The Ingram Micro boss outlined what he believes the distributor needs to do to address today’s challenges, and how their partners can realize new benefits from the process.
LAS VEGAS — Ingram Micro CEO Alain Monié took the stage in the closing keynote at Ingram Micro’s ONE event here on Wednesday. Rather than issue a prepared speech with its own narrative structure, he answered questions from the audience. His responses did, however, mesh to provide his view of where he thinks IT and distribution are headed, and what Ingram Micro needs to do to adapt.
Monié, who worked in several completely sectors like pulp and paper that are wildly different from IT distribution before he interviewed to join Ingram Micro in 2002, said that the whole question of how to stay relevant in a low margin business like distribution has always been a pressing one, that it’s not a new phenomenon. The specific nature of change is distinct now, however, and requires an appropriate response.
“I see two changes as really important and relevant,” Monié said. “The first is the growth of the as-a-service model, and investing in that. As a distributor, we have to help you develop skills around vertical markets, rather than just the technology itself.”
That’s critical, Monié said, because the change to this type of selling changes fundamentally how partners sell, as well as what they sell.
“You need to know how, for example, the health care industry works if you want to sell them cloud,” he said. “We have to help you shift to those skills.”
The second change is around the partners’ own business model.
“As-a-service means you get paid over time rather than up front, so you need to be funded until you get the revenue when you convert to a recurring revenue model,” he said. “Everyone is struggling with that. But the financing we are putting together can help you do it.”
Through all of this, Monié said that distribution’s role remains to focus on and understand the complexities of the solutions on the market, and communicate their respective values to their partners.
“We understand the vendors’ offerings and strategies, and help you understand them,” he said. “That’s our role. It remains at the core of what we do. Some technologies are going to go by the wayside and be replaced by others. Where we invest depends how successful we are at understanding that.”
Monié also stressed that Ingram is increasingly dependent on its non-traditional businesses.
“We need to be successful in ecommerce, in cloud and in lifecycle services – the three areas beyond our traditional businesses,” he said. “There’s a lot of competition out there and a lot of change.” He noted as an example that in ecommerce, Ingram Micro can help create new solutions and markets for partners.
“In ecommerce, we facilitate marketplaces connecting to inventory, through connectivity, physically or virtually,” he said. “This can let us open up to products that are not necessarily IT.”
Monié also addressed the distributor’s pending acquisition by China-based Tianjin Tianhai.
“This is good for the channel – good for you, good for us,” he told the audience. “Some things are absolutely not going to change – the way we partner with you so you can get the most from your customers and vendors. But we will be in any environment where we can invest faster. Being private, where we aren’t listed and have to report every quarter, will let us accelerate our investments and bring technologies and business models that have been more difficult to put in place. For example, the street reacted negatively when we diverted a lot of our profits into acquiring Brightpoint [a mobile device lifecycle services and solutions company] in 2012, and our stock went down. People said ‘what are they doing this for, instead of returning cash to shareholders.’ But that’s the only way to stay alive.”
Monié also noted the acquisition would strengthen the distributor by greatly increasing their chances of greater success in the Chinese market.
“There are areas where we can be more successful and this is one,” he said. “We have been in China for 18 years on our own and have been successful, but we still hover between number three and number four there. Now we will have a chance to become number one.”
Monié closed by imparting some advice to partners.
“Don’t believe in what seems to be an obvious trend, because if it’s obvious, everyone else will be on it already. Trust your guts – and rely on Ingram here, because we can help you a lot on that.”