Avnet to ‘demystify’ cloud potential for partners

Value added distributor Avnet has recently made waves with its acquisition of German distribution outfit Magirus, a deal made official at the start of the month.

The acquisition saw Avnet’s Technology Solutions division, which covers enterprise, SMB and data centre products and services grew its reach even further by snapping up Magirus, offering new market opportunities to its partners seeking to expand into new service areas.

Now that the deal has gone through, Miriam Murphy, Senior Vice President, Enterprise Business Group, Avnet Technology Solutions EMEA, talked to  ChannelBiz UK in a Q&A about the company’s plans to grow in the market, and what benefits the Magirus deal will bring to its partners.”

What stage is Avnet TS currently at with the its integration of Magirus into its business?

“We are at the stage right now where we are finalising our structure and go-to-market model which we are planning to announce, at least in the European structure level, by the end of this month. From there on the country teams are going to be working together to leverage as much as possible the benefits of this acquisition.

“Magirus is one of the most complementary acquisitions we have done in TS in EMEA – it will really help to accelerate our strategy and to achieve our objectives of becoming the leading solutions distributor of services software and hardware in the region.

“The line card  and geographical spread of Magirus is so complimentary, and especially with the footprint it gives us with some of our strategic suppliers across the region.”

What are the challenges to the way that resellers operate as a result of the acquisition?

“I think that from all of the conversations we have had, and we have seen many of our partners over the past couple of weeks since we made the announcement, it has been overridingly positive.  One of the benefits this particular consolidation brings is that there are elements of a solution that [resellers] were working with Avnet on, and they were working with Magirus on – now that we have come together we can bring together to a much more unified approach.

“For the partners that were working with both of us, we see it as an opportunity for them to leverage a greater partnership.  There was very little overlap in what we sold.  Also for those who were Avnet partners of course it opened up the opportunity to secure new technologies and new services with Magirus that weren’t available before.”

Will it cause any operational changes, such as how resellers access credit with Magirus?

“Absolutely not.  We are absolutely determined to continue business as usual and work with our partners to ensure that we can facilitate their business in the best way.”

With the expansion of services and products available through Magirus, will Avnet expect to expand its VAR base?

“One of the things which made this acquisition attractive to us is that the overlap is so minimal – there is an entire breadth of business partners that were working with Magirus, but not Avnet.

“Just by virtue of this engagement it is adding new partners to Avnet.

“Equally because of the combined services and solutions offerings that the combination brings we believe it puts us in a much stronger position to go aggressively into the market and attract new business partners.”

What is Avnet’s view on the economic situation in general – for example are we still seeing delays to spending on IT projects?

“More than delays we are seeing more consideration on how budgets are spent.  That can initially be perceived as delays, but the delays are not just expenditure being extended out by a quarter, these are really more consideration to what the funds are being spent on. Much more attention is being given to can it drive more efficiency in an organisation, and can it help growth.

“People are using IT to open opportunities to see them be more successful through this economic time.  So in fact in many cases it is opening up opportunities for business partners to offer solutions that address these particular business needs of end user customers.  So in some ways it is changing the solution you are offering, but not necessarily funds are not being spent on IT.”

Is this situation likely to change going forward with regards to spending in Europe?

“It is hard to say,  the market is tight but IT growth is still running at a higher rate than the GDP of the region.  So I couldn’t speculate, but we are still confident that there is opportunity for us to grow and leverage our investments in this area.”

How is Avent’s business itself responding to the economic challenges?  Are there plans for restructuring the business?

“We constantly look at our business and look at the best ways to go to market.  We are very focused on the business needs of our partners, be they suppliers or customers, and in providing solutions that address whatever environment is being faced.

“For our perspective we are constantly looking at what the best way is to service that market.  As you look at the integration of an acquisition like Magirus, we are looking at what the structure should be as we bring those business together to best target growth opportunity within the market.

“The way we look at it is how can we become more effective and give our partners a competitive edge, and how do we achieve growth ourselves and for the partners, and how we structure ourselves to achieve growth.

“In terms of how we look at the business going forward it is also how we can optimise the opportunity in front of us.  We will do that as we look to integrate Magirus into the business.”

Will there be changes to the structure of Avnet TS over the coming months?

“Absolutely.  As we bring the businesses together we will look to bring teams together to leverage the solutions.  We will look at bringing our sales organisation to target the new opportunities to target the opportunities through VMware, with EMC, with Cisco.  We will look at how we can bring those products to market to the historical Avnet partner base, and how much extra sales we can drive through those.  So absolutely we will look at how our go to market looks on that basis.”

Will there be restructuring of Avnet’s workforce?

“Can’t say that right now.  As we build our structure going forward and bring two companies together it would be unwise to say that there will be no changes – when you bring organisations together there is inevitably some change.  But right now we are more focused on the breadth of opportunity it bring us rather than looking at it from a perspective of cost restructuring.”

How is Avnet seeking to support its reseller base in growing their own sales going forward?

“We are very focussed on enabling our partners to address new technologies, to address new vertical sectors. So we have expanded our solutions path – a trademark Avnet initiative which is really focussed on helping our business partners analyse where the business growth areas are in the market, to enable them in the technology areas and in the market, giving them specialisation to expand into a new area or sector, and really building a knowledge with them that spans suppliers and technologies.

“So of course the core marketing logistics, finance and sales is always there.  But this is much more than that, it is about enabling our business partners to solve problems and understand the voice of the customer.”

What are the some of the key areas of opportunity for Avnet TS and its partners in the IT market?

“There are a couple that spring to mind – areas like virtualisation, storage, and cloud.  If I look at one of the things that made Magirus an attractive acquisition for Avnet it was the expertise in areas like virtualisation and storage – it really helped to expand our expertise and give us a competitive edge which of course we can pass on to our partners.”

Does this mean good margins for resellers?

“Absolutely, and the same applies to driving growth across software portfolio, enabling partners to move into and take advantage of the growth area of software, which is a segment of the market that is growing faster than any other.

“They are key examples of areas that we can direct partners to to allow them to be more successful.”

What is the Avnet TS view on opportunities in the cloud?  Are we starting to see the hype die down around this, and is this presenting clear opportunities for partners going forward?

“There are several areas that we have worked with our partners on around cloud, and there are several roles that partners can play.  One of the areas we have certainly been able to provide value is in demystifying for our business partners – where their role and their strategy in leveraging cloud technology is – because there are lots of different areas of opportunity, different roles in that area.  What has happened now is the hype has eased off somewhat, and people are looking at where the areas that they can add most value and create demand for themselves.

What can we expect with the vendor lineup, will there be additional vendors coming on board in the near future?

“We have a phenomenal line card and what Magirus has done, as well as the focus we have had on expanding relationships, is really been on expanding relationships with core suppliers across all the areas we operate in .

“So we will always look to engage and look at new partnerships, but right now I would say that the focus is on driving growth with those key suppliers that we have expanded with and our own expansion over the past 12 months.

What effect is the ongoing trend of consolidation in the distribution having on the industry and do you expect that to continue?

“I absolutely expect that to continue.  From a supplier partner perspective certainly it is allowing partners to have fewer but more strategic and significant partnerships.  From a business partner perspective, it is opening up opportunities for business opportunities for partners to expand themselves with existing partnerships they have, and also opening doors for facilitating their own expansion into new geographies.”

“This consolidation is something that is only part of the way there in terms of a journey and is certainly opening up opportunities both for suppliers and for resellers to strike strategic multi-regional, multi-national partnerships with distributors.”