World Wide Technology CEO sounds warning for traditional resellers
Boss of $10bn-revenue global Cisco partner says he doesn't feel WWT should be classified as a reseller any more following its investments into service areas
Resellers that aren't embracing services and innovating will endure a tough time as market growth cools and more spend moves to the cloud.
That's the warning of Jim Kavanaugh (pictured), CEO of global VAR World Wide Technology (WWT), who caught up with CRN this week during a visit to WWT's London office in Canary Wharf.
Canalys chief analyst Steve Brazier struck a cautious tone at the analyst's recent EMEA Channels Forum, warning that industry growth is likely to slow, at least for European channel players.
Asked for a global view, Kavanaugh said he had also picked up on the change in mood.
"What I hear from the general market at times is that the general reseller space is slowing," he said.
"My own observation is that some of the slowing of the reseller space could be because certain things are moving to the cloud. There is a shift - not a complete shift - of some of the consumption on the infrastructure side.
"But my belief is if you're not innovating and creating different value propositions and innovative services for your customers, then your business is going to slow down and potentially decline. And I think there will be additional margin pressures on a traditional reseller if they don't focus on driving some type of innovation and being more focused on a services-led organisation."
Kavanaugh claimed that $10bn-revenue giant WWT itself has moved well beyond its reseller roots, citing its investment in its Advanced Technology Centre testing lab and Asynchrony Labs, a software development firm it acquired in 2015, whose headcount it has since boosted from 225 to 500 thanks partly to a UK hiring spree.
"We believe we are doing some things that are unique to a traditional VAR or SI. We don't feel a lot of times we should be placed in that sector," he said.
Unlike rivals such as CDW, which acquired its way into the UK market, WWT has expanded organically in the UK since launching here in 2013, and Kavanaugh indicated this approach is unlikely to waver.
"We're not completely opposed to acquisitions, but if possible we'd prefer to grow organically, and that has worked well for us as we've expanded throughout North America but also now Europe and Asia," he said. "We haven't gone out and grown by acquiring companies that do the value-added reselling and systems integration side - we look at things that are maybe outside our core competencies.
"That being said, if there is a boutique VAR in a location, we wouldn't be completely opposed to it, but that is not typically how we grow our business."
Asked which competitor he respects the most, and why, Kavanaugh plumped for Computacenter, which recently expanded into WWT's back yard by acquiring US outfit FusionStorm.
"I'd probably say Computacenter because of their coverage and presence in the market," Kavanaugh said. "They seem like they've done a good job and created a solid company.
"I thought [their US acquisition] was interesting. I'm pretty familiar with the company they acquired. From the outside looking in, I'd imagine they're trying to create a broader presence. The challenge is doing that and making those integrations work culturally and from a business perspective, but I can see why they did it."