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Q&A With Paul Eccleston, Managing Director UK & Ireland, Exclusive Networks

In September Exclusive Networks, the cybersecurity specialist for digital infrastructure, announced the appointment of Paul Eccleston as Managing Director of its UK & Ireland business, following the retirement of Graham Jones in May. Joining from cloud security company Zscaler, where he served as VP International Channels & Alliances, Eccleston has in-depth knowledge of the evolving channel ecosystem. In 2015, he founded specialist IT distributor Nuvias, scaling it to a $500 million business across EMEA in just five years. Before that, he held executive leadership roles at Computacenter, SCC and Tech Data. Here, Technology Reseller asks him about challenges and opportunities in the distribution sector and his plans for Exclusive Networks.

Technology Reseller (TR): You’ve been out of the distribution market for about 18 months since leaving Nuvias Group. Has it changed much in that time?

Paul Eccleston (PE): I would say not at all. The role of distribution continues to be the same. It’s helping our partners, both vendor partners and solution provider partners, to deliver a solution to the requirements of end users in all segments, in all vertical markets in the UK and Ireland. I don’t think that changes over time.

What I’ve been delighted to see at Exclusive is its real – sometimes I say old fashioned – distribution values. It’s about the quality of people really caring about the success of our partners as a team. That’s what I was expecting but it is even better than I thought it would be. Those values continue to be a requirement in the market.

Then we think about vendor partners needing to get their technology, as part of a broader solution, through a channel community to the marketplace, which is about reach and capability. That continues but if anything it is getting a little more complicated. What tends to happen is distribution consolidates and then reinvents itself. Consolidation can sometimes have the effect of taking value out, which a new business is then formed to bring back in because that value is still needed.

TR: How does consolidation take value out?
PE: Almost always, you will have a bigger player buying a smaller player and sometimes the values and the structure of the bigger company roll over the acquired company, which tends to be more specialist and higher value, which is why it’s being acquired.

I’ve been in businesses that have been acquired and I’ve built businesses by acquiring. The real challenge when you’re acquiring is to make sure you don’t diminish any of that value. What I see with Exclusive is the absolute requirement not only to maintain that value but to increase that value. We’ve got to defend the value we create and part of that is to build it: you can’t just say ‘we’re value add, so we want you to treat us as such’; we have to prove it every day and we have to continue to look at what the market needs, what end users need. What are solution providers going to have to do? What capability have they got today? Where can we, as distribution, augment that capability to enable solution providers to sell more, more quickly and more profitably?

That’s our job. I don’t think it’s changed. I just think it gets slightly more complicate and because of that the need to bring value is higher.

TR: Infinigate recently bought your old baby Nuvias and has since acquired a number of other distributors. Do you see them as a threat?

PE: No. I see them as having a similar ethos, which is to deliver high value. I know that’s why Nuvias was created and I know that’s why Inifinigate was attracted to them. Having another company with a very similar value set trying to drive and extend value is a good thing, not a bad thing.

We don’t compete very much in terms of the vendor partners we work with – there’s very little overlap. It’s possible we could compete when it comes to acquiring new vendor partners but I don’t think that will happen very much, and if it does and we happen to be the two distributors with a vendor, both driving value and driving success for the channel and the vendor, then that’s a good thing. I’m very confident in Exclusive’s ability to deliver a higher value than anybody else, including Infinigate.

TR: You’re rejoining the distribution market at a difficult time, with recession, war, inflation, rising interest rates, skills shortages. To what extent are these impacting Exclusive?

PE: I’ve been around a bit and I’m not sure I’ve ever experienced the combination of challenges we have today – I’m not sure anyone has experienced such a combination since our parents or grandparents. We would rather we didn’t have those challenges but the role of distribution, I think, becomes even more important when we do.

Of course, our life becomes more complicated because we’re often buying in dollars and selling in pounds or buying in dollars and selling in euros. The high volatility in the currency markets and rising inflation clearly make life complicated, and we have to be ready to take the actions we need to take but also ensure we’re there even more to help and to support and to deliver the capability that people need.

What’s not going to change in anything we’ve looked at is the need for increased levels of cybersecurity, and that’s principally what we do. I think demand will stay very high, even in a more difficult economy. Might it contract a little? I’m sure it might. But today we’re still seeing very strong demand and bookings are at a record level.

TR: I suppose the risk is that your customers will be affected if
their customers fail. Do you have contingencies in place to support resellers with different financing options and things like that?
PE: We do that already and have been doing so for quite some time. That said, from the vantage of my first 60 days spent looking at the UK and Ireland business, we can do more.

