EXCLUSIVE: Sitting down with Synnex...
- 17 May, 2016 08:01
Kee Ong - CEO, Synnex Australia and New Zealand
ARN Editor James Henderson sat down with long-serving Synnex Australia and New Zealand CEO Kee Ong at the distributor’s headquarters in Melbourne, examining the key channel plays for 2016.
“You might think you’re the best Cloud provider in the world but if you can’t even pay your bills, who cares?”
Leaning forward, maintaining eye contact, Kee Ong - Chief Executive Officer of Synnex Australia and New Zealand - appeared relaxed in the face of great industry change.
As the channel takes to the skies in seemingly spectacular fashion, dining out on the earth shattering success of its Cloud-focused partners, it’s all too easy to be swept up in the craze.
Should the Australian market ever consider a slogan, perhaps the words of an English singer songwriter might suffice - “Stop looking down at the grounds, pick it out of the Clouds.”
But in truth, and to battle against the strong industry headwinds, the Cloud conversation is still embryonic.
“Yes Cloud is in the picture,” said Ong, fresh from launching the Synnex Cloud Automation platform in Australia. “It’s not new and resellers have been talking about it for some time now but it’s still very much in its initial stage.
“Of course it’ll be a big play for us this year. We’re going to invest our energy and resources into enabling our resellers to prepare for another big wave of transformations, and that includes Cloud.”
Having spent ten years on the job, surpassing not one, but two billion in revenue during a decade of growth across the country, Ong is well-placed to judge how best to ride the incoming tidal wave of Cloud change.
Unsurprisingly, and befitting of the channel veteran’s methodical approach, it’ll be strategically negotiated.
Ong’s sharpened focus follows the official launch of the Synnex Cloud Automation platform in Australia, solidifying the distributor’s Cloud play across the country.
Heralding a new era for reseller enablement and go to market strategies, Ong said partners can provision and manage Cloud businesses on the platform, as well as ordering Cloud IaaS and SaaS services on demand.
Coupled with the ability to upsell and cross sell - as well as attach hardware with Cloud bundles under one platform - the newly launched platform occupies a strong debut vendor portfolio, including IBM Softlayer, Rackspace, Cirius, Nomadesk, BitTitan, Fenestrae and Egnyte, with “many others in the pipeline”.
“With the new Synnex Cloud Automation platform, we are offering an upsell opportunity for our partners to bundle Cloud solutions with their existing hardware and software sale,” Ong added.
“Channel partners can establish a great recurring business model. This platform also offers significant value to cloud resellers to transact, provision and manage their Cloud business under one fully integrated portal.”
“But there’s still a lot more we can do here in Australia,” cautioned Ong, when examining the current Cloud state of play. “We export our experience and knowledge to other Synnex subsidiaries across the world and in terms of Asia-Pacific, we’re certainly the frontrunners in Australia and New Zealand.
“We’re in that leading pool of markets pushing ahead with Cloud and the industry is changing business models to reflect that.”
For an industry that seldom wants to discuss anything other than an all-out Cloud assault, Ong stands tall as an advocate for caution and compromise. Yes the Cloud train is chugging into town at an unrelenting pace, but perhaps resellers shouldn’t just jump on the first carriage available?
Born-in-the-Cloud players will argue - and correctly - that Cloud computing will become the bulk of new IT spend this year, with nearly half of large enterprises widely expected to have initiated Cloud deployments within the next 24 months.
Gartner called it three years ago to be precise, billing 2016 as a “defining year for Cloud” - backed up by fellow analyst firm IDC that continues to see “healthy double-digit growth” in Cloud IT deployments.
As organisations begin to depend on a blend of as-a-service offerings, alongside traditional infrastructure, to transform in the new digital world, Ong said Synnex’s core focus in the short-term centres on channel enablement.
“We’re going to spend a lot of time working closer with our resellers,” he says. “It’s not just about selling products, it involves process changes at the back-end and selling services, it’s a different game.
“We understand the change and the degree of difference. Cloud isn’t a conversation you can have blinkered.”
Behind the vile of media sensationalism and marketing rhetoric lies a term - Cloud - that is straightforward in delivery but often complex in interpretation.
“The channel as a whole is still trying to understand what the changes mean,” he acknowledged, “and how to implement these changes from a business model perspective.
“Now you’re talking about selling a service instead of a product which is new concept for some resellers. No longer can you sit there and say this server is five times faster so buy this, we’ve moved on from just speeds and feeds.”
Instead, Ong speaks of service-level agreements and a conversation now peppered with technical terminology, built on the need to provide extra layers of solutions that can be wrapped around an offering.
“And of course the systems are different,” he hastily added. “Resellers are now billing monthly or quarterly instead of just processing a one-off transaction and this will impact partners and change how they engage with the end customer.
“The number of transactions will be ten times as many as before but how will the reseller cope with this? It will involve a lot of work in the back-end.”
The Cloud business is not like selling hardware, Ong warned, which represents that age-old easy one-off payment.
“With Cloud and the services that come with it and the layers that can be added, it means one transaction suddenly becomes 12 or 24 and with that naturally brings opportunities and challenges,” he adds.
For Ong, it raises crucial questions; how are resellers going to get paid? With cash up front or over 12 installments? And who’s going to pay the bills?
“Business models are changing and this will accelerate within the next twelve months as resellers work out how to sustain business operations and maintain cash flows,” he adds.
