Computacenter's Neil Hall: It feels like a good time to be running the UK's largest reseller

In a rare in-depth interview, Computacenter’s UK MD chats to CRN about topping Top VARs 2019, giving staff at rival resellers a chance to "play on the bigger stage", and why he never looks more than two years ahead

Computacenter just topped Top VARs again. You're the UK boss of the largest player in our industry, looking after more than 4,000 staff. Looking at how you spend the bulk of your time, is there anything that might surprise people?

First of all, I'm very proud to run the UK business. I've been running it for just over two years now. Prior to that, I was doing a group role driving our services business. And before that I was in Germany supporting the German business for a few years. I took my family out there. I've been at Computacenter for 18 years, as of the last couple of weeks. That was a landmark that makes me feel a little bit more like an adult at Computacenter - because we do have some long-service people here, which is a strength of course.

Some things are more governance-led, and they're not the most exciting things to do, but they're very important to the business.

But the thing I love most is spending time with our own people and our customers.

Having a relatively small number of large customers - we have around 100 in the UK - helps us really understand the market and enables us to be flexible and agile and move with our customers and co-create - so that's probably where I got most of my energy from.

I include vendor partners in that, but I enjoy working with customers with vendor partners, rather than just having vendors in the room. Co-creating with customers can be the most exciting place to be and we do a lot of that.

I listen to other people you report on and maybe they talk about future technologies three or four years out, and what's going to come down the line. I'm not qualified to do that. We're very customer-led. We understand the market we operate in and we try to understand what's coming next, but we can't go two, three, four years out.

I do have to keep looking at things and saying ‘do I really need to be doing that?' I don't do many interviews! I spend a lot of my time with my people and with my customers and we put the numbers on the board. None of my account managers have targets themselves. We don't target our account teams. We're just trying to be the best that we can be.

Computacenter's shares spiked on Tuesday on the back of an upbeat, unscheduled trading update. How has the UK business, specifically, performed in 2019?

You saw the news that we expect to be well ahead of market expectations. I can't add to that, but maybe I can give some more colour.

Customers have this insatiable desire to continue to invest and digitise their environment, their infrastructure. And we're seeing a lot of that playing out through the modernisation of the workplace, and through the adoption of public cloud services. And I think we are finding quite a good place to play in that space, which means not only are we getting good product revenues, but we're also starting to see good services revenues, especially when you look at helping customers adopt the public cloud, and manage multi-cloud environments and workloads that they operate within.

Computacenter, Softcat, CDW, Insight and SCC grew UK product revenues by over £800m in their latest year. What's driving this rebound in product sales, and is it sustainable?

Customers are not only looking to deal with the challenge of Windows 7 end of life, they're also looking at it as an opportunity to drive a new digital workplace with the right collaboration techniques, the right ways to enable their business further and get more from the data and the information they have within the boundaries of their building.

Coming to buildings, we're seeing building rationalisation, which is another driver for that modern workplace: it gives them an opportunity to step back, and in doing that we've seen more diverse ecosystems, with significant growth in non-Windows platforms, especially around Apple.

Moving on to security, we've seen some rationalisation across vendors and vendors going into acquisition mode. We've seen a large number of customers looking to get the right security posture and ensure they've got the right partners to work with at an end-to-end level. I read your report and the level of complexity it talks about certainly resonates with me. From a product and a services angle, customers are seeing lots of different ways to solve their own business challenges. So I don't think there has been a better time to be in the reseller market, or the integrator or MSP marketplace than right now.

I don't know whether that will continue. But it feels like a good time to be running the largest UK reseller.

Looking at where you hire and fire, where you build specialist resource, where you make capital investments etc, what are your investment priorities for the UK business in 2020?

We have found that recruiting from organisations akin to Computacenter - that are operating across products and services but maybe aren't as large as us - [has worked really well]. Sometimes I've seen us recruit from some of the large tier-ones and in all candidness sometimes those people might think they're taking a step down to Computacenter - and that's not the type of people we want.

You alluded to a certain point about where we recruit from. We have found that recruiting from organisations akin to Computacenter - that are operating across products and services but maybe aren't as large as us - [has worked really well]. Sometimes I've seen us recruit from some of the large tier-ones and in all candidness sometimes those people might think they're taking a step down to Computacenter - and that's not the type of people we want.