I’m very focused right now on all aspects of our service, including financing options, as-a-service options and utility options with X-OD. They’re all successful today, in that all elements are operating, but notwithstanding the challenges we face I would like them to be a significantly larger part of our service than they are already. We’re in a good position and we’re making good progress; I just want us to go further and faster.

TR: What are the adoption rates like for X-OD?
PE: It’s going reasonably well. The adoption is good because when you start something your growth rates are always very high,
but it’s the absolute rate and the % of our overall business that matters. More importantly, are we able to solve the challenges our partners have? I think in many ways we do, but we can do more and we can do better. And that applies to X-OD like other areas of the business.

TR: Roughly what proportion of your business do you think goes through X-OD now?
PE: It’ll be very small today. It’ll be in the low single digit percentages, which as I say, is great growth but overall not a big number. Ultimately, if the market requirement is for X-OD to be 5% of our business, then that’s what it should be, and we shouldn’t be trying to make it 10%. If the market requirement is 10%, we should make sure we’re able to meet the full demand of the market.

TR: You have said that you want to focus on services as a growth area. What services do you have in mind and are they your own services or those of your customers?
PE: We have a very strong services capability and it’s my intention that we have an even stronger services capability in the future, and by services I mean all services – P/S (product/service) support services, implementation services, financial services, marketing services.

We’ve got 40-plus people in our services business, which is a high percentage of our total headcount (circa 250) and they are delivering services of all types. We sell vendors’ services; we sell our own services; we sell renewals, which ultimately are our vendors’ services, and we add to some of those ourselves; and then we build managed services, which cover the full spectrum from a very light managed service to a complete managed service.

A lot of my background is in building services capability in distribution businesses. Because we’re a distributor of technology, we have the scale to build a managed service where other people may not have the scale for that to work economically. That’s why I keep going back to the point that we can do a lot more. The services capability at Exclusive today, certainly in the vendors we carry, is ahead of anybody else. But I’m very focused on the fact that that should not be the bar. That’s not really the measure; the measure is: are we able to deliver everything the market needs? We’ve got a lot of opportunity to build on that.

TR: When you say build on it, will you be building scale or will you be expanding the range of services you offer?
PE: Both. I’ve been here I think 35 working days and I’m already pretty heavily involved in looking at how we expand the range of services we offer. My approach is if there’s a need in the market and we can address that need economically then we should be doing it.

We’ve got the scale to be able to build these services in a more economical way than almost anybody else and that’s part of our job. When we say value added distribution, we’re distributing product, we’re distributing software, we’re also distributing knowledge and capability.

We need to build that capability to move forward more quickly. If we can help a project be designed, scoped, implemented, be successful more quickly, then everybody wins. The end customer wins because they’re getting the benefit more quickly. The solution provider/ partner/reseller is benefiting because they’re selling more quickly, and we’re able to make that sale more profitable for them and potentially at a lower cost point for the end user. That’s a really big part of our role.

TR: Are there particular areas you’re focusing on?
PE: Historically, we have had fantastic end- to-end services with some of our vendor partners, but not all of them. One of the big drives for me is to get us to a position where that capability is consistent across all the vendors we carry.

This is a hard task for three reasons. First, not all vendors are the same; they’re at different levels of maturity, different levels of development, so what each vendor wants us to do and will allow us
to do varies. If they’re not ready for the channel to deliver services, then it’s pretty hard for us to do that. Then, because of the stage a vendor is at, a channel partner will quite often have done something themselves, so the level of support they need from us will vary depending on the vendor. The third reason is we’ve got to build it ourselves and we’ve got to build it in a way that is economically appropriate. It’s no good building something that no one can afford or building something that isn’t profitable for us.

All those things are reasonably complicated, but our position will always be that if you are a vendor and work with us, it’s because you see the value in the Exclusive service and if you’re a channel partner, it’s the same; you have a need for the Exclusive service and that needs to be available across as much of our portfolio as possible.

What does the Exclusive Networks brand stand for? It stands for the end-to- end service capability around the vendor partner’s technology. And we’ve got to keep driving at that. It really goes back to what I said at the beginning; we’ve got to keep driving our value upwards.

TR: Roughly what proportion of your revenue comes from the services side?

