Avnet’s hunt for local and global growth

Earlier this month Avnet completed the acquisition of Melbourne-based distributor ChannelWorx. At the time of the deal Avnet spoke of an increased aggressive approach to the market. While on a whistlestop tour of Asia-Pacific, CRN was able to have some time with Rick Hamada, chief operating officer of Avnet. Joined by Gavin Lawless, general manager of Avnet Technology Solutions Australia, both were able to talk openly about the distributor’s global and local plans.

CRN: What is your view of the local market in Australia and Avnet’s position within it?

Hamada: We believe our value proposition can play here and our fundamental value proposition is founded on reducing complexity, reducing uncertainty, and accelerating success for our partners. That is really what we are built on. The way we do that in Australia may have some unique attributes to how we do it in Texas, or Arizona or Germany, but the fundamental value proposition is if you engage with Avnet we will help make you more successful. The fastest way for us to grow is to help our partners grow. We are committed to that fundamental principle.

What is interesting about being part of a global team is what we can learn from the way we are solving that problem or delivering that value in the other areas.

CRN: Avnet has a huge presence in the US and across Europe, how do you leverage that in Australia?

Hamada: There is a whole load of customers doing business across multiple regions today, but from our relationship with IBM point of view – ideas that work and growth strategies that get traction we can immediately transport and expose. The number one goal is to be the best distributor in Australia, then we are going to work on being the best distributor in Asia-Pacific, then we are going to be the best across the globe. The priority is, for the Australian market, that we want to be the best in Australia. Hopefully the global scope and scale of Avnet can add value to being the best distributor in Australia.

Lawless: Our US business is a mature business. In terms of maturity (in Australia) we are at least 12, maybe 24 months behind what our US business does. So we don’t have to relearn anything. Yes they are different marketplaces, but a lot of the practices in the US we can bring down. We get a lot of guidance from the US in terms of what they are doing, where they are going, how they are selling solutions and we bring that down into Australia.

CRN: How are you going to reach that aim of being the best distributor in Australia?

Hamada: The team here is the expert on the business in Australia. Hopefully from an Avnet global perspective we have some unique leverage points regarding scope and scale and relationships with IBM at a higher level that can influence to make things happen out here for the benefit of the Australian channel. The local team adds its value by knowing what makes sense for the local market.

Lawless: From a local point of view, Avnet as a distributor in this country is fairly young. When we started in Australia we were a system integrator and we have been operating as a standalone distributor business for about four years. So as a distributor we are fairly immature in this market. In the past 18 months in particular we have started to get some good momentum in this business for various reasons: we have been broadening our vendor line-up – we took on HP three years ago, we have signed three or four mid-tier vendors in the past 12 to 18 months. We are getting momentum with our business, our revenues are considerably accelerating. We are now at a point where we can get very aggressive in this market. For us to be one of the top distributors in a very short period of time on the back of the foundation we have laid, the aim is very doable. In the next 12 to 24 months there will be a lot happening in this business. The bottom line is that we have laid a good foundation and we are aggressive in this market in terms of growing our business and being one of the top distributors in Australia.

CRN: How does the decision-making process operate between the US and Australia? Is the Australian business run as a separate entity?

Hamada: We are very decentralised when it comes to sales and marketing strategies, customer and supplier relationships and how they manifest themselves in local marketplaces – this is up to the local management team. We are very light on corporate mandates. We influence things such as global IT tools, we are not going to have Lotus Notes in one region and Microsoft Exchange in the other. For contextual activities we use standardisation as much as possible. First it is Australia, second is how does it play in the Asia-Pacific region and third is how does it play globally. We see more balance coming to Asia-Pacific as we make more investments here and build out our total computer business and this creates opportunities which are unique to that region and in some cases unique to Australia.
CRN: What is a typical local Avnet reseller? What competencies have they got? What have they done previously and what are they doing?

Lawless: Our typical reseller is a tier-two reseller, selling what we loosely term complex solutions into the commercial and low-end of the enterprise space. That is our key reseller space. A lot of these firms are privately held, a lot of them selling into local government, market verticals and they are selling complex solutions. They don’t always have a band of pre-sales engineers or highly technical staff to go and sell the product. That is where our sweet spot is and we help our partners sell their solutions. We tend to focus on solutions which are slightly ahead of the curve in terms of the channel. We will try and be fairly quick to markets, for instance SAN technology being sold into the commercial space. We are also quick to market with blade technology coming into the commercial space, too.

CRN: How does that differ from the types of Avnet resellers in the US?

Hamada: The technology solutions business in the US is a US$4 billion business today. There are resellers with the scope and scale of hundreds of million of revenue. There has been some consolidation among the resellers, with some real large players merging. Larger VARs start building their own resources in those areas, so they tend to be a little bit more selective about the elements we provide that they can use versus what they want to invest in. Our best value is what we can scale behind a network of resellers. We are a bigger fish in a bigger pond in the US.

CRN: What changes do you foresee in your reseller base globally?

Hamada: It’s hard to grab global trends, but I do see a couple of things happening. In the more mature marketplaces I have already talked about consolidation, with VAR consolidation taking place. There is also a fork in the road for many VARs which is, do they want to stay horizontal infrastructure experts or do they want to go more solution or vertical experts? Do they want
to be known for security, or for VoIP? VARs are at a crossroads and I see many more opting for a solution and vertical focus.

CRN: Do you think that distributors across the market are being
more specialised?

Lawless: I don’t think so at all. In Australia there are very few distributors who are tackling technology right now. We have a market which is dominated by a handful of distributors and they tend to be pretty broad.

Hamada: On some scale we have seen niche players and sometimes we add them to the Avnet family.

CRN: Are you going to add new vendor lines in Australia, too?

Lawless: As I say we are going to be aggressive, but being aggressive does not mean we are going to sign up a whole load of new vendors. Our biggest value-add is that we are very focused. We tend to say we have a narrow, but deep approach.

CRN: How much of an indication is the ChannelWorx acquisition of the direction of Avnet? Will you be making further similar acquisitions?

Lawless: Whether it be organic or through acquisition we will get more aggressive in certain business areas, particular networking, security and storage. As our business grows globally we will have a focus on other business units, for instance imaging and printing or document management as they call it. That might take us three, four years to get there, but we will add globally another unit into our business. Our growth in Australia will be as organic as possible, but where it makes sense we will make acquisitions.

CRN: How does the ChannelWorx acquisition fit in globally?

Hamada: We like to offer the opportunity as the Australian teams picks its focus, to see what relationships we have on a global scale that we can offer an Australian connection for.

Lawless: We talk about those niche vendors coming though, those vendors are looking for a global supply chain. There are not a lot of distributors in this region that have that wide a presence. So the value proposition we have for those vendors is very compelling.