Westcon Group is in the black, plus some

CRN: Can you tell us about your work background?

Dean Douglas: I started with IBM and was with IBM for 13 years.

When I left, I was the vice president of sales and marketing, in a joint venture with IBM and Blockbuster.

This is a long time ago, and what we were trying to do was find a way to provide communications with data services and digital distribution.

It’s kind of funny today when you think about it. Back then there was a real technical challenge: can you digitise a music disk and then deliver it to a retailer?

Then can you have a CD burned within 15 minutes, so the retailer can have a virtual inventory of music?

After IBM I went to Motorola, and stayed there for almost seven years, almost half of that time I was in Europe.
I soon rejoined IBM, and ran the telecoms industry for IBM Global Services.

Just before my COO role at Westcon Group I was the CEO of quite a large wireless telecoms player.

CRN: How has your past experience helped you in this role?

DD: I have a lot experience in IT and with telecoms.

I know what it’s like to be on the vendor side, having worked with IBM and Motorola.

I also know what it’s like to provide services to end-users; to enterprises, and what that entails across a number of different industries.

[The experience] has given me a great insight: what I call, customer and vendor empathy.

I understand both models very well, so we can better position ourselves to focus on stronger relationships with our vendors and our customers, the resellers.

CRN: Westcon Group is the first distributor you have worked for, how is it different to your previous roles?

DD: I find it fascinating.

I really enjoy it a lot.

It’s a really interesting business and business model which plays an extraordinary role.

It is amazing how critical the role of a distributor is in the marketplace that we occupy.

You’ve got these very large players going after the market trying to find ways to leverage themselves to the reseller marketplace in a very efficient way.

It’s not just having the nice relationships; it’s not just having nice products, there’s a lot more that goes into it from a logistics standpoint; a financing standpoint and a services standpoint.

We provide an extraordinary valuable piece of the value chain to try and make that an efficient process for vendors and then obviously for the resellers as well.

CRN: What changes will you be implementing, if any?

DD: We have a real global footprint, and unlike a lot of multinationals we operate our business truly independently, country by country, and have different systems in every country.

[However] we operate one ERP system across the globe and manage ourselves as a global entity.

So what we’ll be doing more and more of is addressing the requirements of large global resellers and enterprises in terms of how they go forward and do deployments into multiple countries.

We don’t sell directly to end-users, we obviously sell to resellers and integrators, that are highly challenged when they service a global client that needs product distributed to tens of different countries.

[Instead] we can do that. In fact in 2008, we processed over 20,000 orders in over 75 countries, utilising the whole of Westcon Group to multi-national end users on behalf of our customers.

So it’s a very robust part of our business.

So how are we going to change and improve?

We’re going to continue to drive a global focus for our business.

CRN: Are you expanding particular business sectors?

DD: The second area we’re going to focus on a lot is broadening our services.

More and more resellers are wrestling with how they can address the very robust marketplace in ways the marketplace wants to be addressed: how do they create new processes to efficiently address the marketplace?

So, we’ve come up with a set of services we call process-as-a-service.

We begin to start to take on the accounts, help the resellers with some of the areas that they may not have sufficient scale to do efficiently such as purchasing, integration, trading and first-level support.

We do not do it in competition with our resellers, absolutely will not compete with our resellers, but instead we provide a set of capabilities they can draw from to help them be much more efficient with their customers.

CRN: Were resellers asking for these services?

DD: This is really a market-driven set of initiatives.

These are things that are actually done for a reseller or two and [we] have found that there is a great deal of applicability to other resellers.

So we’ve created a program around it and a set of capabilities around it.

What you do, basically, is capture the intellectual capital associated with doing that and then you standardise the process then you scale it, so it creates a really efficient process for your customer base.

CRN: So are these services available now?

DD: Depending on the geography, we’re delivering these services already today. It is available in Australia now.

CRN: What were some key highlights in 2008?

DD: Cisco named us the Geography Global Partner of the Year.

It was the first time a distributor has ever been named in that order and distinction.

It speaks to an extraordinary relationship that we have with our vendors and the type of relationship we can establish.

We have established those kinds of depths and relationships with different vendors and in fact several vendors across the globe have made us distributor or partner of the year.

CRN: What about sales and new partnerships in 2008?

DD: We continued to look at our business and our relationship with our partners depending on the country and the geography.

In 2007, we made seven acquisitions, then in 2008 we made an acquisition in India and got into the Indian marketplace, so we continue to expand.

In addition we’ve expanded organically in Asia Pacific and we continue to invest in the marketplace.

In 2008, it was no different to prior years in our expansion both organically and through acquisition.

CRN: Will you continue to invest in 2009?

DD: There is a significant economic crisis going on in parts of the world and what we’re finding is that there’s a significant liquidity issue in the channel.

We were very fortunate in 2007 to have renegotiated all of our lines of credit around the globe and now we have new lines of credit at very attractive lengths, to the tune of two quarters of a billion dollars, roughly.

We are now helping some of our resellers with some of the liquidity issues they’ve got.

We’re going to make sure they’re able to get the resources they need, whether it’s capital, or whatever, in order to be successful, even though there is a huge financial liquidity crisis that exists outside of the channel we’ll find ways to address issues with regards to credit lines.

CRN: Does this strategy put Westcon Group at an increased financial risk?

DD: There are a number of different ways to address this in the marketplace that allows us not do anything foolish but will give the resellers a great deal more flexibility and liquidity as we look at opportunities.

We’re very excited about that, we’ve got a very strong balance sheet, and we’re leveraging it to help our resellers get through these very tough times.

CRN: Are your resellers sharing their concerns with you?

DD: What’s really on the top of their minds is not necessarily whether they are going to see opportunities, because they are seeing opportunities.

The fact is, people are buying.

I think what resellers are concerned about is the possibility of having trouble getting the financing required to make those transactions happen.

We’ve found very creative ways to address that and in ways that aren’t onerous at all to the resellers.

It underscores this issue I discussed early on about customer empathy.

I come from a customer environment and a vendor environment: if you understand what they’re going through you can create the right environment that allows them to get through the challenges.

If there’s a financing crunch we’ll make the financing available to
them.

We’re seeing a positive response, globally.

CRN: Are you anticipating further growth this year?

DD: The crystal ball these days is very, very foggy, it’s going to be hard to tell for everybody. We don’t know if we’re going to see a rapid recovery.

It’s hard to tell and I don’t think anybody in the world right now knows what’s going to happen.

I will say this much however, there are parts of our business that are doing very well and they continue to grow.

We continue to be opportunistic with regards to acquisitions and we’ll take the opportunity to expand to new markets if they present themselves.

And we’ve got sufficient liquidity to do so.

So although we’re preparing for a pretty difficult time we’re sufficiently optimistic that we’ll come through it just fine.

CRN: What will be hot in 2009?

DD: I think companies will be looking at ways to save money.

I think it’s incumbent upon our resellers to focus on the opex advantages of some of the technology that’s available in the marketplace.

And as we come out of it, one of the great things about the companies that have invested in bringing their cost structure down will generally be able to enjoy upsized profits.

What’s interesting about the marketplace, especially the marketplace we address – IP and communcations – is that generally people make investments in our products because they think there is a real benefit for the organisation in doing so.

Generally the organisation becomes much more efficient as a result, and whether it’s good times or bad times there’s always a financial model that people use to justify the acquisition and the capital associated with the
new device or sets of devices they bring together.

I don’t see that model changing.