Tech Data sees results of investments

In yet another example of how investment can help business, even in dire economic times, Tech Data reported a whopping 59 per cent increase in net income for its second quarter.

We haven’t been hearing a lot of those numbers lately, unless there’s a negative sign in front of them. To put this in perspective, Tech Data did report that its second-quarter net sales declined 16 per cent from the same quarter last year (to US$5.2 billion), but net income was up US$35.2 million compared with US$22.1 million.

But should that be so surprising? Despite the trying business climate, not all businesses are suffering – particularly those who continue to invest in themselves (such as Avnet with its SolutionsPath methodology). It’s hard, of course, not to compare this with Ingram ‘s results, announced in late July, where the distie saw a 25 per cent decline year over year and a two per cent decline sequentially.

So why is Tech Data doing a better job of weathering this storm? The distie says the secret to its success is selling more profitable products to the right customers. But it’s also been adding a slew of new and emerging vendors to its roster and investing in training to make it easier for VARs to do business – both of which show that it’s continuing to invest in its business, rather than cut, cut, cut.

All too often, training and marketing budgets are slashed during tough times, and the focus turns to cost-cutting measures rather than innovation. But, we’ve seen time and time again, those who invest are seeing positive results and will be much better positioned for growth when we come out of this recession.

Not to say there aren’t areas of concern for Tech Data – its business in Europe has softened, though conditions have stabilized in the Americas.

In the meantime, though, it’s expanding its product offerings (at this point only in the U.S.) to include categories from new and emerging vendors, from security to video production to document management to mobile computing – helping to create incremental revenue opportunities for resellers.

One example is Computrace from Absolute Software, which allows IT departments to centrally track client devices such as notebooks and netbooks, remotely delete data and retrieve stolen or lost computers (this will be supported by Tech Data). The distie is also taking on Elgato’s solutions that convert video for storage, editing and viewing on Mac, iPhone and iPod devices, as well as Quattro’s managed services, which VARs can resell to their customers (including help desk support, hosted data backup and managed call centre support).

And it’s expanded its partnerships with Novell (with PlateSpin for managing virtual environments) and Samsung (with enterprise notebooks, netbooks and ultra-mobile PCs).

Sure, cost-cutting measures may be necessary, but not at the expense of innovation – and companies like Tech Data are showing that it can be done.

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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