Insight CEO: Watch For Competitor CDW To Buy Companies In Europe
Insight Enterprises CEO Ken Lamneck said he expects top rival CDW to expand its European footprint beyond the U.K. in part to avoid any Brexit-related issues.
"The U.K. is a good launching point, but certainly you can't address all of Europe just out of the U.K.," Lamneck said at the Raymond James Technology Investors Conference on Tuesday. "We expect to see them be more aggressive in acquiring new assets in other parts of Europe."
Lincolnshire, Ill.-based CDW, No. 8 on the CRN Solution Provider 500, expanded its business beyond the Atlantic Ocean for the first time with its purchase of U.K.-based solution provider giant Kelway in August 2015. Kelway was rebranded as CDW UK in April 2016, and CDW declined to respond to Lamneck's remarks.
Lamneck said the move by CDW validates Insight's deep international presence and its footprint abroad. Tempe, Ariz.-based Insight, No. 15 on the CRN Solution Provider 500, already has 22 locations outside of North America, Lamneck said at the conference at the Westin New York Grand Central.
"We're well-positioned to take advantage of those opportunities already, whereas they're just really getting started," Lamneck said. "They do have some work ahead."
Insight has competed against Kelway for many, many years in the U.K., Lamneck said, and hasn't really seen much change since they were acquired by CDW. Lamneck said the United Kingdom's June vote to leave the European Union could make it even more difficult for CDW to support clients throughout Europe while relying on a U.K. base of operations.
"It's a starting point, but it's really difficult to service all of your European clients just out of the U.K.," Lamneck said. "We expect them to be pretty active in terms of building up a footprint."
Lamneck emphasized that Insight has a lot of respect for CDW, particularly as it relates to their assembly and pricing capabilities along with their ability to add value and sell at high margins.
Insight, for its part, has been pretty active in building up a footprint around the data center with its proposed $258 million acquisition of Eden Prairie, Minn.-based Datalink, No. 45 on the CRN Solution Provider 500. Lamneck specifically said he was impressed by Datalink's technical and architectural capabilities around the private cloud, which far exceeded Insight's internal capabilities.
"When we look at the mid-market clients and above, it's really a hybrid cloud world," Lamneck said. "It's such a critical ingredient for midsize clients and large enterprises."
As a result of the acquisition, Lamneck said Insight will go from having pockets of architecture-focused engineering talent to having hundreds of people with expertise in that marketplace. Insight has struggled over the years with building storage expertise, Lamneck said, but Datalink already has strong relationships with EMC, NetApp and Pure Storage thanks to its heritage in the storage space.
And Lamneck said Insight's tight bond with public cloud players such as Microsoft, Amazon, IBM and Google would allow for the sale of public cloud into Datalink's legacy customer base and the creation of a true hybrid cloud practice.
Insight will also be able to provide Datalink's existing customers with e-commerce capabilities well beyond what they're used to, Lamneck said, particularly as it relates to catalog and digital marketing. Insight's superior digital marketing capabilities are partly a function of its larger size and scale, Lamneck said.
From a geographic standpoint, Lamneck said Datalink would provide a footprint in North Carolina and South Carolina where Insight wasn't that strong, and the company would augment its existing California operations.
Insight plans to take advantage of Datalink's technical and sales-facing client resources while consolidating their back-office functions to the tune of $20 million in cost synergies within two years of closing, which is expected to occur in the first quarter of 2017.
Insight and Datalink work with many of the same suppliers, but Lamneck said Datalink is more focused on orientations. Datalink's 2,000 clients overlap very little with Insight's existing customer base, Lamneck said.