Services will take a far more prominent place at the money table, accounting for half of the Avnet Technology Solutions (TS) business by 2019, with an equal share alongside hardware, said Avnet TS global president and senior vice-president, Avnet Inc., Phil Gallagher.
“I want to be clear: We are not getting out of the hardware business; however, we do think going from a ‘products, software and services’ company to more of a ‘services, software and products’ company is the transformation I’m talking about inside of Avnet that is overlaying with where the industry is going,” Gallagher said.
Gallagher made the bold call to services, as he sat down with ARN to outline FY14 strategies from the global and regional perspective.
“If you look at the profit pools from three to five years ago we were 75-80 per cent hardware, and the balance was services and software. Five years from now it is going to be minimally 50/50. And it is moving closer to that today. Again, hardware is growing – just not at the same rate. The whole key now is the engagement model. How do we now engage the partner?”
Announced globally in May, Avnet Services has combined existing services organisations within Avnet into one dedicated, global team with a unified strategy focused on software (including Cloud), lifecycle and education services that complement existing solutions sales and suppliers’ services offerings. “It is offering our partners capabilities that they don’t typically have. It is about further enabling our partners to go and sell more,” Gallagher said. “We are very sensitive and very deliberate that we are in the services business to sell through our partners.”
Meanwhile, ARN also sat down with Avnet Technology Solutions A/NZ vice-president and general manager, Darren Adams, who highlighted the local perspective – and reiterated the important services message Down Under and how distribution can lend a hand.
“When it comes to services, there is a great opportunity. Partners in Australia, specifically, are not that keen to go and spend a million dollars in setting up their own thing. Distribution has always been great at scale and scope. There are going to be partners that want to go do that, and we will work with them, and find ways to work with them, as we’ve done for years. But there are countless mid-tier partners in Australia, the $10-$20 million dollar partner – and they are the ones that we can really create scale and scope for.”
Complexity brings opportunity
Gallagher, a 30-year veteran in the technology industry, has seen his fair share of market trends, shifts in the business landscape and economic cycles.
“The industry is in a transformational state, which is exciting. There are some key areas of focus for us as we get into fiscal 2014 and we are starting to see pay offs. Globalisation - we’re starting to get the real scale and scope and leverage out of our global platform, global presence. We are in roughly 80 countries today.”
“In the last year, we’re starting to see more and more suppliers and customers (the traditional VARs or system integrators) want and need what we can deliver around the world.”
He said partners want to deliver an integrated solution – and are increasingly knocking on Avnet’s door to help with the complete solution sell – while vendors (suppliers) are looking for additional service and support (including 24/7 call centre support) from their distribution partner. In addition to services, he said a big market opportunity in FY2014 is in the area of converged infrastructure and solutions.
“Suppliers are starting to realise that what Avnet brings on a global perspective is the scale and scope. Many are starting to come to us within the last three years. They realise we can run programs around the world and drive local consistency.”
And while Gallagher agreed the industry is in a time of flux and often in a state of confusion in terms of changing business models and the role of the reseller, he said their role as a distribution partner is clear.
“Complexity in our world is good. The more complex things are - that is an opportunity for us. The more feeds coming into something - that is good for us, because we can be the great aggregator. When you talk about Cloud, software-as-a-service, traditional integration capabilities and delivering a product – we are fine. We’re right at the centre of it – whether it is a virtual asset we’re delivering, a financial model we’re delivering, or physical assets with financial, no problem.”
Adams agreed complexity is rife in the market, but from that comes golden opportunities. “There’s a thirst for channel enablement – and it is more than training – it is about helping someone truly fish as opposed to simply throwing a few fish. We teach them how to fish,” he said, saying training goes to a whole new level involving role playing, workshops and universities.
Gallagher said Cloud computing, in particular, is changing the market landscape. “It is the perfect time for us. It is up to us to not sit there and wait – the industry is in transition and we need to transform with it and position ourselves to capture opportunities.”