Partners Wary of Direct Sales Conflict After Tech Data Buys Solution Provider

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Tech Data's foray into direct sales through its acquisition Wednesday of solution provider Signature Technology Group (STG) sparked an immediate backlash from several of the distributor's channel partners.   

Solution providers said they were concerned that Tech Data's purchase of Phoenix-based STG poses a conflict of interest as the Clearwater, Fla.-based distributor now has the internal capacity to sell data center services directly to end users without engaging a solution provider partner.

Ashok Thakur, president and CEO of Computer Consultants Network Inc., a Hicksville, N.Y.-based partner of Tech Data since 1993, says he is concerned Tech Data could now use his clients' information to sell direct.

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"I never thought they would do something like this," Thakur told CRN. "Now they can take all the information regarding our clients and use it against us and use it to enhance their business. It's definitely a big negative." 

Signature Technologies provides data center services to commercial and public sector customers, small firms, Fortune 100 companies, educational institutions and both local and federal government agencies.

The transaction is expected to close in early June, with STG continuing to be led by current CEO Charles Layne and operating as a stand-alone unit within Tech Data's Advanced Infrastructure Services (AIS) division. The purchase price was not disclosed.

Chuck Bartlett, Tech Data's senior vice president of AIS, tried to allay channel partner fears during a call with CRN Wednesday. He said STG has been focused for the past four years on growing its solution provider business and now does the majority of its business outsourcing services through other channel partners, though he declined to give an exact percentage.

"We've got a lot of requests from partners constantly to do one-off things for them where they don't have the capacity or don't have a vocation in a particular area," Bartlett said. "Hopefully our customers will understand how this [STG acquisition] is being put into the market."

Existing Signature Technology clients will be free to decide whether they wish to continue working directly with the STG sales team or whether they wish to engage a Tech Data channel partner, Bartlett said.

"We're not going to dictate or indicate to our customers how they should procure their services," Bartlett said.

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