Panning for growth at WhiteGold

The vacillating IT distribution market is no easy landscape to navigate. Consolidation, liquidation and diversification are just three “business speak” phrases which are commonplace for distributors.

CRN was given the opportunity to catch up with WhiteGold Solutions to discuss where the security-focused distributor is going next.

“We are seeing the diversification of smaller distributors to broaden themselves across the market and take the value of the niche approach and compete with some of the bigger guys, which I think we can do now,” said Dominic Whitehand, managing director of WhiteGold. “You are either niche and you stick with your one niche, which we will certainly do on the security side, but the success we have had on that business is dragging us into networking and storage. It gets to the point where it is pretty silly not to follow the lead of the customer.”

Striking WhiteGold

Whitehand came to Australia from England in 1996, armed with an IT degree and a job at a help desk software company as a senior consultant. From there he moved to HP where he began to concentrate more on security and channel issues. He then moved from HP to a start-up firm where he met current WhiteGold sales director, Jonathan Odria.

“That business fizzled out and we went our separate ways. I went off and did some consulting and a couple of years later we formed WhiteGold in November 2002,” said Whitehand. “At the time there wasn’t a lot of start-up distributors. There were maybe only two other security-focused distributors. In the last year more security- and storage-focused distributors have started popping up. At the time the market was buoyant, but people didn’t really understand security, it didn’t have the maturity it has now.”

As WhiteGold was finding its feet and building its vendor stable, one concept which was deemed laughable by some sectors of the industry was the IDC- and Fortinet-pioneered concept of Unified Threat Management (UTM).

“We’ve seen the whole proliferation of UTM through people such as Fortinet, bringing that in with people such as IDC and making it a market segment. We are now looking at the mature stage of UTM and where it goes from there,” said Whitehand. “All the technology is changing and there are a few sectors maturing, but there are more segments popping up all the time. There are more security technologies out there than ever before.”

Getting things right

Resellers usually have options when it comes to which distributor to source products from, so getting your business model right as a distributor has a lot to do with how you support your resellers.

“Things such as great customer service and experience are very important to the channel, so we pride ourselves on being quick at what we do, efficient, giving the right type of information and right type of support and pricing to the channel,” said Whitehand. “Our whole model is around creating demand for the reseller as our customers. We deal with end-users a lot, which a lot of distributors don’t, but it does mean we get a lot of brand loyalty from those resellers as we are creating that extra demand.”

Whitehand said some sectors of the market felt it was a bit brash to deal with the end-user directly. “It took people a while to trust the fact that we like dealing with end-users as we don’t sell direct. What we are doing is part of their job for them and taking away the nasty, difficult part of their job. We put something on the table for resellers where they only have to close the last 30 percent of the deal,” he said.

Finding your niche

“The niche approach also works for us, and moving forward we need to have the same niche approach to each business unit we develop under WhiteGold. I think we can do that quite easily. Security is being built into networking devices and vice-versa, and I think storage will start going that way as well. Unified Communications is also a big thing for this year,” said Whitehand.

“I think one of the massive things we are facing for this year which we want to address as a segment is the consumption of content and what people do with that content. We are all crazily downloading all sorts of content using peer-to-peer and everything else and it is growing at such a phenomenal rate, no-one has been thinking about where we are going to store all that content, how are we going to deliver it, how fast can we deliver it, how much is it going to cost? I think the guys who get in place to cater for that are going to really make it, so that is certainly an area we are looking at strongly.”

WhiteGold has found success in being able to introduce technologies, creating demand and building the channel, according to Whitehand. “It is showing the strengths of the products and the solutions we have and creating demand with the end-user.
“Rather than the approach of some of the higher-end distributors that are excellent logistically, they are not as good as knowing the products inside out, providing the level of support and having the experience to back that. Security has been our focus for the past five years and that is now morphing into other areas, but we want to keep that same feel,” said Whitehand. “We are chastised by other distributors as we are faster, but to us that is a massive value as the end-user wants to know quickly and the resellers can find out product information very quickly.”

Reseller community

The distributor now has a reseller base of around 700 resellers, with a core of 75 to 100 resellers buying on a regular basis. WhiteGold has a largely horizontal set of resellers as spam, viruses, email, and using a network goes across a number of segments.

“The trick is getting a small number of resellers for each vendor who are really going to fire up on a consistent basis. I think those broad-based distributors have that ‘we’re here, we’ve got it when you want it, where do you want it to go’ approach, a lot of those guys, partly as they’re larger organisations baked by big bank roles, pick up those vendors who just want that approach and get as many resellers as they can, it’s a numbers game. Where they come unstuck is where some of the anti-virus guys are losing market share as the infrastructure is not great in terms of support, flexibility and efficiency of what they are putting out there,” said Whitehand.

Expanding future
“
We want to be a $20 million plus business in the next couple of years. Then a long-term aim of reaching $30 to $50 million in turnover. We will grow the strength of our market, it’s about how you grade yourself and support your channel and bringing new technologies to market. We will be executing in new areas, but with the same business model. The fact people ask us for the networking infrastructure because we are doing the security infrastructure, because they go hand-in-hand, and this is bringing bigger deals to the table.”

Whitegold’s headcount has reached 13 now and the firm is looking to open offices in Queensland soon and possibly ACT within six month’s time. The firm already has offices in Sydney and Melbourne, which are both set to see their staff figures swell.

“We will move into storage this year. I’m thinking about having a separate business unit for that,” he said. “We are going to be working with a vendor that takes a very different approach to storage. We will be competing will all the big guys, such as the
NetApps and the EMCs, but it is a very different type of technology.”

Whitehand said the firm will also start to operate in the wireless infrastructure space, while expanding in security compliance and networking management with a new vendor.

“In terms of what we have got now, our mainstays are still WatchGuard, Fortinet and Barracuda. We will be continuing doing what we are doing and diversifying, too. There will be more consolidation in the distribution market. Most of the businesses our size have an exit strategy, so they know if they are either going to forge ahead and try to become one of the big guys. You are never going to become a broad-based distributor overnight.
“
We are doing nicely as we are and looking to the future thinking: ‘it would be nice to have a choice’. If we are doing well, why would we sell? However if we did get it to the point where we could get a really good return, then maybe we would,” concluded Whitehand.