Championing the channel: David Henderson

David Henderson was taught the importance of channel from an early age. It is a lesson that stayed with him and there are few more vocal advocates of indirect sales strategies around today.

The first job of his career was working in the marketing department of manufacturing giant, 3M, in the 1970s. These were days when a job was for life if you wanted it but he was moved around frequently within the organisation, which gave him a solid grounding in other areas of business including sales, operations and management. Henderson bemoans the fact that this level of investment in staff is not seen today.

“I had to do four internal and four external training experiences every 12 months and employers could map out the career of any individual for the next five years,” he said. “It was a very good apprenticeship that gave you a broad range of experience. In marketing, we couldn’t launch a product without presenting it to the sales team and if they didn’t like your pitch they sent you away to come up with another. You also got to meet a wide range of partners and stood shoulder-to-shoulder with them on early sales calls.”

3M products were distributed by Blackwoods, which Henderson remembers as a supplier of “everything from concrete to nuts and bolts that held the industry in the palm of its hand”. He would eventually work in distribution himself and thinks that tier of the industry has a vital role to play in bringing through new talent.

“One of the great ironies of the IT business today is that we say positions are vacant but insist that experience is necessary. Where the hell do you start?” he asked. “The industry is not geared to bring people through and that’s where distribution is fundamental to this industry because it’s the starting point for young people to get in and cut their teeth.

“You might have a 26-year-old product manager running a $50 million portfolio. It can, or should, be a real breeding ground for the industry. We seem to have forgotten that.”

After 15 years at 3M, Henderson woke up one day and decided he needed a new challenge. He joined Toshiba as marketing director in the late 1980s and, after just nine months, was installed as the local general manager. Notebooks might be all the rage today but people still needed convincing back then and it was no easy task.

“You really had to believe in the concept of mobile computing as opposed to desktops. Some people thought it was ridiculous – these notebooks weighed 9kg and had blue screens – but I found a niche within myself because I loved evangelising the idea,” he recalled.

Other familiar faces at Toshiba then included Phil Cameron, Ross Cochrane, Bruce Lakin and Steve Rust. The company’s notebook business went from annual sales of $100 million to $350 million during Henderson’s six years and went toe-to-toe with Compaq at the top of the market. Things started to get more competitive as IBM launched its ThinkPad, the NEC Versa followed and Acer joined the fray. Different market segments also started to expand and Henderson was taught his most important channel lesson when Computelec’s Bruce Dixon came to Toshiba with the idea that there was potential for notebooks in private education. He told them he needed help to build the market because the machines were simply too expensive.

“The financial model wasn’t particularly robust but Tokyo [head office] supported us in building a relatively small business selling hundreds of notebooks into a couple of private schools in Melbourne,” Henderson said. “Over three or four years that business grew to thousands of units and now it is tens of thousands. This again taught me the power of partners and the level of innovation present in the channel.”

After a couple of years as managing director of a US-based PC company called AST, which was eventually sold to Samsung, Henderson joined 3Com in an Asia-Pacific and Japan role. Married with two young children, it isn’t a time he has fond memories of because it meant three weeks of every month were spent out of the country and “after a while, it doesn’t matter how good the hotels are or which end of the plane you’re flying in”.

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If 3M and Toshiba had helped teach Henderson the importance of cultivating a healthy channel, it was his next role that gave him the greatest insight into how the model worked. He joined Tech Pacific, Australia’s largest IT distributor of the day, as one of a small management group led by David Cullen. It was a broad role responsible for vendor relationships and buying as well as marketing and communications – in effect, everything but the sales organisation. As with Ingram Micro today, Tech Pac was almost a vendor directory in itself and Henderson was in a position to see the business plans of more than 120 suppliers including just about all of the tier-ones. He developed a skill of looking at business plans and knowing if they would fly or not and remembers Tech Pac as the pulse of the industry. With sales checks carried out twice a day, it was essentially a barometer of strategies what were working and those that weren’t. This stint in distribution also taught Henderson the importance of credit and the vital role distribution plays in managing reseller relationships with vendors.

