“We are al­ways keen to make ac­qui­si­tions”

On his re­cent visit to In­dia, Philip Gal­lagher, Global Pres­i­dent, Avnet Tech­nol­ogy So­lu­tions, spoke to Dhaval Valia about the dis­trib­u­tor’s global strat­egy, its In­dia plans and trends


How has Avnet Tech­nol­ogy So­lu­tions (ATS) per­formed in In­dia and glob­ally?

Glob­ally, the first half of FY2013-14 has been good for ATS due to stronger-than-ex­pected yearend buy­ing in North Amer­ica by businesses.

In Q2FY2013-14, end­ing De­cem­ber 2013, we recorded 8 per­cent YOY growth, while se­quen­tially we grew by 35 per­cent.

Stor­age, soft­ware and ser­vices have been the key growth driv­ers for ATS which has grown at 30 per­cent over the past 12 months.

While we don’t give coun­try-spe­cific break-ups, I can say that In­dia is one of the fastest grow­ing re­gions in Asia for ATS. Our busi­ness in Asia con­trib­uted nearly 18 per­cent of our global rev­enue of $10.4 bil­lion in FY2012-13.

In the five years of op­er­a­tions here, our busi­ness has grown 10 times. We have ex­panded our dis­tri­bu­tion and value-added port­fo­lio in In­dia, and have won sev­eral ac­co­lades from our prin­ci­pal ven­dors.

Hard­ware dis­tri­bu­tion is bound to shrink as the in­dus­try con­sol­i­dates and cus­tomers move to a ser­vices-led opex model. What is Avnet do­ing to re­model its busi­ness?

Be­ing a value-added dis­trib­u­tor, pro­vid­ing ser­vices has al­ways been our key dif­fer­en­tia­tor. How­ever, over the past two years, we have strate­gized to build an end-toend ser­vices port­fo­lio that in­cludes the en­tire bou­quet of IT in­fra­struc­ture life­cy­cle ser­vices. We have also launched Avnet-branded ser­vices.

To­day, soft­ware and ser­vices con­trib­ute nearly 45 per­cent of our rev­enue in mar­kets such as the US and Europe, while in emerg­ing mar­kets like Asia, the con­tri­bu­tion has dou­bled from 10 per­cent to 20 per­cent of to­tal rev­enue dur­ing the past two years.

IBM has been the big­gest part­ner for ATS. How will the x86 server sale by IBM im­pact ATS?

IBM and ATS share a re­la­tion­ship of 25 years, and IBM busi­ness con­trib­utes nearly 35 per­cent of our global rev­enue. This also makes us the largest dis­trib­u­tor of IBM.

IBM’s x86 busi­ness con­trib­utes 5 per­cent of our to­tal rev­enue; this amounts to ap­prox­i­mately $500 mil­lion in an­nual sales.

“In Jan­uary this year we rolled out the Avnet Academy in In­dia aimed at pro­vid­ing ven­dor- and do­main-spe­cific train­ing and cer­ti­fi­ca­tion to cus­tomers and part­ners”

So far we have been given to be­lieve by IBM that once the ac­qui­si­tion re­ceives all the statu­tory ap­provals and is com­plete, the dis­tri­bu­tion con­tracts will be trans­ferred to Len­ovo. This means Len­ovo will con­tinue sell­ing through ex­ist­ing dis­trib­u­tors of IBM, hence we don’t see much of an im­pact due to the sell-off.

With Len­ovo we have a strong part­ner­ship in some coun­tries in Asia Pa­cific where we dis­trib­ute their PCs.

ATS has made sev­eral ac­qui­si­tions glob­ally in the past 2-3 years, and most of them have been sys­tems in­te­gra­tors. In In­dia too ATS’ op­er­a­tions were set up by ac­quir­ing a sys­tems in­te­gra­tor, On­track. Any plans for more ac­qui­si­tions here?

