'The market is a bit flat and needs an energy boost' - CMS Distribution CEO Frank Salmon

Salmon talks the potential monetisation of AI, market challenges, and revenue drivers

CMS Distribution CEO Frank Salmon is optimistic about better market growth in the second half of 2024, driven by AI, but is cautious of the game changing technology's current ability to impact the channel.

Salmon founded CMS Distribution in 1988 in London. Today, it operates across eight countries - the UK, Ireland, the Netherlands, France, Germany, Sweden, the US and China.

It focuses on bringing emerging technology to market and has a global headcount of around 600 people.

Earlier this week we heard from Exertis IT CEO Tim Griffin on market expectations for the second half of 2024.

Sitting down with CRN, Salmon gives his view on current market conditions.

"The market is slow. Thankfully, we're seeing a little bit of growth in the UK, but other parts of Europe are suffering, similar this year to how the UK suffered last year.

"The whole market is a little bit flat and is in need of an energy boost.

"But I can't complain. Our business is doing well. We're currently up about eight per cent on last year, so we're in a good place."

Salmon claims his business had revenues of about £550m last year.

Looking into his crystal ball, the CMS CEO tries to predict the outcome of the second half of this year.

"The expectation is, H2 will deliver better market growth. I think H1, from what I can gather in the UK, is showing four or five per cent growth.

"But we keep talking about growth as far as three to six months away. The further out you go, the easier it is to be optimistic about growth.

"I think one of the key drivers in the second half will be AI and people wanting to upgrade their systems, their laptops, for example, to be AI enabled."

Monetising AI

He acknowledges the buzzword effect AI has on the tech industry, but much like Griffin earlier this week, Salmon is realistic about its current impact.

"The challenge is how we can monetise the opportunities that are out there?

"At the moment, it seems to be very dominated by the big software businesses, the Microsoft and Googles of this world."

However, as times goes by, Salmon thinks the industry will start to see improvements by using AI in the workspace, and will be able to harness opportunities to monetise and drive growth.

"We need to do more research on AI to understand the vendors that are operating.

"There's a huge plethora of emerging vendors in that space. So it's trying to sift through the innovators and see which are ones that will complement our channels."

Priorities for CMS

Salmon reveals one of his priorities for this year revolves around digital transformation, inevitably tying it into AI.

"The whole digital transformation piece and incorporating everything from automation, robotic processes automation, to ensuring our master data is accurate.

"So it's really to be AI ready, so that you have all of the fundamentals in place to be able to benefit from AI down the line."

He adds digital transformation is the biggest opportunity for revenue growth for CMS.

"It's not an event, it's a journey. It's a mindset change, trying to encourage people to question why they're doing particular things, especially if it's repetitive tasks. And how can we automate that task if it's appropriate to."

Challenges

As previously mentioned, the market is currently stagnant, which is proving to be CMS' biggest challenge.

"I'm reasonably comfortable with what we're achieving, but I'd like to be operating in a market that is showing much higher growth. So market growth is a challenge."

He explains that, with a lack of growth, the market tends to become more competitive, driving margins down.

"So we need to ensure we have good partner programmes in place to protect our resellers, to ensure they can deliver to their expectations. And for us, it's about helping improve their chances of success with the brands they work with us on.

"People. I think people are always key, and for us, it's about encouraging and helping our people to develop, continue to focus on a growth mindset, investing in their education and personal development plans.

"We also have a graduate academy, in which we recruit about ten people every quarter, including apprentices. So we're reinvesting in the youth, trying to create more opportunities for young people and help them on their journeys."