‘Great companies are made in tough times’: Tech Data’s Dutkowsky

‘Great companies are made in tough times’: Tech Data’s Dutkowsky

Tech Data CEO Bob Dutkowsky thinks distribution is headed towards a ‘value line’ type of model — but perhaps no longer in those words.”The world is becoming a world of hybrid distributors,” Dutkowsky told eChannelline on a recent visit to Toronto. “Value line was a word we coined to try and describe this, although it never went anywhere.”

Tech Data’s transformation from a broadline to a hybrid distributor has been spurred by the development of four new specialty areas — data center, mobility, software and consumer electronics. Dutkowsky discussed this in depth in the first part of this two part interview here.

“This diversification is the place where Tech Data has invested really aggressively, both organically and through acquisitions,” Dutkowsky said.

“Today we are one of the largest distributors of big screen TVs in the world, and a few years ago we weren’t even in that market,” he said. “The same goes for digital signage, which is just huge now.”

Dutkowsky thinks this is a common trend in IT distribution, that the other broadliners are trying to do the same thing. But he thinks that Tech Data is better positioned for this evolution than its rivals.

“We have a 50-50 balance between broadline and our specialty areas, so we are comfortable in next five years or so that if there is a sea change in our business, it will be in one of those areas,” he said. “Wherever it goes we are in a good spot. A few years ago, we were not. And many of our competitors are not. We are well positioned for the long haul.”

Dutkowsky doesn’t think the changes will drive distributor consolidation though, at least in North America.

“Europe is still overdistributed,” he said. “In every country in Europe there are two big distributors and several dozen small ones. What all happened a decade or more ago in North America, where you had major consolidation, hasn’t happened there.”

North America needs the level of distributor competition it has now, Dutkowsky added.

“Canada and the U.S. need to have several strong IT distributors because none of us will offer VARs all the credit that they need,” he said. “They need multiple distributors to get that. And we are all a little different. The traditional VADs don’t do mobility products and consumer electronics. One of the broadliners has a strong practice in POS, and we don’t do that.”

Tech Data’s strategy also positions Tech Data well for the Cloud, Dutkowsky said

“Put an umbrella over what we have built and you have the cloud,” he said. “By focusing on those areas, we really have built the most robust cloud practice as well.”

Dutkowsky acknowledge that despite the hype — and the investment — the cloud has still not caught on as many expected.

“Cloud adoption rates are slow everywhere, and that implies resellers and vendors have to change their business models,” he said.

“We think VARs need to learn more about the business of the cloud, so we opened the TDcloud academy,” he said. “Many VARs are selling private cloud technology to their customers in the data centers of their customers. That’s how they are monetizing the cloud now. But there is also the public cloud, and where the VAR can make money there is taking a cloud offering from a vendor and sell it to their customer like any other vendor product and help customer implement it. We have those clouded offerings on our line card that they can pick from. The sweet spot for the VAR is to integrate it all together in the hybrid cloud. And if they also need help there with their business model, that’s where StreamOne comes in.”

Dutkowsky is also relatively optimistic despite what many see as a potentially perilous global situation.

“60% of our revenues are out of Europe today, and southern Europe is really challenged right now. They have 25% unemployment in Spain. But northern Europe is actually pretty good. So mix it all together and Tech Data Europe performed well. Canada and the US did pretty much the same, but Latin America did really well, so altogether we did well here. We just will pull back investments in places that are strong, and redeploy in places that have growth.”

“Great companies are made in tough times,” Dutkowsky said. “We’ve focused on that from the time we’ve been in the company. Even in a terrible market in 2009, we picked some spots that did well, and we bought companies then for a good price. I think we are in a kind of neutral time now.”

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