Tech Data SVP: Time To 'Peel Back The Layers' Of Stimulus

Tech Data's Tech EDG conference in Arlington, Va., and other public sector VAR events like it have extra resonance this year, thanks to the American Recovery and Reinvestment Act and its attendant opportunities. sat down with Tech Data's Senior Vice President for U.S. Marketing Joe Quaglia at the show Thursday to hear about the distributor's efforts to better engage its public sector audience in the year of the stimulus.

So now that the initial stimulus hype is subsiding and we're starting to separate the wheat from the chaff with stimulus opportunities for VARs, what's the table discussion been like in the last few weeks? What are Tech Data VARs telling you?

Overall, we see about 50 percent of partners who are actually mobilizing resources to go after it, and about 50 percent who think that by the time the dollars actually kick in, the stimulus money won't be needed -- they feel that anything that happens now is in the midst of a natural uptick. It's a good time to be in public sector.

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We've heard a number of different opinions on whether it's "too late" for VARs who don't already play in the public sector to get in on the stimulus action.

Where you're going to hedge is in SLED [state, local and education]. If you're not already a federal guy, there's definitely a barrier to entry, and you have to focus more on states, as well as local representation in counties. We see plenty of VARs gravitating there, and they're definitely not out of time.

How are you advising VARs to best position themselves for stimulus dollars?

If you're going after this, you have to put an expert in place. In your organization, designate what I'd call a "stimulus czar" -- someone to uncover and peel back the layers to see exactly how to manage opportunities and become the trusted adviser, as many of these VARs have become, to local end users. The way I'm advising customers today is to narrow things down as far as possible -- specialize in a few particular technologies and verticals.

What technologies and what verticals do you see as specifically strong?

Well, in health care for example, document imaging is big. If you're looking at health care but aren't in document imaging, we're looking at how we can help you see that as a big play. You have to narrow it down beyond just "state" or "health care" to that level: document imaging, unified communications, these types of technologies.

What others besides those two?

Digital signage is big, especially in education and doctors' offices. The data center is big, as is security. And all the construction going on with building modernization is going to mean a refresh for new technologies.

So how, then, does a VAR without a pre-established public sector practice get in front of these opportunities?

Those resellers who have been on the sidelines may still have put specific investment into software and things like business process outsourcing. Because those technologies are so needed in public sector, they'll find more natural opportunities to convince customers than they have in the past. Really, anything related to the stimulus that needs more efficiency is a place to be.

Looking at the overall economy, do you think we've hit bottom? What's telling you so?

I do, I think we have seen the bottom. Coming out of January, and seeing what happened in February and then in March, we think the bottom has been hit. It's a question we're asking ourselves, so we are being cautious. Unemployment, which really affects SMBs, will be one indicator.

How about the equity markets stabilizing?

Yes. In general, when credit and cash are more accessible, you're going to see a lot more spending, and I don't think we're as far away from that as we thought in January. It's still going to be a sluggish year, no doubt, but there's enough to hope for growth.

Speaking of credit, I caught up with [Tech Data's Senior Director, Credit -- SMB Accounts] Scott Tillesen earlier today and he said that with the so-called credit crunch, quite a few VARs are asking for what they've always asked for -- extended terms -- saying the economy is really squeezing them. But by not giving them extended terms, Scott said, you're helping those VARs become better about credit, as the suffocating climate forces them to change their terms of sale for the end user. Is that a view you share?

Definitely. We're going through a reset right now -- and if you don't go through that reset and create new discipline, then you haven't moved forward. Credit is so important to a business like ours, and if you get undisciplined about it, you have nothing.

Next: Quaglia on Dell and social networking

While I have you, obviously the big news in distribution this past month was Dell's agreement with both you and Ingram Micro. We heard from [Tech Data Americas President] Ken Lamneck at the time of the deal, but I'm curious as to your impressions. How have Tech Data VARs responded?

Well, let it be said first that Dell has been in the channel for many years. Customers are responding well. Dell realized there was an opportunity here, and they came to us.

What's the brushback been from Dell's competitors so far? Anybody grumbling out loud?

We have the same commitment to other vendors we've always had. The Dell announcement changes nothing about that.

I spoke at length with [Tech Data Vice President of Marketing Services] Katie Dumala about some of Tech Data's newer marketing efforts and their strong social networking flavor. She mentioned vendor-specific communities.

Yes, we're working with vendors independently. They want to establish online communities to help them target VARs that are selling into specific verticals. We're also into Twitter and blogs and everything else, but we're being cautious. We want to make sure there is real value.

Did the vendors come to you specifically about these types of communities? Did they ask for your help, that is, in targeting specific VARs and markets?

We have collaborated. When they look at where they're placing investments they see a high value in social community. I would say adoption has been early by the more mature, aggressive vendors -- the ones that have a large base to begin with.

Do you see a business value for something like Twitter beyond being an additional advertising arm?

It's too early to tell, but it definitely has a place in our business. These things take time to grow. I've been a LinkedIn member for five years, but only in the last year and this year has it become viable for communicating. I'd like to say we're more advanced right now in the social networking, Web 2.0 stuff than others. We've understood for a while that any time you can connect a customer back to a vendor solution is a good one, and one that has value. And these are a less expensive approach, no question.

What technology segments are particularly hot right now and staying so?

We're spending a lot of time on software -- it was our highest growth area as a product category last year, and because we don't really pack or ship anything, it's a great product segment for us. But we're always looking at new opportunities. As Ken Lamneck is fond of saying, let's not waste a crisis.