Colorado Springs – During this year’s annual Avnet New Frontiers conference, held here for the specialty distributor’s Sun Microsystems (NASDAQ: JAVA) partners, Avnet Technology Solutions Americas (NYSE: AVT) executives said that solutions in the virtualization, unified communications (UC), network security and storage spaces are all key to the distributor’s distribution strategy moving forward.
To help keep pace with specific solutions and market segments, Avnet Technology Solutions, an operating group of Avnet Inc., last month launched VirtualPath University for its VARs. In addition to VirtualPath, Avnet also has offers its partners HealthPath University and GovPath University, which are each three-day training sessions that focus on the healthcare and government industries. While GovPath is only available in the U.S., both VirtualPath and HealthPath are available in the U.S. and Canada. The training schools fall under what Avnet calls its SolutionsPath methodology, which enable partners to target one of three markets.
CDN recently had a chance to speak with John Paget, president of Avnet Technology Solutions, Global, about the new Avnet training, specific areas of growth, rising fuel costs and company plans for 2009 and beyond.
CDN: Throughout your career, what’s the most important lesson you’ve learned about working in the distribution business and working with partners?
John Paget: I’ve learned two things. The first is that this business is a high relationship business and people do business with you because they trust you. The second thing I’ve learned is that you also have to be a student of the industry to understand the changes and the things that are going on in the economic environment; because as the distribution partner, we’re the trusted advisor to our partners.
CDN: What would you say has been your biggest accomplishment at Avnet Technology Solutions to date, and why?
J.P.: I think that we’ve moved from being a VAR distributor to a solutions distributor. It’s the way we go to market, by selling solutions. It’s also about the tools, commitment and the engineering talent that we have. This last year we grew in the mobility practice by about 38 per cent. Unified communications is also growing at about the same speed as market is growing.
CDN: What’s Avnet’s commitment to the Canadian market and your partner community?
J.P.: In Canada, our Sun business is big and the year over year growth is actually exceeding the growth in North America with all of the practice sets. I would say we just had the best year in Canada in about the last four to five years. HealthPath and GovPath and VirtualPath University are three mechanisms we are using to bring our VARs up to speed for that market segment and practice. A lot of people believe the job of a distributor is to just provide the time and place. The real job for us though, is to understand the marketplace and to enable the reseller and the vendor.
CDN: What are Avnet’s market and solution priorities for this year and moving into 2009?
J.P.: We’re really pleased with where we are with wireless mobility, unified communications, security, storage and virtualization. Of course, I’d like to grow faster as long as our resellers and vendors are also seeing the same kind of return. Today, the markets we’re focusing on are healthcare and government, but as the industry changes, we may also change these areas. Education, government and healthcare seem to be the fastest growing market segments. I think we’re in all the right places today. We’re growing well in the high 40 per cent range year over year here at Avnet. Where the IT market is tending to have more of a struggle is is in certain geographies, coupled with the different dollar strengths.
CDN: Speaking about the dollar, starting next month, Ingram Micro will be increasing its freight charges globally to help balance rising fuel and transportation costs. What are your thoughts on this and what are Avnet’s plans in response to this current economic situation?
J.P.: I worked in the broadline distribution world before when I was at Access Distribution and Synnex, so I understand the broadline distribution business. What we’ve done is we’ve taken a look at fuel surcharges and we’ve made the decision to pass through those fuel surcharges to the partner community beginning on Aug. 4. We’ve gotten a positive response from our partners. We’re not expecting to make money on the fuel surcharges because we’re not in the shipping business; we’re in the solutions business of IT. That fuel surcharge is flowing through and we decided that whatever we get charged, that’s the amount that we’ll pass through.
CDN: What new technologies do you see growing and/or emerging in the North American and Canadian marketplace?
J.P.: Security products. Whether they are soft products or appliance products. Intellectual practice is concerned with a more robust firewall technology and if you start talking about virtualization environments, you have to talk about a more robust security product and services practice. What’s nice about the virtualization market is that virtualization really plays across the entire CPU technology, whether it’s using UNIX or Sun’s x86 platform. It’s not about the product itself, it’s how you sell it. We’ve seen good growth with industry standard servers. We do well in that environment in terms of returns.
CDN: What are two or three of Avnet’s top goals and/or priorities for the 2009-2010 timeframe?
J.P.: Regarding Avnet in total, we have consistently told the marketplace that we’d like to improve our productivity by 10 per cent and we’d like to hit a 12.5 per cent return on capital invested, and we’d like to grow our business 10 per cent. For Avnet Technology Solutions, we expect to grow faster than the market grows and we expect to improve our profitability with operating income as well.