We want people to feel like they're playing on a bigger stage and we want them to be relevant to us. We want them to be brilliant in all the things we do and we want them to help us win with our customers and have the right mindset. I think that's more important than the skill set. We can help develop the talent. We do a huge amount of that through our graduate and apprentice programmes, and we're better at growing from within. I've been at Computacenter for 18 years and I'm probably one of the longer-term people, but the averages are pretty high. And that's because we keep challenging our people and trying to put people outside their comfort zone, so they can grow and learn.

From a technology perspective, we're seeing some skills gaps in the market, especially around security and that multi-cloud environment. And we must ensure we've got an environment people want to join and be part of, and be very open to the market to incorporate all the best people we can invest in and take forward in their careers.

How is Computacenter's competitive landscape changing, and is the threat from direct-selling vendors growing or shrinking?

We've seen the deal size reduce through more disaggregation of service contracts. And while we've had, I think, our strongest year for some time in renewals - with renewal rates over 99 per cent - I think we've seen more tier-one service integrators come into our space, because deal sizes have become a little bit smaller.

Vendors are sometimes competitors, and sometimes good, strong partners.

I looked at your statistics in Top VARs and you said 12 or 13 per cent growth across the channel. I don't think that vendors have been seeing that type of growth. And I think that's because we've been seeing a bit more direct to indirect. We have lots of the vendors wanting to deal directly with those large enterprise customers, but we're starting to make a difference there and there are some vendors who recognise the value we bring in those large enterprise relationships.

We've seen Computacenter hit the M&A trail in a big way, in the US and Switzerland. How likely is it that Computacenter will make a UK acquisition in 2020?

If the right thing comes along, then great. We acquired a company called Team Ultra in the UK about three years ago, which has helped us in ServiceNow integrations with our customers. Picking things off like that, which can help support our large enterprise customers, is always something we're going to be interested in. We don't really put ourselves in debt. We keep investing back in the business, and that's been one of the reasons for our success.

Computacenter relaunched its cloud strategy in the summer. Some commentators have painted Computacenter as having a slightly cautious stance on the cloud, at least until recently. Do you feel that's fair, and do you have a clear vision of how to approach cloud given your legacy business?

I think there's an acceptance in a lot of our customers that going to the cloud could cost more.

We're not one of the tier ones that have huge datacentres filled with workloads that we are trying to resist going to the cloud. So actually, I think our classic datacentre business has often been around transformational opportunities with our customers. I see the opportunity of helping build public clouds with the hyperscalers and we've done quite a bit of that. And if you look at the more classic large enterprise customers, we're helping those customers on the journey to the cloud, but also sometimes on repatriating back into their own datacentres because I think there's an acceptance among a lot of our customers that going to the cloud could cost more.

I think originally when the cloud came, the thinking was that it was pay-for-what-you-use and on-demand. But the reality is, in the services we have around things like apps dispositioning - where we're looking at a workload and we're trying to assess where the short- to mid-term requirements of that application is best served - there are times when this might need to move back into [the customer's] own environment.

The US acquisition [FusionStorm] gives us a bit of a view of what's happening out on the West Coast. A lot of our customers in the US are very much West Coast technology-based customers and they've grown up in the cloud. And now they're looking at it saying, actually, we want to build a datacentre.

Looking at your teams around AWS, Azure, Google etc, how many people does the UK business now employ in cloud-related roles?

Over the last 18 months we've been training and helping support our classic datacentre specialist teams, of which there are about 70 or 80 [staff], to be ready to support our customers to help them understand the journey to the cloud that they're there on. Then there are about 100 new consultants who we've either trained or developed or brought in from the marketplace that can support our customers. If you think we have probably 700 project managers or consultants in the UK, that gives you a good idea of the volumes of where they've got cloud like-skills.

What is the mega-trend you believe will shape the industry in the 2020s?

I wouldn't really want to say. There's 5G, edge computing, AI, augmented and virtual reality. We're seeing a few use cases in the marketplace and we're there to help support and modernise the infrastructure of our customers to help adapt and support those new ways of working and operating. But you're looking over the next decade, that's just not Computacenter. We're more likely to be a year or two out and looking at those timescales. We don't have pots of cash to invest in R&D that will be bringing us home in five or 10 years' time. It's just not the way that we operate. It's about a careful balance of being just ahead of our customers in terms of what they want to achieve.

I wouldn't want to get drawn into those types of topics, but if you take something like edge computing, and all the momentum you hear about smart cities and IoT devices, we're pretty strong in the edge. And we've got good skills in that area and managing that type of environment. So if those areas do grow, I think will be one of the providers that can help customers and be well positioned.