CRN Interview: Fred Cuen, Avnet

As executive vice present and general manager of Avnet's IBM division, Fred Cuen has seen a lot of change at IBM and in distribution in general. IBM recently announced a slew of executive changes. In an interview with Editor in Chief Michael Vizard, Cuen talks about what the changes at IBM potentially mean for VARs and Avnet, and how the Phoenix-based distributor's IBM arm is evolving alongside its strategic partner. For the full text of the interview, visit CRN.COM/EXTRA.

CRN: Beginning with the appointment of Mike Borman to oversee IBM channels and now the more recent executive shakeup, do you think it is becoming easier to do business with IBM?

Cuen: Change initially can be disruptive. But as soon as all the connection points are put back together, it will be easier. With Mike Borman, all the channel pieces report [to] his organization with the exception of software, and we're hoping over time that software will report to him as well. Mike Borman has been very good for us because of the consistency he provides.

More recently, Michael Lawrie went to Siebel [Systems]. John Joyce went to IBM Global Services. Mark Loughridge is running finance. And Doug Elix is replacing Lawrie. That could be a good call. I think with Elix you've got a guy that's been around quite a bit and has been in IGS, so that could create further linkages between the channel and IGS. That's a pretty good thing. And we got to work with Loughridge at IBM Global Finance. He helped us a whole lot and I think he'll be a great CFO. Mike Borman has been a great channel executive for us.

CRN: How is Avnet evolving as IBM evolves?

Cuen: It's unbelievable the amount of power you get in a particular hardware unit. But if you focus just on the unit, you're going to be in jeopardy. The complete solution is what the VAR is buying and that is getting more complicated. We are reorganizing our teams so we have our hardware and software guys together [to] collaborate on solutions on behalf of the VAR.

CRN: How big has IBM software become for Avnet?

Cuen: It's about $300 million. It's a huge portion of our business. Three years ago our business was probably 80/20 in terms of hardware vs. software. %85 Today it's about 60/40.

CRN: Are your customers embracing Intel- and AMD-based platforms?

Cuen: Absolutely. Our VAR population is moving into the Intel space from Unix or the IBM iSeries. That's where we are making all our investments in education.

CRN: Are they running Windows or Linux on those platforms?

Cuen: There's still a lot of Windows, but we've seen a dramatic increase in Linux. It's probably a 60/40 or 70/30 split. As an IBM partner, we have Linux skills in-house and can deploy on behalf of our partners.

CRN: As the model changes, are your customers looking for more business counsel from Avnet?

Cuen: We actually have been providing financial modeling for our advisory councils of VARs. They plug in some financial spreadsheets to see how they look today and then we give them some advice on how a services mix will drive a type of product concentration higher. We're giving them more guidance than ever before. Before, our focus would have been more technical in nature. One of the things we're more focused on is the executive training track to figure out best practices.

CRN: Given the fact that solutions are increasingly spanning more products than Avnet carries, how does Avnet interact with other distributors?

Cuen: We have a relationship with Tech Data, Ingram [Micro] and Synnex. And we trade wares with Arrow Electronics and Agilysys. There is collaboration and competition. We cooperate in terms of the buying and selling that we do with each other. As we look at vertical markets, we are going to have to find pieces of the solution that may not be all-IBM. We would like it to be all-IBM when it can be, but that can't always be the case.

CRN: There has been a lot of talk about special pricing lately and the costs associated with providing it and the time it takes to find the actual, real price for the solution. How big an issue is this?

Cuen: It's critical. The longer it takes to get the price, the worse everything becomes. What you want to do is build, from a price standpoint, a model that allows you to get to the answer quickly. Special pricing means there is an opportunity for a portion of the solution to take longer than what the VAR is looking for. And maybe not at a price point you're looking for, either.

I think every manufacturer should be focused on trying to streamline the process. But there is always going to be a portion that needs special pricing based on competition.

CRN: What's the most important thing for IBM to remember about the channel and distribution?

Cuen: The main thing we are driving is consistency and simplicity. You want to make sure that as the channel goes 100 miles an hour, you don't have any left or right turns without letting anyone know in advance.