CRN Exclusive: Synnex CEO Kevin Murai And His Successor, Dennis Polk, Discuss The Future Of Distribution
Leadership Transition: Murai And Polk Look At The Future Of Synnex And Distribution
On March 1, Kevin Murai, the long-time president and CEO of Synnex, will step away after 35 years of distribution management, including 10 years as president and CEO of Synnex. The last 10 years have seen massive changes at both Synnex and in the distribution business in general, including the $830 million acquisition of Westcon Americas under Murai's watch.
Murai (pictured, left), however, is not yet ready to walk away from Synnex. He is taking over a Synnex's chairman of the board where he can still keep his hand in distribution while getting more rounds of golf.
Taking over as president and CEO is Dennis Polk, who has most recently served as Synnex's chief operating officer. Polk, a 16-year Synnex veteran, started out in the company's financial department and served as the chief financial officer.
Murai and Polk recently sat down with CRN to look at the future of Synnex at a time when upheavals in the IT industry are changing the nature of distribution.
Kevin, have you started your retirement yet?
Murai: No, not yet. My official date is March 1, and I fully intend on doing exactly what I've been doing for the past nine-and-a-half years all the way through to the end. But, as I go through each and every day, and as I do different milestone meetings ... I'm now starting to hit some of the last ones, which is a little bittersweet, but I'm still as engaged as I have been.
Polk: I'll tell you, some of those meetings he's walking out kind of a little sad. But other ones, he's pretty darn happy he's not in some of those, the grind-it-out distribution meetings that we have.
What are the first things you want to do after the retirement starts?
Murai: I have a lot of plans, mostly on the personal side. First and foremost, I will still be connected and engaged with the company on the board. I'm absolutely looking forward to that new role. I am on [the StanCorp Financial Group] board as well. So I think between the two of them, that's gonna keep my mind active. And it's going certainly to be more than a part-time job.
It can't be all work and not play.
Murai: For personal things, I have, number one, spending a little more time with family, specifically my wife, and being able to travel with her. I've traveled a lot, and I've traveled to many places around the world. Unfortunately, she hasn't been able to join me for most of that. So, a lot of exciting first-time things to do there.
We've been involved as a company, and I've been personally involved, in FIRST Robotics which is a terrific STEM (science, technology, engineering, and math) program focused on middle school and high school. So I'll be able to spend more time focusing on that. There are a couple of others that I'm considering as well that I think are important to me.
That said, there's still going to be a little time left, and I plan on tuning up my golf game.
So as far as IT goes, your focus will be on First Robotics?
Murai: Well, the priority, of course, will be chairman of the board of Synnex ...
Polk: Thank you. Yes, I appreciate that.
Murai: … and spending a lot more time with First Robotics. I do dabble a bit in other things. Home automation in the things I do around the home. I have a handful of unfinished projects that I have to finish as well.
Polk: We're going to make him a pretty hard-working chairman. Trust that. I assume some of the meetings we'll have with him will be on the golf course, but we'll be working pretty hard with him.
So Dennis, as you take the CEO reins on March 1, what are some areas you would like to focus on initially?
Polk: As we transition from Kevin to me, the key thing is just to make sure we have a smooth and successful transition. That is priority number one. We want to make sure this great company keeps operating effectively like it has for the past 37 years, and staying with its main focus on our partners. That's what we're all working on as we speak. We expect it will go very well given the success in the transition process so far.
After that number one priority, one of the things that's important to me is to reconnect with the partner community. I did spend quite a bit of time with the partners in my early years here at Synnex, but the last seven to eight years, I've been focused more internally on the non-distribution businesses, on our M&A (merger and acquisition) strategy, and a host of other projects.
I'm glad you mentioned the M&A strategy. Recently, there was news that Synnex might be looking to acquire Ingram Micro from its Chinese parent company. What's going on there?
Polk: That's been talked about by the parent of Ingram, and they've said that was an untrue rumor.
Was Synnex involved in any discussions with Ingram Micro about this, or thinking about such an acquisition?
Polk: I'm sure you've gotten this from Kevin 100 times in the past: We don't ever comment on M&A rumors.
What is Synnex's acquisition strategy in general?
