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Ken Lamneck On Why He’s Retiring, What’s In Store For Insight

‘For IT, overall, the pandemic has been a good thing in the fact that more and more of our companies realize that at the heart of it they’ve got to become more digital as a company in order for them to succeed. And I think we’ll see some of the remnants of this continue. I think we’ll all agree that the workforce won’t be the same going forward,’ says Insight Enterprises President and CEO Ken Lamneck.

Insight Enterprises President and CEO Ken Lamneck Thursday said his decision to retire was a difficult one, but that Insight will continue to grow into the future regardless of who sits at the top.

Lamneck also used Insight’s first fiscal quarter 2021 financial analyst conference call to talk about how his company and the IT industry in general has fared during the COVID-19 coronavirus pandemic and prospects for growth as the pandemic winds down.

Tempe, Ariz.-based Insight, ranked No. 15 on the 2020 CRN Solution Provider 500, said Thursday that Lamneck is retiring at the end of 2021 after his 12-year run as the company’s top executive.

[Related: COVID-19 Accelerating Digital Transformation: McKinsey]

The decision to retire was difficult given how much he cares about Insight and its employees, Lamneck said.

“We accomplished a lot in my time at Insight, and I’m excited about our trajectory,” he said. “We have a strong and talented management team and an engaged workforce who believe in and continue to execute the strategy that we outlined in our investor day in 2019, and Insight is very well positioned for the future. The board has hired a top-tier search firm, and the company is undertaking a thoughtful process to evaluate internal and external candidates. This is a critical search for Insight, and I’ll be working with the board to identify the new CEO. I’m committed to continuing to leading this team as CEO until a new successor is appointed.”

When asked by an analyst during the question-and-answer period about the key attributes Lamneck and the Insight board of directors will be looking for when it searches for a new CEO, Lamneck said first and foremost the firm is looking for a very solid leader. He noted the company already has a good slate of both internal and external candidates it is just starting to engage with.

“We think we’ve got the right elements in place, we’ve got the right strategy in place. ... Nothing outside the norm of what you’d expect,” he said

Lamneck said during his prepared remarks that the impact from COVID-19 pandemic is starting to recede.

“With renewed optimism for 2021, demand improved in the quarter,” he said. “Clients continued to focus on business agility and continuity by leveraging cloud solutions for certain workloads. Our clear strategy and deep expertise delivering digital solutions to clients of all sizes allowed us to grow our sales of cloud, SaaS, and infrastructure-as-a-service high double-digits in the quarter.”

The challenges of 2020 show that the resilience of the IT industry and the demand for IT solutions will continue to evolve during economic downturns and recoveries, Lamneck said.

Analysts are expecting mid-single-digit growth across hardware, software, and services in 2021, Lamneck said. However, the recovery in 2021 will vary across different clients and markets, he said.

Elevated backlogs are continuing into 2021, Lamneck said.

“Supply constraints with chip and display shortages are now expected to continue for the balance of the year,” he said. ”However, we continue to see healthy hardware booking trends that are up significantly year-over-year so far in the second quarter. When combined with our already elevated backlogs, we feel confident that we’ll see seasonally higher hardware sales in Q2 and over the balance of the year compared to the first quarter. The market is growing once again, and we expect this will accelerate in the back half of this year.”

Insight believes it is strategically ready to compete in areas where customers see their greatest needs, including improved workforce experience, modernizing their data centers, and realizing the opportunity to go digital, Lamneck said.

This includes investing in its sales and technical teams to better lead with solutions in core end markets, enhancing the scale of its IT systems and processes including its ecommerce market targeting midmarket clients and service subscription models, he said.

“We plan to invest in these critical areas with a goal to deliver a great client experience while also optimizing our infrastructure to scale for future growth,” he said.

Given the current supply constraints and long lead times, Insight is working with clients to assess their 2021 device refresh needs and delivery plans, Lamneck said.

“As a result, we exited the first quarter with an elevated backlog, and are pleased to see the pipeline for future sales build to healthy levels,” he said.

Lamneck during his prepared remarks said that low-digit percentage growth in corporate and enterprise clients combined with strong public sector growth fueled Insight’s return to revenue growth in the first fiscal quarter.

“Our performance for the quarter sets a good base for what we expect to be a strong year,” he said.

When asked by another financial analyst why Insight expects business in the second half of the year to accelerate even as some analysts are predicting endpoint device sales to slow down, Lamneck said his predictions stem from both the economic changes and the easier comparisons to the second, third, and fourth quarters of 2020.

“That’s certainly just the math that works there,” he said. ”But from the device point of view that you touched on, certainly we’ve experienced elevated backlog. Our backlog is up low single digits from Q3 to Q4. That continued to be up low single digits from Q4 to Q1. And that trend is continuing now into Q2. So there are certainly good indications of demand. Booking rates are up again substantially from where they were a year ago.”

There will be constraints from the semiconductor chip shortages that the industry is experience, Lamneck said.

“But I do believe that all indications we have, the OEMs are still going to ship more units this year than they did last year,” he said. ”We won’t be able to get everything we want by any means, but there certainly will be acceleration.”

Also, Lamneck said, workers returning to the offices will impact IT spending. “We think [demand] accelerates even further as we get into the second half of the year,” he said. ”And I think as people start coming back to their work environments in a hybrid fashion, I do believe that will definitely help accelerate a lot of the private infrastructure that has been definitely been much more muted over the past four quarters.”

When asked by another analyst about expected PC growth, Lamneck said that the average before the COVID-19 coronavirus pandemic was one PC per household, but now is moving towards one PC per person per household because of distance learning.

“So I do think there’s a huge proliferation as we’ve seen with Chromebooks primarily in that market set,” he said. ”And I do think that’s going to continue now that you’re going to have refresh cycles that will be certainly more accelerated with the numbers that you’re seeing out there and the fact that there’s a lot of wear and tear on those with students.”

The pandemic has had a huge impact on the IT industry as seen in the level of devices customers are able to purchase to work remotely, the scalability of the networks, and the use of tools like Cisco WebEx and Microsoft Teams to improve collaboration, Lamneck said.

“For IT, overall, the pandemic has been a good thing in the fact that more and more of our companies realize that at the heart of it they’ve got to become more digital as a company in order for them to succeed,” he said. ”And I think we’ll see some of the remnants of this continue. I think we’ll all agree that the workforce won’t be the same going forward. ... There will certainly be more work-from-anywhere activities.”

When asked by another analyst about the consolidation going on in the channel, Lamneck said that smaller competitors are very resilient and are not going away, but instead are turning more and more towards managed services. Meanwhile, the larger 10 to 15 companies in the industry are growing almost twice as fast as the smaller companies.

“But I do think that it’s becoming more and more difficult for smaller players to continue to play in the supply chain aggregation game,” he said. ”I think the systems, the tools that are required now are much different than they were a few years back. So I think that plays into the larger companies who invest in really strong IT platforms, strong ecommerce engines, strong digital marketing-type capabilities. So I think that’s been playing out and will continue.”

Combined, that is leading to more consolidation, Lamneck said.

“I think you’re seeing that across the landscape in many, many facets,” he said. ”That’s only going to continue. And it’s a very natural thing that occurs as industries continue to mature and grow. So I think that’s definitely happening.”

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