MISSISSAUGA – After a long career at IBM, Rich Hume, the executive vice president and COO of Tech Data, has been on the job for eight months and made his first visit to the Canadian operation in Mississuaga, Ont.
Tasked by company CEO Bob Dutkowsky to develop a global route to market along with boosting services revenue for the distributor, Hume looks to Tech Data Canada as a “bellweather” for future business growth.
CDN sat down with Hume to discuss this new direction along with what the company will look like after the Avnet integration is complete. This is part one of a two-part interview.
The following is an edited transcript.
CDN Now: You have been on the job for eight months now, after spending 30 years at IBM. What have you learned and what plans do you have to move Tech Data and its channel network forward?
Rich Hume: At IBM I learned a lot over all those years that I think will be perhaps most relevant to the movement that we see in the market. First general observation is we see a convergence of what I would call consumer IT with enterprise IT. If you think about consumer IT for a moment, you think about your phone, social media, and the cloud, and you see an adaptation or use in the enterprise of these capabilities. We think about our capabilities now spanning from the living room to the data centre, and it’s very relevant because IT is converging and the lines between consumer and enterprise IT are blurring. Our partner’s enterprise customers are demanding solutions that are turnkey utilizing all of those technologies.
I have heightened the awareness at Tech Data around these areas and we are making additional investments to go capture opportunities in the growth market. I think that when you take a look at the Avnet acquisition, which we’ve announced but not yet closed, our full intention is to build the skill and capability of Tech Data to not only drive excellence within the data centre market, but to use all of that skill and capability to build in these third generation technologies.
CDN Now: Bob Dutkowsky announced that Tech Data wants to develop a global route to market. At IBM you handled a lot of channel development and technology services. How does that experience help produce the global route to market plan?
Hume: I’ll preface it by saying that everyday when I’m engaged with a vendor, they’re all asking for a global relationship and they’re asking for a global relationship because the market is transitioning. When you think about the cloud, all of the vendors, and even distribution, are building run-once architectures. We have to have a meeting of the minds globally because as we build these architectures we intend to deploy them globally, so the demands of the market are moving us more towards global relationships.
Some of the experiences that I had when I ran the channel for IBM globally was to engage at a global level across the entire partner ecosystem. I come with a lot of skills and experiences that are portable now into the partner ecosystem to help accelerate some of these needs. They always have existed, but they are becoming profoundly more important as we move through time.
CDN Now: What can you tell the channel audience about the Avnet acquisition that happened earlier this year, and what should they expect when the acquisition is complete?
Hume: I tend to think about any large movement like this from the context of the stakeholders – employees, customers and vendors, and our shareholders.
I think that the employee response in both Tech Data as well as Avnet TS as we look to the future is overwhelmingly positive. Both groups absolutely understand the value proposition and they see that as we come together we’ll be a $35 billion company globally. They see the opportunity for themselves from a career dimension to be able to grow through time as well. As we grow larger, it breeds more opportunity for all of these employees that will be part of the new company once we close the transaction.
From a customer and vendor perspective, the response has been overwhelmingly positive. Candidly I have not run into a conversation where someone had negative sentiment, maybe some neutral, but its all been overwhelmingly positive, and again the reason for that response is that they see the value proposition. They see the fact that is that as we come together we’ll be able to offer expanded portfolio and capability that is going to address their needs and assist them as they build their third generation platforms to move forward in the future.
From an investor perspective, all I can objectively do is point to the reaction of the financial markets. When the intended acquisition was announced to the market, Tech Data, as well as Avnet, saw very good appreciation in their stock prices. Its rare that the acquirer sees an appreciation in their stock price at the time of announcement but the investment community has been very positive, and they also see the value proposition and the financial economics that support this deal.
CDN Now: Tech Data is generally considered a broadline or mainstream distrubutor. After the Avnet integration, how different will your company be?
Hume: Tech Data, on a global basis, is a $26 billion company, $8 billion of that $26 billion has been within value distribution, so we aren’t new to value distribution. The Avnet acquisition, more than doubles that value capability, and they come with some really sophisticated skills capabilities, and will really allow us to expand our footprint and capabilities. With these larger pools of resources, we’ll be making more investments in the strategic areas that I talked about earlier – around cloud, analytics, and security.
CDN Now: Emerging technologies such as cloud and mobility have made it more global in nature than regional. How are you working to change Tech Data’s direction in this regard?
Hume: We can’t forget about hyperconverged systems, which is basically the new generation of the traditional data centre category, and we will be making large investments there. We have a large-scale broadline business and that is important and strategic to us as we move forward. We had emerged in business as a broadliner, those are our roots, and we believe we do that business from a distribution perspective better than anyone else in the world. We intend to continue to evolve that capability to drive continued excellent customer and vendor execution moving forward.
CDN Now: How do you work with the Canadian operation to future this strategy?
Hume: The Canadian operation has been a ‘bellwether’ as it relates to continuous, consistent, and strong performance. As we move forward and integrate the two companies together once the deal is closed, that won’t change. We would intend to obviously have a larger scale footprint, with the same sort of motion and execution that our customers and vendors expect from us today.
