How is the channel bouncing back from last year’s positive but patchy performance? James Goulding finds out from Tech Data’s David Watts
One year after Apollo’s acquisition of Tech Data, which was completed on June 30, 2020, and with its recently announced merger with US distributor Synnex likely to be completed by the end of this year, Technology Reseller caught up with David Watts, Tech Data Senior Vice President, UK and Ireland, to get his thoughts on the opportunities and challenges facing the IT channel.
Watts is in buoyant mood when we meet over Zoom. There are many unknowns right now, from the end of furlough to the return of inflation, but for the time being he says the channel is doing well and in a much more even way than last year, when fewer partners were trading and demand was more patchy.
“We are now in the last month of our Q2 (May-July) and unlike last year, when growth was very much fuelled by mobility, I would say every business technology unit is back on track with year-on-year growth, with many back to pre-pandemic levels,” he said.
This is being driven to a great extent by Tech Data’s enterprise business, which last year was hit by insecurity about budgets (which Watts says didn’t disappear but were just held over) and by the simple fact that at the time people couldn’t get on site to complete big infrastructure projects.
“Those are coming much more back online now and that is really pleasing to see. So we are seeing really good yearon-year growth in enterprise products,” he said.
Watts points out that growth, even in Tech Data’s endpoint solutions business, is being achieved despite the much publicised chip shortage.
“There is a shortage and we are not getting everything we want, but it doesn’t affect vendors equally and our numbers are really strong. With some endpoint vendors and peripheral vendors, like speakers and cameras, and certainly in terms of our notebook business, we are above even last year’s levels, when business was really peaking,” he said.
Some product areas have been hit harder hit than others, e.g. consumer class notebooks, as have some vendors, particularly those that are reliant on one chipset manufacturer or have large Government projects to fulfil, which can dry up stock for SMB channels.
“The consensus is that there will be some form of shortage for the balance of this year and maybe going into next year. Through our components business, we have direct relationships with chip manufacturers, and they are certainly talking in those terms,“ Watts said.
He adds that while the chip shortage is holding up a lot of projects and bringing tension to the channel, the impact is not as bad as was first feared and is ‘a fly in the ointment’ rather than an insurmountable obstacle, adding that overall there is a lot of opportunity in the market.
“The really big things for us at the moment are cloud and software, which now account for about one third of our business and are our highest growth areas. Anything next gen – analytics, cloud, IoT, security – is growing. Then, you’ve got things like VR and AR, which are growing massively right now.
“These are a real focus for us. Partners need a lot of support in those markets, if they are new to them, and we offer services like Practice Builder, where we effectively assess their business for its readiness for cloud, for example, and take them on a journey to be ready to sell and deploy cloud. We have a technical team of about 60-odd people who support partners with those sorts of transformations and their first deployments. That part of our business is incredibly busy.”
Watts added: “A key part of Tech Data’s strategy is around services and platform, and partners can’t aggregate those solutions on their own; they can’t be an expert in everything; and they can’t consume and bill it on their own either. That’s where our focus is – in supporting those transformations.”
Watts suggests that this support is particularly necessary for VARs and MSPs under pressure to meet the security needs of their customers.
To be the security expert for your customer is sometimes quite hard. We encourage our partners to go through that journey with us, because we can help them transform their business from a security point of view,” he said.
While last year’s priority was mobility, Watts points out that the spotlight has swung back to the challenges and opportunities that were being addressed before, particularly in relation to digital transformation and cloud, which are arguably more necessary than ever.
“One of the things I say is that if you didn’t have a cloud strategy going into the pandemic, you’ve definitely got one now,” he said.
Another big opportunity identified by Watts lies in tidying up loose ends associated with the rapid deployment of millions of laptops that might not be properly secured or deployed on the right infrastructure and which might also have delayed investment in other areas.
“It’s a bit like hospitals and doctors catching up on the backlog of operations; there’s this whole backlog of assets that have been sweated too long, that are maybe out of warranty, because all the money went on mobility – where is your cloud strategy? Is it secure? Is your infrastructure effective? That all needs looking at and that’s what our partners do brilliantly well for their end user customers,” he said.