Ingram EMEA chief on M&A plans, cloud, value vs volume, and life under HNA
Mark Snider opens up on what life is like under Chinese ownership
Ingram Micro's mammoth $6bn sale to a subsidiary of Chinese conglomerate HNA was a 10-month rollercoaster of shareholder lawsuits, regulatory probing and stock exchange investigations.
Finally concluding in December last year, Ingram has now spent more than five months under private ownership
The interest of Chinese firms in buying US-based companies has always been something that has stirred unrest among US institutions. One only has to think of Huawei's failed acquisitions of 3Com and 3Leaf, blocked by the Committee of Foreign Investment in the United States (CFIUS).
Speaking to CRN sister pubilcation Channelnomics Europe, Ingram Micro EMEA chief Mark Snider (pictured) - who was appointed last year after the departure of European leader Gerhard Schulz - said that life under HNA will see the world's largest distributor be as aggressive as ever both in terms of organic and acquisitive growth.
"I get asked a lot by customers about the HNA acquisition, [about] being owned by this new company as opposed to being a public company. Definitely from a customer and vendor perspective, they are seeing us be aggressive and leaning towards growth," he said.
Snider stressed that the culture and strategic direction of Ingram Micro has changed little in its time under new ownership, claiming that HNA always intended to keep Ingram's leadership team in place.
"Definitely for Ingram Micro, our name is staying the same, our CEO is the same. When they did the deal that was how they wanted to run us. They said they wanted us to run with the same strategy that we always had… Internally the culture and feel of the company has been exactly the same. The difference is, with the acquisition behind us and with the leadership for EMEA, we are the global leader and we should be growing in all of these markets and be significantly more aggressive in the competition," he said.
"They have an HNA person on the board but they really bought us, not to integrate as part of their technology, they bought us because they believe in the revenue that we get obviously from a global perspective and also the vision we have for the future, things like cloud, which they knew was a good investment from their perspective."
The deal was largely responsible for the world's largest IT distributor posting a $34.65m net loss for its fourth financial quarter ending 31 December 2016. Ingram incurred a further $39m in merger and acquisition costs for its first quarter of this year ending 1 April. Yet, according to Snider, further costs related to the acquisition will not continue to weigh upon Ingram's profits going forward.
"I think Q1 was double-digit growth on a global basis. Profitability was good. We don't do forward looking, but I think... Q1 was a strong quarter for us, so there will be no hangover effect from that at all," he said.
"You are not going to see a huge change from a strategy standpoint. So with that there is very little distraction and I think from our perspective we already wanted to be more aggressive in the marketplace."
Putting M&A on the table
Ingram has maintained a steady pace of M&A activity throughout 2016 and going into this year. The firm made three acquisitions in 2016 in the shape of UK channel networking and server services firm Comms-care, cloud distributor Ensim and Auckland-based firm Connector Systems. This year, Ingram has already bought NIT, a Dubai-based physical security distributor covering the Middle East and Africa.
Snider said that under HNA Ingram's will maintain an active M&A strategy.
"That is one thing that seems to be in the DNA of HNA, they are acquisitive and definitely in that mode of thinking, and I think, for us, that fits right into our plans both in EMEA and globally.
"Some of our recent acquisitions have been in speciality technology, in services and in physical security… but all acquisition targets would be on the table when it comes to our relationship with HNA."
Click through to page two to read Snider's thoughts on the changing competitive landscape among the big four, and Ingram's cloud proposition
Ingram EMEA chief on M&A plans, cloud, value vs volume, and life under HNA
Mark Snider opens up on what life is like under Chinese ownership
Volume vs. value
The industry's top four enterprise distributors - Ingram, Avnet, Arrow and Tech Data - effectively became three when Tech Data announced its intention to buy the value-rich Technology Solutions segment of Avnet in September of last year.
Soon after the deal closed in February, Tech Data's European boss Patrick Zammit told Channelnomics Europethat the deal would give Tech Data a "comparable" scale to Ingram, but could also differentiate itself in more specialist and specific skills.
Snider said that Ingram are not looking at Tech Data's merger as an opportunity to gain market share during the lengthy integration period that lies before its rival.
"I wouldn't count on that," he said. "For us, we have got to be proactive on our own. When we devise our strategies we start with our customers and our vendors and having competitors in the middle of that might just make it confusing for us."
Instead, Snider said that Ingram has also made efforts to become a balanced and well-rounded player, and having a clear distinction between volume and value business has been central to Ingram's success.
"The value we bring is, whatever the solution is, as broad as it is, we can offer that to our customers - I think that is what the winning model is. When the lines between volume and value start blurring, that's when you start losing. We have a volume lead and a value lead and it is not that one is more important than the other… you need both so you can go to your customers confidently and give them what they're looking for."
"This model of having the full spectrum is one we are investing in heavily. You don't see us backing away from any particular segment… it is more about balance. The differentiator for us is on this SMB reseller side. If you look through our focus areas, a real strength of ours is on that SMB market overall."
Cloud goes sky-high The EMEA boss named HP, HPE, Dell EMC, Microsoft and Cisco as the vendors that pull in the most revenues for Ingram. The distribution titan has been busy expanding its cloud marketplace across the continent, which is now available across 20 EMEA countries, in five different currencies and six languages.
"I would say from a general trend, the cloud business, and software which are growing together, that is one of the fastest areas of the business from a revenue growth stream perspective," said Snider.
"That is why, as we have expanded, and we have made it accessible, there is more than a million and a half licensed users on it now."
He added: "Then on the other side there's a development component of it because we are almost more like a software manufacturer now. The Odin platform is our proprietary platform that we have to keep expanding and improving, so for that we need programmers and a different kind of employee than we had before."
Pan-EMEA conversations
The firm underwent a major global restructure in 2015 which saw Ingram shut down its European HQ in Brussels, and appoint in-country chief executives to manage its four business units: technology solutions; supply chain; mobility; and cloud.
Snider said he has no plans to change its country chief executive structure, but instead plans to get chief executives sharing knowledge on an EMEA - not a European - level.
"We have switched our structure to be more of an EMEA structure. Before I came on board the reporting relationships were with different areas. For us, our real focus is to get synergies between these teams. We've got really good chief executives from a country standpoint and I want to get them to be sharing best practices. My job as the new leader is to increase communication across our teams. We want to be aggressive in the market, and continue to grow the value portfolio and the value business and be important to vendors, but also be indispensable to customers," he said.