Logicalis CEO Vince DeLuca On Rapid Cisco Meraki Growth, Dell EMC And Hiring Doctors To Drive IoT Sales

DeLuca On 2017

Solution provider powerhouse Logicalis is betting big on Cisco Meraki in 2017 with an eye towards specific internet of things (IoT) verticals to drive more service opportunities.

Logicalis CEO Vince DeLuca, whose New York-based company is ranked No. 30 on 2016 CRN's Solution Provider 500 list, said hiring non-IT personnel in specific verticals will be a key differentiation in driving sales. "For us, we'll have real-time practitioners in our space that may not know a lot about IT, but they know a heck of a lot about K-12 education, for example, or how to run a hospital system," he said.

DeLuca also talks to CRN about Dell EMC's hyper-converged strategy and his plan to make services represent 50 percent of Logicalis' revenues.

How big was your Cisco Meraki business in 2016?

Meraki was either our number one or number two fastest growing segments that we had with Cisco. It was quite strong. Although the base is not as big as some of the core components of their traditional business, we're seeing a lot of traction with [Meraki].

If you look at people and what they use, there's one common element that trumps everything else in terms of repeat use and its simplicity. You can have the best thing in the world, but if it's really difficult to use, chances are you're not going to use it again. Meraki brings a simplified and streamlined approach to work deployment, ease of use and manageability that's very easy to use and it's in the cloud. All of those elements stacked up pretty high with regards to what is important to our customers. Meraki fit their equation quite well.

Do you think Cisco made the right staffing moves?

The shifts that Cisco is making in the organization are the right ones. They've overhauled their executive management team. Arguably, some of these new folks they brought in are much more geared towards the future than they were in the old router-switch mainstream technologies that Cisco had for so long. They're making some good moves there.

What's one challenge for Cisco in 2017?

The short-term challenges they have, which everyone else has as well, is shifting their business model. Today it's very project-oriented – a customer needs something, they order it, they deploy it. Cisco recognizes revenue pretty quick. It's been steeped in hardware. That model is shifting so much that customers are looking to consume differently. An annuity is of higher value. Cisco is pretty big and shifting that paradigm is pretty difficult.

What does Cisco need to do to make this new OpEx business model work?

They need to made sure that their field teams have the same appreciation for what they're doing and that all the incentives and everything else are aligned. That includes both internal incentives to their field teams as well as to external incentives to the channel community. We need a bit of a ramp to get there. It's not like flipping a switch, even though the market change taking place is quite rapid.

What's a big focus for Logicalis in 2017?

We're seeing the internet of things take shape quite well in the marketplace with deployments in a variety of things. People still tend to think IoT is smart refrigerators and smart lightbulbs and stuff, but with the increasing world of connected devices and having intelligence around that, we're seeing real life applications out in the marketplace that leads to a proliferation of data. And being able to help our customers harness the power of that data, make it understandable, and serve it back to them in an intelligence manner with a very easy user interface is something we're working on.

What's your IoT strategy and where are you seeing wins?

We're starting to become more industry vertical oriented in terms of how we're shaping the company. We certainly have horizontal plays and that will continue, but we're increasingly looking at organizing ourselves around vertical markets. We put a lot of emphasis in healthcare and government and in education.

Give us an example of a IoT solution Logicalis has built that is currently in production?

One is in healthcare, where we do a lot of advanced imaging capabilities -- so having digital-enabled smart devices out there connected to the imaging infrastructure of hospitals systems. We help our customers design, develop and implement those kind of things and it really gives real worldwide access to images that can then be used as telehealth solutions to share across the world. Through that digital imaging infrastructure, we allow hospital systems to collaborate and then use that technology to do diagnosis and preventative health and everything else in that space anywhere in the world.

Where should the channel focus their IoT efforts?

We're very bullish on verticals. Certainly, horizontal infrastructure and application deployment still has relevance, but if you're really looking at value, [customers] want to understand that you know their business. You understand it at a fundamental or even more advanced level … What they really care about is that you understand it at least at the business-model level, like what hospital systems are trying to do.

A vertical orientation is becoming increasingly more important. For us, it's one of the things we're really betting on to provide that higher level value that our customers are asking us to provide.

Logicalis is hiring people who are non-IT experts in a certain vertical like healthcare?

We have people that we've brought in from the medical field … That' the future in terms of where we need to invest to get closer to our customers, and to do that, we need to have an understanding of that business. We'll eventually reshape ourselves to be much more oriented in that space.

You're hiring doctors and nurses?


What about in the education space? Will you eventually hire teachers?

Yeah. It's going to vary depending on the type of company that you're talking about. For us, we'll have real-time practitioners in our space that may not know a lot about IT, but they know a heck of a lot about K-12 education, for example, or how to run a hospital system or what a physician experience is within the boundaries of hospital systems, etc. I do think that is required and we've done a little bit of it and we'll continue to do more.

Logicalis is a longtime EMC partner. What's your view on the new Dell EMC?

They're a formidable player that we can't ignore. Generally speaking, they have the fabric of still what is a really robust technology portfolio. They've done a lot with revamping their channel organization even with their new leader that they brought in. Their programs are pretty robust, so they have a strong position there.

They have some work to do in the convergence and hyper-converged space. They have good offerings, don’t get me wrong, but they need to do a little bit more work there. Networking is obviously a void for them, so their partner strategy around a holistic infrastructure solution I think needs to be enhanced.

What does Logicalis' revenue look like when you compare services and hardware sales?

Our services growth is double digits. The problem is the shape of the business still has a fairly large segment being in that traditional infrastructure resell space. Even though we're growing quite well in what I would call advanced solutions and services business, that still represents a smaller segment. The shape isn't quite where we want it to be, but we have a path to getting there.

If you look at all services … we're right at around 30 percent. So it's about 70 [percent hardware], 30 percent [services]. We do see a path needed to get closer to 50-50 percent, but again, it's on a really big base. We have a three-year plan to get there. 2017 is the first year.

What's your vision for Logicalis?

We're continuing to put emphasis on the next generation of how we're looking at things. So in the infrastructure, certainly converged and hyper-converged seem to be the way that a lot of our customers are looking to deploy systems.

Software at the core of everything is definitely what we're seeing whether it's traditional partners like Cisco or next generation things in the software world. That continues to be very relevant in terms of skills and how we're helping our customers understand how to deploy the technology in the best manner possible – highly virtualized, highly automated, a very flexible business model with software at the core.