“We’ll be actively enabling our channel to understand what this means for their business, the impacts it will have and why it’s irresponsible to just blindly move into the Cloud. We’re advocating a strategic approach.”
Throughout Australia, resellers with strong experience in the managed services space, as well as the born-in-the-Cloud providers, are helping change the dynamics of the market, providing learning opportunities along the way.
As business models evolve and new ones emerge the landscape changes, with Ong advising partners to pay attention and crucially, “know what you’re going to do”.
In processing over 6,500 orders per day nationally, with 40 percent of shipments coming through the distributor’s Sydney warehouse - a $45 million facility that opened in August 2014 - Ong said that amongst all the Cloud talk, the company’s hardware business is “still going strong.”
Representing a core area of the channel, Synnex services a variety of customers across Australia, including direct and value-added resellers, system integrators, retailers, and original equipment manufacturers (OEMs).
Operating as the largest distributor across the country, with a blossoming devices portfolio, Ong believes hardware and Cloud can combine to provide the perfect storm, advising that the strategic channel play for hardware resellers involves cloud, utilising both in a managed services business.
“Cloud is important but hardware still plays a significant role within the market,” he said. “Our hardware business is still going strong and we’re helping resellers understand how to join these two businesses together and build a synergy that accelerates growth across the business, rather than just dropping your hardware business to move to the Cloud.”
Ong is under no illusions however - this isn’t new and resellers are aware but despite growing streams of literature on the topic, questions still need to be asked.
“A reseller sells hardware, so why can’t they sell cloud together?” he asked. “You can provide fantastic cross selling options but it requires an in-depth understanding of Cloud and how it can be utilised alongside hardware.”
As Ong explained, a relevant local example is a sales person pushing the sale of a server, just the one box.
“The play here is to tell the reseller to advise the end-user to look at other options to compliment that server, such as disaster recovery on the Cloud,” he said. “That’s how you start looping the Cloud into the conversation.”
But instead of just moving more boxes in the future, how can the distributor, and the vendors, help resellers focus more on selling value-added services to customers?
“Training and education depends on the complexity of the deal,” he added. “The market talks about Cloud, whether it be public, private or hybrid and with that there’s a need to create an express route due to security issues. Even for those selling devices, there’s room to cross sell security into that.”
Ong believes it boils down to having the wider awareness of what the Cloud can do for customers and then possessing the knowledge to act on it.
“Helping our partners achieve this kind of success is critical for us in 2016 and beyond,” he reaffirmed.
When advocating a strategic channel play, Ong spoke with authority after transforming a $500 million company into a $2 billion distribution powerhouse - now housing around 430 staff - within the space of ten years.
“We work as a team,” maintained Ong, insisting that one person cannot run Synnex. “It’s too big and it’s always been a team effort.”
In achieving such growth organically, Ong said the long-game approach represents a more solid basis for future success, but requires unwavering resolve.
“It takes strength to stay with it,” he admitted. “But you can’t lose faith and you must be able to deliver on your promises.”
Akin to Business Growth 101, the execution of a relatively simplistic approach to distribution is actually, one of the hardest to maintain.
Offering a wry smile when recalling the testing times of the past decade, Ong believes the easy option is to make changes, rather than stay the distance during the eye of the storm.
“You set your vision then you stick to it regardless of what the cost is,” he revealed. “You stick to it whether good or bad and it’s tested my resolve, it absolutely has. But you need to show courage and stick with what you say you’re going to do.”
As Australia’s largest distributor amidst a consolidating market - think the recent acquisition of Ingram Micro, and its recent acquisition of Connector Systems - Ong openly admitted that Synnex has opened dialogue with industry rivals in past, but in terms of rubber stamping an actual acquisition, “we’ve not achieved that result so far.”
Acquisition is a relaxed topic for Ong, who in keeping the door ajar, says during the past few years the company has spoken to “at least three or four” distributors regarding potential buyouts.
“We wouldn’t merge, we would acquire,” he added. “The size of our operations means that we’d like to drive any new business into our organisation. The door is open but they have to fit into our current business. It’s not a high or low priority but when the opportunity arises, we’ll certainly look into it.”
Unfazed by recent developments, Ong said the industry has been consolidating for the “last 15-20 years”, with Synnex happy to “let the market force play” in terms of triggering a local deal.
But in keeping with his methodical nature, Ong is bound by his questioning nature.
“Why do you have to put your business up for sale?” he asked. “Each distributor in Australia has its own reason behind why they do what they do but we have a criteria and our history will show that buying for the sake of buying does not work.
“That approach creates failure not success and there’s proof out there. So many people have gone down because of that and the market remembers.
“Organisations that try too much too soon can’t handle the speed, they can’t handle the size and they can’t handle the scale. And what happens? They go under.
“You have to make sure you have the capacity and capability to handle that otherwise you’re committing suicide.”
Behind the analytical exterior lies a distribution CEO open to change, just not change for changing sake.
With acquisitions not off the table - or particularly on it if you ask Ong - the focus for 2016 turns to the reseller, and how best Synnex can facilitate channel growth in a changing market.
Short on sound bites but strong on a core strategy for the year ahead, opportunity lies in combining the best of both channel worlds; hardware and cloud.
“Just have a look at it,” he suggested. “If you just focus on moving boxes I don’t think that’ll be a good business a few years down the road.”
Transformation is coming but rather than succumb to blind industry panic, Synnex plans to take a breath, step back and assess - a method that has served Ong well for ten years in Australian distribution.
This article was originally published in the March 2016 issue of ARN magazine.