Cloud can be a boon for disties: Avnet

Its arrival spawned a tsunami of predictions that IT distribution was dead, but according to Avnet's global president Phil Gallagher, the cloud has proved a major boon for the fortune 500 company.

Taking time to speak with CRN during a whirlwind tour down under and across APAC, the 30-year industry veteran said the distribution game has changed dramatically over the past five years but that the impact of the cloud has been totally misunderstood.

And in Australia, it has given the company a shot in the arm to better compete in what has become an extremely tough and competitive market.

In 2010, Avnet bought local value added distributor itX for almost $80 million. Last year the distie giant officially launched Avnet Cloud Services, built out of itX division ICO.

Avnet Australia now boasts a uniquely services oriented cloud offering in Australia, helping its partners differentiate their cloud offerings from the highly commoditised offerings being marketed by the likes of Amazon Web Services (AWS), Gallagher said.

“Customers need customised solutions, not commoditisation".

Seven years ago Avnet’s revenue mix was heavily weighted towards hardware, with tin making up around 75 percent of the pie. Now it’s about half that, Gallagher explained. And the cloud is major driver.

A big part of the opportunity is around the sale of storage solutions, which Gallagher said has become Avnet’s “biggest story”, and a story which segues nicely into customer conversations around big data.

Avnet partners including IBM, Oracle and HP all have skin in the game here and Gallagher said the distributor was building a portfolio of offerings capable of addressing unique customer requirements. "We've only scratched the surfce."

And all three vendors are big players in a topic Gallagher said local partners confirmed was top of mind, that being converged solutions.

Asked whether he thought that presented challenges for the majority of partners accustomed to delivering a piece of the total solution he said yes “partners are very much affected by converged solutions” but that it was the direction the market was headed in regardless. 

Another important emerging source of services revenues, according to Avnet's A/NZ boss Darren Adams, is the so-called 'dispose of'' market. "Big integrators are seeking help with this."

Vertical goes flat

The conversation around converged solutions is starting to drown out the discussion around vertical specialisation, Gallagher stressed.

Solutions architectures are less likely to differ greatly between organisations in different industries than they were, even a few years ago, as the challenges of mobility, data management, security and social media loom large for all. However, Gallagher said healthcare was a notable exception.

“We have seen success where we have focussed programs around healthcare.”

And despite what may seem an encroaching homogeneity in terms of IT solutions, Gallagher remains adamant that there is still plenty of complexity in the market, especially around the design and deployment  of effective cloud solutions.

Far from sounding the death knell for distribution, the as a service model, has, at least for Avnet, provided an unexpected opportunity.

“The good news for Avnet and its partners is that cloud is complex,” Gallagher said. 

Moving forward he added that the $US40 millionj in cuts announced recently after Avnet reported a more than 40 percent drop in revenues for Q3 would have little impact on the day to day operations of the business.