Tech Data CEO Dutkowsky On Avnet Integration Status, Next-Gen Investments And Where Specialty Competitors Get 'Left Behind'

The New Tech Data

Two quarters removed from the completion of its $2.6 billion Avnet Technology Solutions acquisition, a bigger, broader Tech Data remains laser-focused on strengthening its status as an end-to-end IT distribution provider.

The Clearwater, Fla.-based company is coming off a record $9 billion third-quarter sales performance and is "right on schedule" with its Avnet integration plan, CEO Bob Dutkowsky told CRN.

"What we wanted to do is create a company that had the breadth, scale and scope, and be able to address the demands of the market," he said. "You're beginning to see that breadth of Tech Data take shape. We're excited about it, and more importantly our vendors and customers are excited, as well."

What follows is an edited excerpt of Dutkowsky's conversation with CRN, which includes Tech Data's long-term growth vision and how Avnet best practices have improved company execution – and vice versa.

With Avnet in the fold, Tech Data now has 14,000 employees in 40 countries. How are you and your team ensuring nothing falls through the cracks during what must be a complex integration?

When we decided to put [Avnet] and Tech Data together, we committed to having two different threads. One thread was focused on operating the company, serving the customer and the resellers. We dedicated a second thread of people to executing the integration. We tried to take these two big day-to-day business challenges and dedicate people to each front. That has paid off. Our operations were very good in Q3, and at the same time we're right on schedule with where we want to be on the overall integration of putting the two businesses together. Here we are seven months into it. We said it was going to be about a two-year journey.

What sorts of synergies has Tech Data begun to realize across that wide footprint?

We have operations in 40 countries. We're able to look at those countries very objectively, see the best practices that develop in one country and compare it with a country that maybe isn't performing as well. That way, we don't have to reinvent excellence in execution. We just have to transfer it, which is much easier. All of Tech Data basically runs on one IT system. If a process is stronger in one country versus another, the way it works is all the same. It's typically the skills of the people. We can do training sessions with people in a country and they can get as good as the best practice in another country.

What are some examples of best practice adoption that has directly led to success?

We have to understand what the market opportunities are. We have to have relationships with vendors that are developing and delivering those kind of solutions to the market. We have to buy the right products. We have to cover the right customer sets. We have to be able to process all that business and logistically ship all those products. All those little sub-processes I just described, there are places where they work better than other places. We're able to quickly see stronger performance and weaker performance, and we review those operations twice a quarter. We have a good feeling for what works, where it works, what doesn't work, and we're able to quickly pass best practices onto the right places.

So you're essentially just looking at the big picture, seeing what's working and reacting across the whole Tech Data footprint?

Let's assume we sell a product from a certain vendor in a country, and it's selling really well, and we don't have that vendor product in another country. We say, 'Look how well we're doing in Country A for you, can we have that product in Country B?' That's where the breadth and scale becomes so important for a company like us. We can find pockets of success.

What's allowing Tech Data to find those pockets of success? You noted the highly competitive landscape distributors face now during the earnings call. That can't be easy in a tight market.

There are people inside Tech Data who have really deep skills and they grew those skills from working on much more complex things than what Tech Data is. That gives us great confidence over time with both operating a big company and integrating the two together. We have a lot of people with a lot of experience. On top of that, we've hired some of the best consulting firms in the world to give us advice, direction, counsell and models we can use. Combine all that, we're very confident we can manage the complexity you're describing. I don't want to downplay the complexity, but we have plenty of people who are capable of that.

You mention focusing on being an end-to-end distributor. How is Tech Data positioned to compete with specialty players who might be really good at cloud or IoT, for instance? Can you beat them in those areas?

What makes a specialty distributor special? It's the skill sets they have and the products they take to the market. We believe our strength is the breadth of our line card and the depth of our skills. We're able to deliver it end to end. The reseller sits with an end user who has a business problem they need to solve. Our customer can talk about a data center solution, a cloud solution, an endpoint solution, a desktop solution, a mobile solution, a hardware solution, a software solution, and with one phone call back to Tech Data can talk to people who are experts in all of those different solutions sets. We can help them build the optimal solution for their customer.

Why is that better than, say, connecting with a specialty distributor for a specific need?

If the reseller would have taken the opposite route, they'd have to call a data center-specialized distributor and call a broadline distributor and they'd have to call a software, networking and Microsoft distributor. They would have to cobble all those things together on their own. Which one makes the reseller more productive? Which one allows the reseller to answer their customer's question not as, 'I happen to have a relationship with this data center distributor, so I'm going to propose a data center solution?' If they do business with us, we don't care if they sell them data center, endpoint products, a network solution or a cloud offering. We sell all that. That's where the reality of the world is headed toward, that end-to-end solution set.

You said Tech Data is investing in next-gen solutions. Are there any areas where you think the company can improve or fill gaps on its line card?

The beauty of the advanced technology needs, they're still being formed. They're not a finished end product, commoditized answer to the question. We continue to invest heavily in those areas – security, analytics, IoT, cloud, mobile device management and security, converged and hyper-converged, solid-state storage systems, flash storage devices. All of those areas are morphing really quickly and they need the breadth and depth to continue to be able to make the investment. … That's a place where the specialized distributor gets left behind. They're not going to be able to make the breadth of those investments. That's where the Tech Data model becomes very attractive not only to the vendors, but the resellers.

Do you have a parting message to partners about where Tech Data is headed? What do they need to know about your investment strategy?

We serve 115,000 resellers around the world today. Each of them has a competency that connects them very closely with their customer. Whatever that is, we can help them see other areas they can serve their customer, either because their customer is migrating to one of these advanced platforms or they want to get a bigger share of wallet from their customer. For instance, if their customer is going to move from traditional storage to flash, and they don't know anything about it, we can help them manage that transition. Tech Data should be the first call any reseller makes when they want to grow, improve their profitability and make themselves more valuable to their customer.