When Ingram Micro made its blazing foray into the Australian distribution market at the start of this year, ARN commented that "the channel may never be the same again".
Well, if CNI pulls off its ambitious growth-by-acquisition plan (Page 1) to build itself into an integrator, the likes of which Australia has never seen before, then the same may certainly be said of the local integration market.
As CNI's director Lyle Potgeiter said to me last week, the company will be taking an approach to integration that differs from any of its Australian competitors. Until recently, the integration market in Australia has been very much segmented by state. The entry of national integrators like Com Tech, though, changed all that. That's been somewhat out of necessity, because when you're, for example, building a network for even medium-sized companies, it's generally one that spans multiple states.
CNI, however, clearly sees the national sale becoming a global sell. Its South African parent company Datatec is building a worldwide army of networking-centric integration and distribution companies. Clearly, any time Datatec wins a piece of business in one part of the world, it will attempt to leverage its international resources and turn that into a global sale.
Much has been written about the globalisation of business, and clearly with the entry of both Ingram and CHS into the Australian market, that is happening in distribution. It is now becoming very clear that this is also happening in integration, particularly in networking.
To use Com Tech as an example again, it has already won significant business generated by its Asian sister company Datacraft. Another recent example of globalisation was an agreement signed by Unisys and Nortel, which gives Unisys Global Solution Partner status. Unisys will now be able to negotiate a worldwide agreement which could potentially give it an edge over those with local agreements.
Most agree that integrators have to get big, get niche or get out. The question is, what is big enough? Do Com Tech, Anixter, Anite, Memorex Telex and the like have critical mass yet? Datatec argues not. It believes there will be two or three players that pull right away from the pack. That same prediction was made last year, ironically, by Mitch Radomir. Now marketing and business development manager for NetStar, Anixter's network integration business, he was then commenting with his Gartner Group hat on.
Where does all this leave the smaller integrator? There are certainly still massive opportunities in the small-to-medium business market, many of which will always feel more comfortable dealing with a regional player. But believe me, as the bigger boys get squeezed at the top, they're going to be coming down for that business too. Indeed, NetStar has already stated as much.
Competition is only going to get tougher - take it as a given. Those that survive will be those that very clearly understand both the needs of their customers and also what their own core competency is. The trick then is to do what you do better than anyone else.