Channel Chief
“We see cloud as a big opportunity”
 On his recent visit to India, Dean Douglas, President and CEO of the Westcon Group, met up with Ramdas S and provided insights about the company’s plans
What’s the agenda of your visit?
India is a strategic growth market for us, so we have invested significantly in the country over the past couple of years.
We started with a 50.1 percent stake in Inflow Technologies in late 2008, and set up the Westcon India subsidiary in the latter half of last year. In August this year, we announced plans to set up a third company under Comstor India. We are now awaiting final regulatory approvals for making it a separate legal entity.
I am here to attend the review and planning meeting of the Indian operations.
Could you shed some light on the Westcon Group and on your business globally?
The Westcon Group is the flagship business of the $4.5 billion South Africa-based IT conglomerate Datatec. While the Westcon Group is into value-added distribution, Datatec has other companies, Logicalis and Analysis Mason, which specialize in providing IT and telecom solutions respectively.
Under the Westcon Group we have two companies, Westcon and Comstor. While Westcon is a broad-based VAD, Comstor has a unique model wherein it globally distributes the products of only one brand—Cisco. The Westcon Group’s turnover in 2009 stood at $3 billion, of which Comstor contributed $1 billion while $2 billion came from Westcon. We have a presence in 35 countries for the distribution of products from 100 IT companies.
In India, we presently engage with 25 vendors through Inflow and nine vendors through Westcon. Together we address about 400 partners.
Why have three different entities in India? Any plans to merge them?
We have no plans to merge the three entities because each subsidiary has its own value proposition. The strategy behind having multiple entities is to have exclusive relationships with vendors.
Westcon and Inflow do not have any common vendors, and this strategy has helped us garner more market share in the comparatively niche technology segments we operate in. Comstor was formed with the intention of servicing Cisco alone. We follow the same
model in many countries, and it has been successful.
Which technology segments are you betting on for 2011?
We see lots of scope for desktop virtualization, and for new-generation data center technologies such as Cisco’s UCS. Enterprise mobility is another area where we see ourselves providing value. We are also looking at aligning with more vendors in other areas such as storage management, as well as in niche vertical software solutions.
Do you see Westcon aligning with tier-1 vendors? Our business model is to pick emerging technologies, and create, train and manage the required ecosystem to take these technologies through the various stages of evolution till they mature and become mainstream. For this reason, it doesn’t make sense for a VAD like us to align with mainstream vendors unless there’s a substantial value proposition that we can offer to the vendor or the partner.
Gartner recently suggested that cloud computing will be detrimental to the growth of distributors.
We are immune to the effects which Gartner is describing. I would imagine that cloud computing will impact traditional mainstream distributors like Ingram and Tech Data. We, in fact, see the cloud as a big opportunity.
We are operating in niche areas where customers need to invest more, or in newer technologies if they are adopting a cloud infrastructure. We are reinventing ourselves to be an aggregator of cloud services that channels can deliver. Customers require services over the cloud, which cannot be provided by a single vendor. So, it has to be a combination of multiple vendors. This is why it’s important to have a tech-savvy VAD.
Another fact, which is not yet understood by many, is that the cloud is a paradigm shift, not just for customers but also for vendors. Vendors now need to amortize revenues over a period of 30-40 months because payments will flow in a staggered manner. Not every vendor is ready to adapt to such a model, so they would need someone like Westcon to help them plan their go-to-market better.
Channels will continue to be relevant even as the world shifts to a cloud model because they are still the first contact for customers. However, partners need to be trained to integrate and deploy cloud-based solutions. |