'I don't agree that as-a-Service is something vendors have dreamt up' - Softcat CEO on 2022 results

Graeme Watt on 68 quarters of growth, the Apple opportunity and what he thinks of colourful comments on as-a-Service made by one of his opposite numbers at recent Canalys Channels Forum

Softcat did a "pretty good job" of hitting its key goals in its fiscal 2022, CEO Graeme Watt told CRN on a call following its annual results this morning.

But the Softcat leader also opened up on a number of other topics, including whether he agrees with the contention of Computacenter CEO Mike Norris that as-a-Service is "sh**' for customers, vendor price rises and how much longer he thinks current supply chain challenges will last.

Your preliminary results for the year to 31 July 2022 show increased revenues as well as gross invoiced income of £2.51bn. You also stressed that Softcat has now seen 68 successive quarters of organic year over year income and profit growth. How pleased are you with this performance?

I think we're pleased. I think we achieved what we set out to do in the year and more. We did a couple of upgrades throughout the year and we've got a mission to be the best place to work to deliver outstanding customer service and grow faster than the market.

"I think we did a pretty good job on all of those areas - it was obviously organic growth and broad based. I think what that tells us is that there's good demand in the market and it tells us that our portfolio of technology and services is very relevant to customers across the board. We grew across all segments, double digit; we grew over 20 per cent by the key technology areas of hardware, software and services. I think all in all, we're pleased with the performance we set out to achieve and we did more than that too.

An Ingram Micro directly said last week that supply chain constraints might last until the end of 2023, at least in the enterprise infrastructure space. What's your view?

I'd say that on the device, tablet and PC side, it has definitely freed up and in fact, in some areas, because supply chains freed up and demand softened a bit particularly on the consumer side, which is not really our part of the business, I think there's even some oversupply in some areas now. So, it's amazing how quickly that can flip.

I think we said in our statements that we've seen some easing of supply on the device side. On the server, storage networking side, [there will] definitely supply constraints in place for a while. You suggested freeing up by the end of 2023. We've been a little bit more circumspect than that and said, we just don't know when supply chain is going to free out because nobody's really able to give us a hard and fast commitment to that, but definitely extending into and possibly throughout this next year.

As inflation continues to bite, have you seen your vendors put up prices and how quickly does Softcat pass these on to customers?

We're passing them on immediately. As you've said, its driven primarily by a combination of costs, constraint and forex and as we always have done, we will just have to reflect those prices in what we charge to our customers and that's what we've been doing. I'd say the vast majority of our hardware partners have either put up prices or are putting prices up.

At the Canalys Forum 2022, Computacenter CEO Mike Norris was quoted as saying: "As a Microsoft shareholder, as-a-service is brilliant. As a vendor, as-a-service is brilliant. As a channel partner, as-a-service is pretty good. [For] a corporate customer, I think it's sh**." What do you think?

I don't agree with it as a general statement, but as-a-service is one of a number of ways of consuming IT infrastructure. So, I think Mike's point was a little bit overstated, perhaps, but I think some customers do prefer that, they prefer an OPEX model. They don't have bandwidth in house, to manage on premise, purchase capex, with all the refresh and the downtime and everything else that's associated with it, perhaps if it's around the device, for example.

I think Mike's point was a little bit overstated, perhaps... but I don't agree that it's something that the vendors have dreamt up, and there's not a demand for it. There's definitely demand for it and we see it as a growing part of the business

So, I think for some businesses, it really suits them just to completely outsource the end-to-end management of that particular bit of technology. So, I think it doesn't suit everybody and we've had good take up from it. But not every customer we have consumes as-a-service. It works much better from a software perspective, perhaps a lot easier, and that's a little bit more prevalent. But I don't agree that it's something that the vendors have dreamt up, and there's not a demand for it. There's definitely demand for it and we see it as a growing part of the business.

Most resellers would see the likes of HP, Dell or Lenovo as their natural allies in the PC space. But is Apple becoming too big an opportunity for the mainstream IT channel to ignore?

Well, we already have an Apple strategy. We've been working with Apple for many years since before I arrived at the company. And Apple has been growing at premium rates within our portfolio. So I don't think it's new that Apple are being successful. I think they've taking share in the device and tablet market for sure. I think a small proportion that has been related to supply chain: they've been better at managing supply chain than some of the mainstream manufacturers we've been dealing with, and I think we see opportunities to grow even further with them. For example, I think there's more we can do on phones, which isn't a major part of our portfolio today, although that's obviously quite commodity. And then I think in the enterprise piece when you start moving up the stack to Apple servers, where in our customer some of that enterprise technology is being consumed, I think we can do more there.

You are moving to non-executive chair of the Softcat board next July, with Graham Charlton will assume the position of Softcat CEO. Do you have more information about future plans and the handover strategy?

I have no real plans at this point. I always find it quite difficult to do two things, and I'm very focused on running the company at the moment.

Graham and I, we have some high-level plans, and we'll start to put them into effect at the end of this financial year. But in terms of what I'm going to do, I'll probably take on another non-exec role somewhere, possibly industry related, let's see, but there are no real firm plans at this point other than to pick up the chair position of Softcat.