NexInnovations could not take next step

I have pieced together from many sources in the industry and the channel that at around 4:00 P.M. EST on Oct. 2nd, Hubert Kelly, the CEO of NexInnovations, told the employees of the company that it was over.

What he should have said was that NexInnovations, a reselling force with revenues of more than half a billion dollars, was unable to take the next step.

This is not to say that they did not try. The solution provider did build a lucrative security practice, but at the same time did not want anything to do with the Open Source community. I am not saying Linux would have saved them, but it could have added another valuable service to clients who, lets face it, wanted the option.

This is just one example of a company not taking the necessary steps to be ahead of the curve. They are a solution provider and as such should provide solutions for their customers.

Instead NexInnovations battled margin pressure and lost.

A reseller has to be cutthroat with its business to survive and thrive in Canada. If certain areas were not turning profits they should have been shut down or re-modeled.

Take a look at Dimension Data. They are entering the country and sticking to just one thing really, and that is unified communications. The reason for that is because it is a greenfield of opportunity. This company is not going to worry about fixing hard drives.

Meanwhile, the stars are aligned for Dave MacDonald and Softchoice. The only thing that would have made the NexInnovations deal more perfect was if it was gift-wrapped.

NexInnovations answers several business issues for Softchoice in their quest to be a global provider. Let’s not forget that Softchoice was a well-oiled software reselling machine just a few years ago. MacDonald basically transformed it swiftly into a hardware, software, government and services solution provider in about five years time.

They also made their way successfully to the U.S. market, thanks in large part to the assets of another failed entity Beyond.com. The key was that Softchoice acquired the best part of Beyond, the government business, and left the rest.

Softchoice will be doing the same again here with NexInnovations. They will be keeping its hardware business, all of its certifications, its lucrative security practice and more importantly, its people. You cannot grow successfully in this market without qualified people and Softchoice had that in abundance.

Softchoice is now right with Dimension Data and other global solution providers. They could be a worldwide systems integrator, but they would be the poor-man’s version.

In this high stakes chess match in the channel Softchoice has just blocked Dimension Data. It is now Dimension Data’s move and since that company’s leadership is made up of NexInnovations insiders it should be interesting to say the least.

But overall I think this will benefit a lot of mid-tier resellers who are between $20 million to $40 million in revenue. With 600 or so people on the street there is a lot of talent looking for work.

Also, do not be surprised if some of the former NexInnovations staff start their own companies.

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Jim Love, Chief Content Officer, IT World Canada

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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