Fortinet and Palo Alto Networks continue to be the two star performers for Exclusive Networks' UK business, country manager Graham Jones has revealed as he admitted some of the start-up technologies it signed last year failed to yield returns.
The pan-European VAD smashed the €500m revenue barrier for in the first six months of the year, with the UK business growing 25 per cent year over year.
"Now we're doing a lot more testing before we go hell for leather."
Jones (pictured) said its two largest vendors, network security duo Fortinet and Palo Alto Networks, are causing pain to single-play vendors as they continue building out their platform capabilities.
"The good bits [within the results] are the main two vendors, as they've both grown significantly for us," he said.
"This industry is cyclical, as we've gone from ‘I want best of breed' to ‘well I've got a Palo platform, do I look at other endpoint solutions or do I look at Palo Traps [endpoint protection] and Wildfire [anti-malware] etc'?. It's the same with Fortinet now that they have Fabric. It means the single-play vendors are finding it more and more difficult now."
Exclusive's UK business, whose contribution to the topline in euros in the first half was artificially impacted by the crash in Sterling in June, is broadly on track to hit its target revenues of £180m to £200m this year, Jones said.
However, he admitted the New Technologies arm Exclusive launched last year is being wound down - at least in its current form - after many of the start-up vendors it attempted to incubate failed to produce results, SentinelOne being a notable exception.
"One of them we took from the beginning to them getting sold, with zero revenue," Jones said.
"I'm winding it down and have moved into launch now. There are too many vendors and I'm turning down four or five a week. They come in and say ‘I've got this great idea, we've got VC backing for $10m and my plan is to sell it in a year and it will make me rich'.
"What we're doing now is bringing in some criteria - is it a feature or a product; do you get the channel; do you get VAD; do your American customers get the channel and VAD? Now we're doing a lot more testing before we go hell for leather. We've got one we're looking at now where we've been out to eight SIs to ask them what they think.
"We've learned a lot of lessons. We still have [New Technologies], it's just that we're a lot more fussy."
Jones said Exclusive is also seeing mixed fortunes with its mid-sized vendors, where the distributor prefers to operate sole supplier relationships. Vendors with which it holds exclusive relationships include Fortinet, Tufin, SentinelOne, LogRhythm and Exabeam.
"The more exclusivity we get, the more we can protect our VARs," he said.
"The likes of CDW are the heroes over in the US, where the vendors sell direct or at cost-plus two through Arrow. But over here you've still got some value-added channels. Where we're exclusive, we can control that - the last thing we want to do is build up a handful of VARs only for CDW or Insight to come in and say we'll do that at cost-plus-two."
That said, Jones admitted standalone security VARs are almost an endangered species following a rash of consolidation that has seen the likes of Nebulas, Sysec and Accumuli become parts of bigger groups in recent months.
New services-focused security suppliers are emerging, but often with new business models, Jones said.
"There's a fairly new one we are working with that is really getting it right. For three months, they say ‘let's just monitor your systems'. They start building a profile of what is going on both externally and internally and after three months they say ‘we've noticed this, this and this and your strategy should be that, that and that'. They don't go in saying 'I'm going to sell you this, this and this'. Once they get into them, they become a trusted partner."
Exclusive's northern office was recently turned into a dedicated SME operation, looking after renewals, telesales and vendors such as SentinelOne and Fortinet SMB. Former Arrow executive Lee Widdowson was recently enlisted to run it.
"It's always been a balance between leaving the company alone and changing it every day," Jones explained. "We're getting pulled upwards - we're engaging with the SIs and telcos now - and it became obvious that we needed to strengthen our SME base in Chesterfiled. When I picked this up three-and-a-half years ago, it was £60m revenue and 60 people and this year we are tracking £180m with about 150 people. The story of our journey is how to get huge but keep our soul, still be agile and still be nice guys."
MSP plans to use new acquisition to expand its security offerings
Reseller also saw its operating profit fall five per cent in its financial 2017
Wendy Bahr to bring 18-year spell at networking giant to an end
AdEPT says latest purchase will push revenue beyond £50m