We are al­ways keen to make ac­qui­si­tions that help us strengthen our value-added dis­tri­bu­tion ser­vices. Last year we ac­quired US-based Seam­less Tech­nolo­gies, a strong HP part­ner who spe­cial­ized in cloud and data cen­ter au­to­ma­tion ser­vices as well as ITIL best prac­tices. We used this ac­qui­si­tion to strengthen our ser­vices around HP tech­nolo­gies.

Prior to that we ac­quired US-based As­cen­dant Tech­nol­ogy which was a leading IBM part­ner fo­cus­ing on the cloud, mo­bil­ity and busi­ness an­a­lyt­ics. The ac­qui­si­tion helped us to en­hance our So­lu­tion­sPath prac­tices around the fi­nan­cial, health­care and re­tail mar­kets.

Through these ac­qui­si­tions, we built new ser­vices which are now be­ing of­fered glob­ally to our part­ners in­clud­ing those in In­dia. As­cen­dant, for in­stance, has a 100-mem­ber oper­a­tion in In­dia. ATS In­dia is al­ready work­ing with them to of­fer value-added ser­vices around IBM Cog­nos.

To an­swer the last part of your ques­tion, we are al­ways keen on an ac­qui­si­tion that fits our strat­egy and plans.

What are the new ini­tia­tives planned for In­dia?

In­dia is a very im­por­tant growth mar­ket for us. We have been steadily ex­pand­ing our port­fo­lio of prod­ucts and ser­vices. At present, we dis­trib­ute en­ter­prise prod­ucts from IBM, HP, NetApp, VMware, Citrix, Ju­niper, Com­mS­cope, In­foblox, SAP, HDS, F5 Net­works, Vi­sion and Or­a­cle.

Of these, we signed up SAP and HDS last year. We will be dis­tribut­ing SAP’s HANA and data­bases, while for HDS we will be dis­tribut­ing their stor­age and con­verged in­fra­struc­ture sys­tems as well as the soon-tobe-launched cloud ser­vices.

Last year, we in­au­gu­rated our sec­ond In­no­va­tion Cen­ter in Delhi aimed at pro­vid­ing cus­tomers and part­ners tools to cre­ate POCs. We al­ready have one POC in Mum­bai.

We launched the ISV Ac­cel­er­a­tor pro­gram in 2013, and have signed up 20 ISVs who have mar­ket-ready ap­pli­ca­tions for ver­ti­cals like BFSI, tele­com, me­dia, man­u­fac­tur­ing, util­i­ties, govern­ment, re­tail, lo­gis­tics, health­care and

“We have our own Avnet Cloud Ser­vices. Part­ners can re­sell an Avnet cloud ser­vice, brand the ser­vice as their own, or do a com­bi­na­tion of both”

hos­pi­tal­ity. We plan to ex­pand this pro­gram and cre­ate an au­ton­o­mous busi­ness that is ISV-led.

In Jan­uary this year we rolled out the Avnet Academy in In­dia aimed at pro­vid­ing ven­dor- and do­main-spe­cific train­ing and cer­ti­fi­ca­tion to both cus­tomers and part­ners.

As the tech­nol­ogy land­scape changes, train­ing and cer­ti­fi­ca­tion is emerg­ing as a big fo­cus area for help­ing part­ners to ac­quire new skills and trans­form their businesses. Last year, we be­came a Global Train­ing Provider for IBM. Un­der the Avnet Academy, we will pro­vide all IBM train­ing and cer­ti­fi­ca­tion.

What will the role of a dis­trib­u­tor be in the cloud com­put­ing era?

As part of our en­able­ment ser­vices, we ed­u­cate part­ners on how to po­si­tion var­i­ous cloud ser­vices, how to sell, and how to re­mu­ner­ate their sales rep­re­sen­ta­tives.

We have our own Avnet Cloud Ser­vices. Part­ners can re­sell an Avnet cloud ser­vice, brand the ser­vice as their own, or do a com­bi­na­tion of both. Our plan is to ag­gre­gate dif­fer­ent cloud providers in a bid to give more of­fer­ings to the chan­nel.

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