We want to help our suppliers and partner migrate to the next solution and beyond, in all regions of the world by the way.