CDW's New CEO Will Face Services Challenges
John Edwardson's 10-year reign as CEO of CDW is slated to come to an end Oct. 1 when the company's current president and COO, Thomas Richards, will succeed Edwardson as head of the $8.8 billion solution provider, the company said recently.
Edwardson,who will stay on as chairman as least through 2012, joined CDW in 2001 from American Airlines. The feisty leader famously took a sledgehammer to a Dell laptop in front of employees to illustrate what he planned to do to the then-direct-model enemy in the marketplace.
Since then, CDW has more than doubled its annual revenue, including a 23 percent increase in 2010 compared to the recession-impacted 2009. Most recently, CDW reported a 10 percent increase in sales for the first quarter compared to the year-ago quarter.
Richards joined CDW in September 2009 as president and COO, coming to the Vernon Hills, Ill.-based solution provider from Qwest Communications, where he was COO. Although there was no mention of Richards eventually taking over for Edwardson in CDW's announcement of his hire, CRN had reported in June 2009 that CDW was seeking to find a potential successor .
Richards will take over a company still challenged with finding its services identity in the market, according to several solution providers. In 2006, CDW acquired Berbee Information Networks, a Cisco Systems services superstar, to jump-start its services business and said at the time that it would make several more acquisitions to expand that footprint nationwide.
Those acquisitions never occurred on a large scale, and several VARs said they don't see CDW as a services player in the field.
"We run into CDW when it is a transactional occurrence vs. the thought leadership, trusted adviser role we play with customers," said Bob Venero, CEO of Future Tech Enterprise, a Holbrook, N.Y.-based solution provider. "CDW is still viewed by a lot of customers as a commodity product supplier. A lot of customers go to CDW to price product. That is generally when we compete with them."
Venero said the difference between his company and CDW is personified by their respective Web sites, where Future Tech showcases its solutions prowess and a green data center offering while CDW's Web site touts prices on a wide array of point products from a Cisco Wireless-N Access Point for $179.99 to a "Best Deal of the Week" Lenovo ThinkPad T410S for $999.99. "A Web site picture is worth a thousand transactions," said Venero. "Tell me, who is product-centric and who is solutions-centric? Companies have a need for transactional suppliers like CDW, especially in the SMB market, but I think the better value play for corporations is companies like Future Tech."
NEXT: Seeking More Services
Adam Kaplan, a principal at AE Technolgoy Group, a Rockville Centre, N.Y.-based VAR, said customers don't even use CDW's pricing as leverage anymore. "If people throw prices at us, it's usually for something onesy-twosy at some Web site. It's usually from some kids in their bedroom trying to start something."
He added that CDW's services business is nonexistent to his customers. "Services? Never. I haven't really come across them. I can't even call them a competitor," Kaplan said.
CDW executives could not be reached for comment, but the company's release notes that Richards previously ran Qwest's Business Markets Group, a $4 billion unit that designs, installs and maintains information service networks and solutions for small, medium and large companies and the federal government.
It's likely that CDW's board is hoping Richards can replicate that solutions success at CDW.
"We've accomplished a lot over the last two years and have unlimited opportunity in front of us," said Richards in a statement. "I look forward to continuing to work closely with our partners, customers and co-workers as we expand our service offerings and drive future success."
STEVEN BURKE contributed to this story.