A U.S. reseller is moving into the Canadian market with the acquisition of General Electric’s IT Solutions unit. And this could mean more competition for large enterprise and government accounts.
Dallas-based CompuCom is a well-known U.S. reseller that focuses on helping companies implement
multi-vendor platforms, and is particularly strong in large enterprise accounts (it has a number of Fortune1000 accounts, such as General Motors and Boeing). GE ITS, on the other hand, is more focused on specialized, high-end technical services, and has a foothold in the Canadian public sector market – which CompuCom will directly benefit from.
CompuCom itself was recently the target of an acquisition; it was purchased by L.A.-based Platinum Equity in October. Platinum’s strategy is to team up CompuCom with a number of partners to strengthen the reseller’s offerings. With the acquisition of GE ITS, it hopes to make CompuCom an end-to-end solutions provider. GE ITS has 300 employees in its Mississauga, Ont. headquarters, with 1,700 employees in sales offices around North America; CompuCom has 3,450 employees.
This will also affect distributor Ingram Micro Canada, which signed a sourcing agreement with GE in 2000. As part of the agreement, Ingram provides product procurement services of hardware, software and personal computers, as well as electronic data integration and custom configuration – freeing up GE to focus on technical services.
While Canada is largely made up of small and mid-size businesses, and IT growth is slower here than in the U.S., neither of these factors seems to concern Platinum executives. They should know what they’redoing: the company specializes in acquiring solutions and services companies – it’s acquired 50 companies since it was founded in 1995. Its plan is tomake CompuCom an independent provider of IT products, services and consulting; however, no specific details on organizational change have been announced at this point.
Platinum may be playing its cards well. While the ITbusiness hasn’t bounced back as quickly as some had predicted (or hoped), it is slowly picking up steam. According to IDC Canada, hardware replacement,software upgrades and increased capacity will continue to drive spending for infrastructure-related IT products and services this quarter in the medium and large business markets – which is likely where CompuCom will focus its efforts.
According to ERC’s 2004 Canadian IT Reseller Report, 60 per cent of IT resellers categorize their businesses as consulting and systems integrating or as an IT solutions provider – which is how CompuCom will be positioning itself. Specialty markets, such as retail and professional firms, are key areas for sales growth, according to ERC. Hardware salesrepresent a key component of the industry, with PCs and networking equipment accounting for the bulk of activity.
The acquisition of GE ITS not only gives CompuCom a foot in the door to the Canadian market, but also fills in the gaps in its own business model. With Platinum’s resources behind the acquisition, CompuCom is likely to become a significant player in the Canadian market – and a significant competitor to Canadian VARs.