“Success has crippled so many partners and I have seen some go bankrupt with a full order book because they simply can’t bankroll it and cash flow gets them,” he said. “There has to be somebody responsible for supporting growth and vendors or distributors used to help companies trade through difficult times.

“You were essentially the bank and financial advisor that helped them continue growth but insolvency laws are now so tough that we are all scared to do that. As soon as a business goes cash negative you shut it down or the directors go to jail.”

Henderson’s days at Tech Pac also saw early successes in managing a profitable retail business, although the different pricing and rebate strategies employed were no more popular with traditional resellers than they are today. It was this army of small business owners that he developed the greatest empathy for.

“We all talk about the likes of Commander, Leading Solutions and Data#3 but there are 5000 small business guys out there just paying the mortgage and looking after the kids,” he said. “They are genuine, hard-working individuals and that’s why I get frustrated by people questioning the value of the channel and talking about fulfilment. It’s a derogatory term.”

Five years ago, Henderson joined EMC as channel and alliances manager. For a man with such a solid channel heritage, this would be a completely different experience and in many ways has been the toughest assignment of his career. With a customer base that consisted largely of global 500 companies in the late 1990s, EMC had a very singular direct route to market with no need or desire for a channel. As its product strategy broadened, and the company tried to grow its way down out of the enterprise, the powers that be realised the need to embrace channel.

Henderson was brought in to lead a transformation of its internal mindset over a period of time but that journey started with a major slap in the face that served as an indicator of the task that lay ahead. EMC had brought in Express Data to help it build a channel but Henderson had not been there long when he took a phone call from the distributor’s managing director, Ross Cochrane, to tell him it was all over.

“I remember thinking ‘hang on a minute, aren’t I supposed to be the one that does this kind of thing to you?’ It was terrible but at the time we had a very direct organisation when it came to manufacturing so quite rightly Ross made a financial decision to let the agency go. I respect him for that and it taught us a great lesson that it was going to take a lot of internal reengineering as well as investment if we were going to be successful through distribution.

“We sat down with Wendy [O’Keeffe] and the LAN Systems team with a completely different mindset. We told them we had a really bad back office and asked for their help to make it better. Distributors know supply chain and efficient sales operations better than anybody. That was a value-add they brought to us and we invested in talented people within LAN Systems.

“It has been spectacularly successful – a real case study in a vendor and distributor coming together to build a business quickly.”

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As far as instilling a sense of channel importance within the EMC team is concerned, Henderson reckons the job is just about done. When the company recently announced new network-attached storage boxes, it was a reseller that sold the first one, sight unseen, before the product was even available. It is this power of recommendation that Henderson sees as priceless. A relative newcomer to channel operations, EMC has no glass ceiling preventing partners from selling into enterprise accounts and has not ring-fenced any accounts.

“It’s logical where a partner has a core competency to leverage that. The partner community starts with companies like Accenture and goes all the way down to the high street,” Henderson said. “They have the power to recommend as a trusted advisor and that has far more impact than somebody approaching you with business you didn’t know existed.”

Externally, Henderson also had to break down reseller perceptions that EMC was an enterprise vendor with little or no channel relevance. This, he said, was simply a matter of building trust over a period of time and continually demonstrating that there has been a change in behaviour. To convince potential partners that it is worth doing business with EMC, he and his team have often given them the phone numbers of others that are prepared to provide a reference and talk through their experiences of the model.

Away from work, Henderson likes to go hiking and plans to walk New Zealand’s Milford Track with his two brothers in January. He is also an avid reader of military history, likes the theatre and cheers for the Wallabies, but a young granddaughter is the centre of his attention. As far as work is concerned, he still has unfinished business to attend to.

“As our products come down from enterprise to corporate, commercial and SMB, you discover new partner relationships. We are probably only halfway through that because we will continue to need new partners,” he said.

“EMC is not likely to stop buying companies anytime soon so it’s a very dynamic place to work and that makes it difficult to get bored. I believe I make a difference every day and when that stops somebody else will take over. The organisation has enough respect to listen to my opinion, even if it doesn’t always take my advice. There will come a day when they offer me a pair of slippers and a pipe but not yet.”