CEO Rich Hume: Tech Data Outgrowing Market By Embracing Emerging Tech, SMB
Rich Hume, in his TechSelect keynote address, argues that Tech Data's focus on emerging technologies, and a devotion to the SMB and midrange solution providers who will bring those technologies to market, are essential to growth.
Even as overall IT growth slows down, a focus on emerging technologies and on reorganizing to be a leaner, more agile company will help Tech Data weather the slowdown and outgrow its peers.
That's the message from Rich Hume, CEO of the Clearwater, Fla.-based distributor, who said that 2018 was a year of across-the-board IT industry growth the likes of which he has not seen in the 35 years he has been in the industry.
Hume, addressing solution provider attendees of his company's TechSelect fall 2019 conference on Tuesday, held this week in Orlando, Fla., said that his discussions with the CEOs of many of Tech Data's vendor partners seems to indicate growth in 2019 will be half that of 2018.
"To put it into context, last year, Tech Data in the U.S. grew 11 percent year-on-year on a very big number," he said. "This is tens of billions of dollars. And this year, as reported in the first quarter, and the second quarter, we were 5 percent and then 7 percent. So I think that that's a pretty good barometer."
The first half of 2019 also shows a bifurcation in growth by customer size, with the largest enterprises seeing relatively soft growth with the real growth in midmarket and SMB customers, Hume said. "And that's where you all participate," he said.
Hume attributes Tech Data's growth in part to a global footprint. However, for the distributor's partner base, even more important is the breadth and depth of its portfolio, he said.
Many of Tech Data's distribution peers are focused more on the PC ecosystem or on data center and new technologies, Tech Data prides itself on bringing together an end-to-end portfolio, Hume said.
Furthermore, he said, the market is currently favoring Tech Data's channel partners' focus on the midmarket and SMB business.
"When we take a look at Tech Data within SMB, we have three years of double-digit growth every quarter through that time frame," he said. "And it is an area where we invest significantly."
Tech Data's focus on the channel and the support it offers small partners is second to none, said Chrystal Antao, CEO of Cherokee Data Solutions, a Claremore, Okla.-based solution provider with six employees.
"We do business with a lot of distributors, and they really hit the sweet spot of supporting resellers like my company," Antao told CRN. "And we're small. We're not a massive company. They take care of us, and provide great support as far as their technology solutions."
Tech Data is building a path to growth across the board with what Hume called a four-pillar strategy.
The first pillar is investing in emerging technologies, with a focus on cloud, security, next-generation services, and IoT and analytics, Hume said. The reason is simple, he said: Outside of emerging technologies, there little to no growth expected in the IT industry for the foreseeable future, he said.
"In order for us to make sure that we're vital for you, we are very focused on making sure that we're building the capabilities within those four areas," he said. "And when you take a look at the investment that takes place in Tech Data, it is heavily weighted towards those emerging technologies."
The second pillar revolves around how Tech Data will continue to strengthen its portfolio by investing in the SMB and midmarket business by creating new solutions, aggregate solutions, and so on.
The third pillar is a focus on optimizing Tech Data's global footprint, Hume said. As a $37-billion to $38-billion company, Tech Data has opportunities to improve its cost structures and re-invest the money saved by increased productivity into other more strategic areas, he said.
"So be assured that we are plowing up money back into the business to make sure that we keep our offerings and our value proposition to our stakeholders, the vendors and our customers, vital as we move forward," he said.
The fourth pillar is digital transformation of Tech Data's own business, Hume said. A big emphasis will be new investments in Tech Data's StreamOne cloud marketplace platform to eventually turn it into a virtual distribution platform, he said.
Hume expects StreamOne to be the platform that serves all of Tech Data's cloud content including infrastructure-as-a-service, platform-as-a-service, Office 365 and other modern workplace applications, and the entire ISP ecosystem.
"In fact, as we look at the vision through time, it will be a bi-directional marketplace where we'll have the opportunity for many of our solution providers and resellers to actually post their content and sell it more broadly than what they may be able to actually focus on today with their coverage models," he said. "[We're focused] on every process within Tech Data with the intention of ultimately giving you one pane of … moving forward."
Tech Data is also making internal leadership adjustments to better address the fast-changing needs of channel partners and their customers, Hume said.
The company has adopted what it calls "servant leadership," which Hume said requires that all Tech Data colleagues are actually in service to the people that they support, he said.
"That means that they are putting the needs of our stakeholders way, way, way at the center of our model, and making sure that all of the ecosystem builds around it," he said. "Internally, it means that those in management at Tech Data also adopt that approach with their people [and] meeting the needs of their people first This is really important, because in our legacy, we've probably been a hierarchical decision making company. But when we look to the future, hierarchical no longer works. You need responsiveness, we need to be able to meet those needs."
With its servant leadership initiative, Tech Data is pushing the responsibilities and accountability to its lower-level employees, Hume said.
"And this takes a big transformation internal to the way we've traditionally operated," he said. "I would tell you that it's really being accepted quite well internally. And the management team has really gotten behind this. And we will accelerate this transition as we move into the future."
Thomas Klink, president of Infinit Technology Solutions, an East Syracuse, N.Y.-solution provider, told CRN he liked Hume's message about servant leadership.
"For us, as a partner with Tech Data, getting them to invest in our businesses, train our people, allow us to become a better organization by utilizing tools that we normally couldn't afford, allows us to continue to grow and evolve," Klink said.
The increasing digital footprint Hume discussed is also a big investment focus for Infinit Technology Solutions as well, Klink said.
"It's actually building up our content on social media so we can market to customers better," he said. "We're focusing a lot more on digital content and making sure our brand recognition is out there and people are connecting through digital media."