PE: Today, it is about 10% of our business. It depends on how you quantify it, which is where we need to be a little bit careful because you can look at it in a number of different ways. You could argue when we sell renewals, that’s services; you could argue when we sell vendors services, that’s services. It’s hard to give an accurate figure because some of these things are intertwined.

TR: And what are your other priorities?                                                 PE: You touched upon it right at the outset when you highlighted the skills shortage as one of today’s big challenges. A top priority for me is to make sure we retain our staff and that is about making sure we enable them, develop them, compensate them and treat them in the right way. We will deliver great service if our staff are highly motivated.

I’ve worked in lots of companies, but I’ve never worked anywhere where the culture of the staff is quite as positive as it is here, in terms of supporting each other. There’s a real team culture. Somebody said to me, I think on day three, ‘we’ve got each other’s back’ and I don’t think anyone could put it better than that.

My job is to maintain that great culture but also to look at how we develop people. We’ve had a very strong year in terms of growth and that’s created opportunities, most of which have been fulfilled with internal promotions, so it really is about building the capability of our people.

Sometimes it’s about attracting new people with the same potential, the same culture and sometimes people will move on to other opportunities. That’s part of life. We shouldn’t be worried about that. We just need to make sure that we’re building the pipeline of talent for ourselves, and for our channel and for our vendor partners.

TR: Do you think you’ll be making more acquisitions in the UK in the future?
PE: We have an M&A team which supports what we want to do at a country level. We’ve been acquisitive in the past and with the right opportunity we will continue to acquire. Exclusive Networks is a very strong business in the UK and Ireland but that doesn’t mean there aren’t more things we can do and more capability we could acquire. Acquisitions are always part of our plan.

TR: Is now a good time for acquisitions?                                               PE: There are companies that tend to acquire very opportunistically and I’m not a particular fan of that. I think businesses should acquire as part of a strategic plan. Clearly, market conditions set the price, and that price might determine whether it’s an acquisition you should or should not make. Something might be less expensive next year than it was last year, but the projected returns would be less as well, so I’m not sure the maths changes.

The summary for me is to look strategically at what we are seeking to achieve and whether that is a buy or build. If the right opportunity to buy is there, then we should do it and if it isn’t we’ll build it.

And we have to be agile. Despite what I said about not acquiring opportunistically, sometimes opportunities come along that you shouldn’t ignore. If that fits with your strategy, it can be strategic and opportunistic. We need to be agile, flexible and fleet of foot enough to take advantage of those opportunities.

TR: When you talk about growth, are you looking at taking on more vendors or more resellers?
PE: The vendors we currently partner with give us an enormous opportunity and we need to make sure we give the right level of focus to the vendors we already carry. That’s got to be our priority, to make sure that we maximise the opportunity we have with them. That’s my number one priority.

If other vendor opportunities come up, we will evaluate them very, very carefully on the basis of whether they deliver incremental value to our customers; whether we can deliver to that vendor what they need; and whether we can create the Exclusive service around that vendor in a way that supports our business economically. That process starts with ‘is this going to add value to our customers?’ and if the answer is ‘No’ then we won’t do it.

This year we’ve added Mimecast and Tenable to our portfolio and both of those companies absolutely met those criteria. But we’ve grown roughly 35% this year without them by maximising the opportunity we have with the partners we currently have and they deserve that from us.

In terms of customers, I think we do a good job of supporting customers deeply and of having a good breadth of customers. That’s another area I’m really focused on.  I focus on our vendor partners – are we delivering what they need? – and I focus on our customer partners – are we continuing to build the capability and the service they need not only today but tomorrow? And are we taking that service to new partners?

It’s a matter of continuing to go deeper with the partners we have, of bringing in new partners and of having more of a look at developing a stronger servicing capability with MSPs and MSSPs and with GSIs and potentially with more specialist partners in vertical markets.

TR: For a company that’s enjoying 35% growth you talk a lot about the improvements you have to make.
PE: Some people have asked me whether I want to be MD of a business that’s in such a great position and is already going fantastically and I say: ‘Well, it’s just the beginning. What I’ve joined is a fantastic platform that’s got a great trajectory in terms of its growth. But I can also see lots of things we can improve on and do better’. There’s an amazing opportunity for us, as long as we continue to react to what our customers need.

What my experience has taught me is that when times become more turbulent, the companies that stay focused on what their customers need do even better. We need to make sure we are great at responding to our customers’ needs and delivering service back. I would rather we didn’t have so much turbulence, but we will come out the other side of this. If we continue to do well through this period, then we’ll do even better afterwards.

www.exclusive-networks.com

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