Cisco Finds Data Center Sweet Spot With Avnet

Avnet added Cisco to its line card as a data center partner

That's thanks in no small part to Avnet's own industry heft, and the growth of UCS since its March 2009 unveiling as well. As a new entrant into the server market, it's been a needed home run for Cisco, especially during the painful restructuring the networking king mounted starting in 2011.

But Avnet also occupies a unique place among Cisco distributors in that it's a $25.7 billion company -- Cisco's first data center specialty distributor in the U.S. -- not focused on any other major Cisco lines. Avnet's Cisco purview won't expand anytime soon, insist Avnet and Cisco executives, because the data center opportunity around Cisco, UCS, Nexus and other related products, and ecosystem partners such as EMC and NetApp, is a total addressable market well into the billions on its own.

"We're very comfortable with each other," Jeff Bawol, president, Avnet Technology Solutions, Americas, told CRN in a recent interview. "The energy with them and the cultural alignments were there from the beginning."

[Related: Cisco's Best-Kept Secret: Distribution Growth ]

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The growth of Cisco's overall distribution business in the past two years has been one of its best-kept secrets -- a gradual ascent, behind the scenes, while macro-events such as a supply chain crisis in 2010 and Cisco's retrenching away from scores of "market adjacencies" and back toward core priorities claimed most of the headlines.

Scott Brown, Cisco vice president, worldwide distribution, recently confirmed to CRN that after several years of flat sales, Cisco's distribution revenue grew from $9.6 billion to $13 billion from 2010 to 2012, and now accounts for more than 28 percent of Cisco's $46 billion in annual revenue. Cisco maintains approximately 170 distributors worldwide, from global powers such as Ingram Micro, Tech Data and Westcon Group's Comstor business to a constellation of regional distributors and specialty houses.

Avnet's role in that mix, however, is quite specific. For starters, it's both a configure-to-order (CTO) and build-to-order (BTO) distributor for Cisco UCS. It has an L6 designation -- a Cisco manufacturing term meaning that Avnet is authorized to build servers from the ground up, combining sheet metal, processors, power supplies and all other necessary components.

"Avnet was the first distributor to earn this Cisco designation," Brown said. "It provides partners with a flexible and rapid delivery of custom data center solutions to customers."

Avnet declined to provide its exact Cisco numbers, but Darren Adams, general manager and vice president of Avnet's Cisco Solutions Group, said Avnet transacts Cisco data center deals with more than 100 partners per quarter. The L6 designation has proven huge, he said, because it gives Avnet the advantage of being able to build UCS servers and prioritize its role in the supply chain with that flexibility. But Avnet also has staffed the opportunity aggressively from a sales perspective.

"All of our Cisco-quota-carrying individuals have a Cisco DCUCAM [Data Center Unified Computing for Account Managers] certification," Adams said. "Half of our field sales force carries that."

The growth of UCS for Cisco might limit some of Avnet's specialty in the future; Ingram Micro, for example, was just confirmed as a UCS B-series and C-series BTO partner in the U.S. for Cisco. But Avnet also is broadening its Cisco relationship in other ways.

Earlier this year, it hosted a second Avnet-Cisco Executive Summit, a conference specific to data center solution providers building Cisco-centric solutions. And although the Avnet-Cisco relationship initially covered the U.S., Avnet will expand its Cisco purview through it's planned acquisition of Stuttgart, Germany-based Magirus Group, which serves similar Cisco data center distribution needs in the EMEA region.

Bawol believes Cisco has been successful with UCS because it addresses how customers are looking to buy infrastructure: as line-of-business architecture rather than networked pieces of IT. Avnet's various solution-selling programs have been trying to address that same customer interest, he said, not only with Cisco but also in its major practices with Hewlett-Packard, IBM and other vendors.

"It used to be a separate sales process depending on the department, but what's happening is that convergence, and our approach to solutions and solutions distribution and vertical focuses, plays right into that convergence," Bawol said.

Avnet supports both of the major UCS-centric converged infrastructure plays -- the VCE-led Vblock model, which ties Cisco, EMC and VMware technology together in a tightly integrated stack, and the FlexPod model, a reference architecture for building with Cisco, NetApp and VMware -- and Adams said there's more than enough market opportunity for each.

Solution providers have been happy with how they can build sophisticated network and computing stacks around Cisco's UCS vision, Adams said.

"Cisco looked at the whole architectural picture from the ground up," Adams said. "They looked at virtualization and what the effect was going to be there and designed UCS to go after that. It's done a great job as a piece of converged infrastructure and the building of that cloud-based network solution."