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Tech Data CEO splits business in two: broadline & value

Bob Dutkowsky announces new partnership with public cloud vendors

MISSISSAUGA, ONT. — The marketplace and its competitors may call Tech Data “a broadline distributor” but that’s only half true if you ask its CEO, Bob Dutkowsky. Dutkowsky, visiting Tech Data Canada’s (Nasdaq: TECD) operations in Mississauga, Ont., said the distributor’s business is split equally with broadline logistics to value-added distribution. The company, he said, is poised to deal with any high tech sea change whether it’s in data centres, mobility or consumer electronics.

“We’re in a good spot right now. I couldn’t say that a few years ago. We’re a true end-to-end distributor, but we’ve positioned ourselves for the long haul,” he said.He added that Tech Data will always be in the broadline business in some capacity but as big data, for example, evolves the company will invest in a value-add strategy for this new market trend.

Rick Reid, president of Tech Data Canada, said the broadline portion of the business is part of the distributor’s value add. Tech Data Canada offers a data centre practice, for example, but those solutions are built in its two ISO certified configuration centres in Mississauga and Richmond, B.C.

“Very few resellers do logistics today. We moved into this building 10 years ago and now we have 20,000 sq. ft. in configuration space. We can do a lot of high end solutions and government business because of these two facilities. Any large, major roll-outs (solution providers) look to us to do it. The configuration centre is our golden egg; resellers no longer have to worry about configuring products,” Reid said.

The configuration centre in Mississauga averages more than 600 units a day, while the Richmond facility does 200 per day. Tech Data in the U.S. is now building the VBlock cloud infrastructure system from the coalition of EMC, Cisco, and VMware. Plans are in place to start building VBlocks in Canada sometime this year, Reid confirmed.One thing Tech Data Canada won’t do is consumer electronics. Reid told CDN he made a concious decision to focus more on commercial. They may dabble a bit in consumer electronics, but not in any wide scale broadline effort. “There are two distributors in that space already and we’re not interested in cutting up that market,” Reid added.

Going forward, Dutkowsky will focus Tech Data’s strategy in three areas: execution, diversification and software.

On execution, Tech Data transacts more than $100 million in technology each day. All orders are to be shipped out by 5:00 p.m. the same day. “I want customers to rely on this. Many resellers have shut down their logistics operations, so we’ll continue to invest in tools and techniques to improve on our execution,” Dutkowsky said.

In diversification, Dutkowsky said in the past five years they’ve invested organically and through acquisition (17 deals) in areas such as data centres and mobility. Tech Data has become one of the largest cell phone and smartphone distributors in the world.The third area, software, is what Dutkowsky calls the glue. During his six-year reign as CEO, Dutkowsky has invested in tools and new technology to make systems and staff work better. One of the biggest announcements in this area was StreamOne, which is slated for a Canadian launch this summer. StreamOne will be a commercial app store similar to iTunes. Tech Data has sourced more than 24,000 independent software vendors who are looking for a route to market such as StreamOne. StreamOne will have provisioning and billing capabilities through a service deployment in the cloud.

Dutkowsky also confirmed that all the large public clouds created recently by IBM, HP, Cisco and Microsoft will be available as part of its line card.

Follow Paolo Del Nibletto on Twitter: @PaoloCDN.