QandA With Arrow's Ed Coleman: "Value-Added Distribution Has Real Meaning"

Last month, Arrow Enterprise Computing Solutions started carrying the complete StorageTek line that Sun took on with last year's acquisition of Storage Technology. It was the latest part of Arrow's continuing expansion of its core storage business. Also, Ed Coleman became president of the ECS division, which last year accounted for $2.4 billion in revenue for its Melville, N.Y.-based parent Arrow Electronics. Coleman tells VARBusiness about his strategy at Arrow.

VARBusiness: What is the significance of expanding Arrow's storage offerings?

Coleman: Compliance solutions are becoming a major driver of storage implementations. Compliance with Sarbanes-Oxley requires a very rigorous process around what information you have, how it was managed, how long you retain it, how effectively you access it. So the ability to help a reseller help its customers define that process and define the infrastructure necessary to support it [is critical to corporate sales].

VB: What are Arrow's other strong suits?

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Coleman: From a solutions standpoint, I think we're [also] very strong in server consolidation. From an industry-vertical standpoint, health care, as well as public safety, emergency response. Back on the technology side, we have security solutions.

VB: You call your division a value-added distributor. Isn't that just a marketing distinction?

Coleman: I think value-added distribution does have real meaning. The manufacturer, in essence, is hiring us almost as an outsourced service provider to manage a defined portion of their channel and to be responsible for the recruiting, education, training, development and growth of that channel--meaning we have to go much deeper with the reseller to develop their joint marketing plan, their business strategy, how they're going to market and the resources they need to be successful, not just today, but three or four years down [the road]. That's a very different value proposition than focusing on price and availability.

VB: Can you give an example?

Coleman: [Recently] we worked closely with an independent software vendor that had a very good health-care package; we brought them together with one of our resellers interested in expanding their presence in the health-care space. Now they had a chance to sell an IT system supporting a cardiovascular hospital. What allowed the VAR to be successful in large measure was [the combination of the] independent software vendor that had the right package [and] the VAR's infrastructure support. That's an example of where we're upscaling our capabilities to deliver solutions that we provide to our resellers and help them become more solution-focused and capable.

NEXT: Why Arrow's heading into Europe.

VB: In 2005, Arrow bought German distributor DNS. Why go into Europe now?

Coleman: First and foremost, there are growth opportunities. Second, it allows us to create more value for our OEM partners. As they look to do business with a smaller number of highly capable service providers, the broader our reach, the more valuable we can be. As we look at the distribution industry, particularly in Europe around the enterprise product, it's an even higher value model. I think they may be more advanced in solution selling, and we think there's knowledge we can gain in working closely with them to help us grow up the value chain in North America as well. In the case of DNS, they do an extremely good job of working very closely with the reseller--sometimes in front of the end user to explain, sell and implement security solutions. They're really becoming part of the reseller's customer-facing team. It happens in the U.S., but not to the same degree.

VB: Are you making any other changes?

Coleman: I come to a business that's been very successful [and] very well run. At the same time...standing still is not a recipe for success. We need to continue working closely with the VARs to make sure that together we continue climbing up the value chain. We have to stay [focused] on increasing the number of solutions we bring to the marketplace, helping the VARs bring more value to their customers.

VB: You have a unique perspective on the industry. What weaknesses do you see in the way VARs are doing business?

Coleman: I'm not sure I'd characterize it so much as a weakness as a [need to] focus on what they need to do in the future to continue their success. CIOs generally [want] to reduce the number of people they do business with. [The question for] VARs is how do I make sure I'm broadening my customer relationship? If you don't think beyond the hardware infrastructure and start shifting to a solutions focus, where you can broaden and deepen your relationship with your client, you risk being consolidated out.

Erik Sherman is a freelance writer based in Coltrain, Mass.