Tech Data CEO: Resource Shuffling Is Driving Growth

A realignment of resources over the last few quarters is now paying off for distributor Tech Data, its CEO said Thursday.

Bob Dutkowsky said those realignments, which included streamlining of back-office functions and implementation of an SAP platform for its U.S. operations, have led to above-market growth in some parts of the business, amid a focus on such areas as cloud, mobility and security.

"We are poised to take advantage of the next set of opportunities being created in IT, such as the emergence of cloud, the endless potential of IoT and (a) never-ending challenge of securing an interconnected world," he told analysts after the company released its first-quarter numbers for its 2017 fiscal year.

[RELATED: Tech Data To Double Security Headcount As It Rolls Out Dedicated Practice]

id
unit-1659132512259
type
Sponsored post

Dutkowsky said he believes Tech Data has made the move from being a broad-line distributor, dealing in a high volume of cheaper products, into a hybrid distributor that differentiates itself with a broad inventory of technology solutions and value-added services.

Dutkowsky said that a couple of years ago, Tech Data began to realign its resources in the U.S., implementing an SAP platform throughout its American business units, and saving money by centralizing back-office functions at its Clearwater, Fla, headquarters.

Last year, the distributor began to take the money saved from those realignments and invest it in more technical staff to deliver more value-added skills to customers, as well as additions to its sales force.

"You can see it is clearly working. … we are growing faster than the market," Dutkowsky said, adding that Tech Data will continue to invest internally around customer support for cloud, mobility and IoT.

Most recently, Tech Data doubled its security staff, creating a 100-person security and information management practice that will operate in the Americas and Europe.

Dutkowsky said the company is confident that investment will drive more business, especially amid the growth of cloud and the Internet of Things.

"I don’t think we are ever going to wake up one day and say 'Hey, now everything is safe! The bad guys lost and the good guys won.' I think security will always be an important part of IT," he said during a later, exclusive interview with CRN.

Dutkowsky said Tech Data will continue to invest in what he called the "next set" of opportunities, noting that the company has never invested more in its cloud platform, StreamOne.

"Our success is predicated on our ability to adjust to the realities of the market," he said, "We need to constantly adapt and adopt."

During its earnings call Thursday, Tech Data announced a 1.18-percent year-over-year revenue growth, from $5.89 billion in the first quarter of last year to $5.96 billion. (The quarter ended April 30). The company also reported non-GAAP net income in the quarter of $37.4 million, a nearly 20 percent improvement from the year-ago quarter.

Tech Data said the company came in at the low range of its guidance in the European market due to lower demand for mobile and data center solutions on that continent.

Dutkowsky said he believes that at least some of the lower European demand may be tied to next month’s vote in the U.K. on whether it should continue to remain part of the European Union. That vote will take place June 23. If voters approve an exit, it could make trade more difficult due to the addition of another border on the continent.

Dutkowsky said businesses in Europe are holding back on IT investments until they know the outcome of the referendum. However, he said Tech Data will continue to find sales opportunities.