Polk: First of all, our industry has gone through some consolidation in the past several years. We have been one of the drivers of that consolidation. And we expect that we will continue to do so. The consolidation has driven a lot more efficiency in the distribution marketplace. And ourselves, as well as our competitors, have become more efficient and been able to offer a lot more services to our partners as a result. You've seen a lot of recognition from our partners about how well Synnex has done after all these acquisitions and our increased offerings. I would expect that to continue to go forward as the industry consolidates.
What about as you look into the future?
Polk: As far as Synnex and potential next acquisitions, we're always looking for something that will add more value to our business, which would mean adding more value to our partners. It's either filling in a line card gap, or filling in a service offering gap, or maybe going into something that's a little bit not perfectly in our core business but [which] over time will add to our partners and add value across the channel. That has always been our M&A strategy, and will continue to be going forward.
Distribution has been traditionally divided into broadline and value-added distributors. But with acquisitions like Synnex's acquisition of Westcon, is the distinction between broadline and value-added distributors getting blurry?
Polk: That's been occurring for, gosh, almost 10 years now … Today we're at a point where it's really hard to tell the difference. Our customer sets, and the product sets that we sell, it's really a quite interesting matrix in that some of the larger customers need a lot of value in a transaction, and some do not need a lot of extra value, from the distributors. And it's true on the smaller customers as well, where some will need a lot of technical support and other services, and some will need very little support, just the product sold through to them. And because of that, distributors, and I think Synnex is a leader in this, need to be able to efficiently and expertly move between those types of sales. And because of that, I think there's been a significant blurring of the lines between 'broadline' and 'value-add.'
When you say 'customers' you mean channel partners?
Polk: 'Customers' to us can mean our reseller customers, it can mean our vendors – we use the term 'partners' to describe both. Given our unique place in the channel, we service customers basically looking in every direction possible.
As you look at distribution over the past few years, do you see the selling of 'things' or products becoming of less importance?
Polk: No, I don't think so … The data proves that out. If you follow [analyst firm] NPD at all and their numbers, you'll see that the amount of 'things' or products being sold has actually increased recently and over the past few years in aggregate. We're excited about that. Our partners, the vendors, in this case, are seeing the value of the distribution channel, and are moving more product through the channel …
There are certain categories that may be flat or a little bit challenged from a growth perspective, but that's what has occurred in this business for the past 35 years. Products will move into the channel. They'll ramp up very quickly. But then, over time, like anything, new products and new technologies and new services will start to replace them. With new vendors and new technologies replacing those, then the channel can pick those up and grow the overall business.
What are the product areas where you see the most growth through distribution?
Polk: First of all, we haven't talked at all about our recent acquisition of Westcon-Comstor … You saw in the recent results we talked about how important that business was to our recent quarter. That business brings us a lot of new networking, UCC, and security products. On the security side, a lot of important new vendors have now come to work with Synnex because of the acquisition. And, as you are well aware, security is everywhere and is all-important. So we see a lot of growth in the security space.
And then, like every other entity out there, we have an Internet of Things strategy that we're working very hard on. We've started to get some reasonable momentum. And things all around the 'third platform' (cloud and analytics) -- anything related to that is where we're seeing growth as well.
A big part of the Westcon acquisition was also about services. How is distribution's approach to services changing?
Polk: We've found out the services business and capabilities of Westcon-Comstor go very well with the existing services capabilities that Synnex has. And so we're seeing that as one of the one-plus-one-equals-far-more-than-two aspects of this acquisition. That's very exciting to us.
From an overall perspective, we're investing in services to help our partners, in this case, our reseller customers, to help grow their businesses and to help fill in gaps where they're unable to service their end-user customers. And that was the mindset of Westcon-Comstor as well.
So with these two services businesses, we're able to offer a lot more capabilities to our customers, and they're in turn able to offer a lot more to their end customers, which should allow them to close more business and grow their overall companies.
What's the value distribution adds to the cloud?
Polk: We offer a lot of value to cloud. All of our partners, and in this case, it's the vendor side, need distributors like ourselves to explain their strategy to our customers and then [help] sell those capabilities to the end customers. While cloud may seem to be going around all those partner and customer sets, we don't see that as the case because the distribution channel has proven over time that it can help enable any vendor in selling more of their product or their services to the end-buying customer.
Any last thoughts?
Murai: If you can, tell our partners how grateful I am for having to have been able to work in this industry for the last 30 years, and in particular for the last 10 years at Synnex. And for those that I can't say farewell to personally, I'm going to miss it. I'm going to miss it a lot. And I will still stay in touch.