Tech Data's European boss on integration timetable and rebranding
Patrick Zammit also claims Avnet deal gives Tech Data edge over Ingram and discusses geography and relationship gains of last week's blockbuster union
Following Tech Data's closure of its Avnet Technology Solutions acquisition last week, CRN sister publication Channelnomics Europe quizzed newly appointed European president Patrick Zammit (pictured) on a wide range of topics, including the integration roadmap and where the deal has strengthened the distributor.
Bringing it all together
The Avnet TS buyout brings Tech Data's total workforce to more than 14,000 employees - roughly 7,500 of which are based in Europe, according to Zammit. He said that as a result, overlap between the two distribution giants will be greater in EMEA than in the US. Zammit said that he aims to have Tech Data's integration process complete in a year's time, with Germany and the UK - the largest markets of both Avnet TS and Tech Data - expected to take the longest. He claimed, however, that smaller European countries could be integrated within a few months.
"We are going to have a country-by-country approach. The Tech Data model is a country-by-country approach, and some [countries] will have more to combine than others," he said. "The overlap is of course going to impact the support functions of each business, but I do not think we will see big lay-offs at this stage."
Additionally, Zammit said that Avnet's offices across Europe will be combined with Tech Data's where possible, claiming that larger European cities such as London and Paris will likely see staff brought under one roof.
"Ideally, we would like to bring all employees into one space but that will work only in some cities [where] the head offices are extremely close to each other. But for some cities it will not be possible because we do not want to extend the time it takes for people to travel to the office," he said.
"In London or Paris if you look at the map it looks as if we can bring the two together but in the majority of cases we will not be able to do so. In some cases the teams are close to each other, in other cities it is too far... I don't want there to be any disruption for the employees."
Zammit confirmed that the Avnet name will disappear in the integration process, and Tech Data is currently evaluating its branding strategy with the addition of Avnet.
"The Avnet name is going to disappear in the future. There is a global study taking place as we speak on the branding strategy. There will be some changes, we do not know yet what will be the decision because we have to go through the process. We have some very memorable brands in EMEA like Azlan, Datech and Maverick; they are very powerful names," he said.
"We can continue to use Avnet for six months but for brand reasons we want to know where we are heading to sooner rather than later."
Channelnomics Europe spoke to Tech Data's CEO Bob Dutkowsky when the deal was first announced, and he was quick to stress to resellers on both sides of the merger that protecting credit lines was a priority. Zammit pledged that resellers will see their credit lines with Tech Data and Avnet merge together, and could even increase under the combined company.
"Tech Data very early in the process - the announcement came out in September and no later than one week later - made a very clear statement and a strong commitment that credit lines will be merged, so it is a one plus one equals two scenario," he said.
"There will be increases to the credit lines where needed. There are no changes to terms and conditions, no change to credit limits, it is business as usual, but as we win some new projects we will increase the credit lines accordingly."
He added: "We work case by case, partner by partner; this is really business as usual. We will review the needs of our partners and address the credit lines accordingly... we want to make sure they have enough credit."
Click through to page two to find out about potential outsourcing, what Zammit thinks are the key relationships and geographies gained via the merger - and why he believes Tech Data has the advantage over Ingram
Tech Data's European boss on integration timetable and rebranding
Patrick Zammit also claims Avnet deal gives Tech Data edge over Ingram and discusses geography and relationship gains of last week's blockbuster union
Nearshoring strategy
A number of Avnet and Tech Data's major rivals have moved some back-office functions to lower-cost locations in recent years. Ingram Micro doubled the headcount of its shared services centre in Sofia, Bulgaria to 500 in 2014, Westcon similarly took the decision in October 2015 to move finance and operations departments to a business process outsourcing firm with operations in Romania, while rumours have suggested that Arrow is planning on moving functions to Poland.
Zammit said that Tech Data has a shared services centre in Barcelona, while Avnet TS holds one in Poland.
"We will stick to the Tech Data approach. We have one shared service centre in Poland and have no intention to close it. At this stage we are following the plan established by Tech Data and we have not made any decision to change those plans," he said.
Bringing something to the table
Zammit said that he plans to go after more European market share as a result of the Avnet TS deal opening up further territories on the continent. When the deal was first announced, Tech Data claimed that the addition of Avnet will open the door to the APAC region - a new frontier for Tech Data. But Zammit added that Avnet TS will bolster the distribution giant's presence in Europe as well.
"We have a lot of benefits in the new Tech Data following the acquisition. The first thing I want to mention is, we are going to be a €17bn company in Europe; scale matters in our industry. The second benefit is geographic coverage, it brings Tech Data into eastern Europe, that expands nicely our geographic coverage in Europe and EMEA, because we are already in Turkey. Now, with Avnet, we could offer to the vendors an eastern European and Turkey expansion," he said.
"The third big advantage is, we are adding a few new lines to the Tech Data family, being primarily NetApp and others in the security space as well. Tech Data has many lines we did not have on the Avnet side. [Tech Data will meanwhile bring] Microsoft, and that plays a key role, we have our cloud strategy and Microsoft [will add] a solid value proposition. Microsoft would be a good example of a key addition [to Avnet]."
Avnet's Technology Solutions arm comprises of its value-focused datacentre infrastructure, software and services business, turning over $9.6bn in its 2016 fiscal year. Zammit claims that the acquired business will complement Tech Data's existing strong client device offering.
"What Avnet brings to Tech Data is a very large position in the so-called value business to be specialists in datacentre, security cloud, and data analytics; it has doubled the size of our value business in Europe as Tech Data was more focused on the client device business. Tech Data will be a $6bn business in datacentre and specialist technology," said Zammit.
"If you look at the way Tech Data is organised, you have the so-called broadline business, the value business and the mobility business. I look at it a little differently; I look at it by products. We have a huge client device business, we will bring the mobility business and all of that together to create a significant client device business unit. Then our datacentre business unit, then a specialist business unit, so if you look at each of the business units by country and by vendor and by customer, there is nowhere where there is not a major opportunity to grow in market share. Our intention with the scale we have today, we can go after the product families in the IT industry, we can go after every customer segment in every country."
A specialist advantage
With Ingram Micro's $6bn sale to Chinese giant Tianjin Tianhai, the broadline distribution landscape has seen some defining changes in the last year. Zammit claims that the addition of Avnet, and a broader offering, puts Tech Data in a unique position against the likes of Ingram Micro.
"The way I look at it is, what is the value proposition of the new Tech Data? It is the ability to sell to the market all of those valuable technologies. We are very comparable to Ingram insofar as we have a very large portfolio. Avnet was datacentre and technology but not at the same... size in terms of product portfolio. [Now] we are very comparable to Ingram. What will differentiate ourselves is we have three models, one to support volume business or commodity type product fulfilment, low costs, shipping on time, then we have a value business model, then we have our specialist and specific skills," he said.
"We are the only one in the market that can do that. Our partners have choice; they have access to product portfolio, they need support, we are able to support them. I like the Tech Data slogan which is ‘we are a collection of specialists' - and that is the way I see it."