Q&A: Tech Data's Joe Quaglia On How Solution Providers Will Benefit From The Distributor's New Structure

The New Norm

The new Tech Data is poised for customer growth, with a larger sales force, expanded skill sets and broader technical capabilities, said Joe Quaglia, Tech Data's president of the Americas. The distributor has seen an influx of new customers, including a good number that are buying through distribution for the first time, he said.

Quaglia spoke with CRN about how solution providers will how solution providers will benefit from the new organizational structure, the integration of Tech Data's siloed operations organization, and the company's value-centric strategy in Latin America.

What has your strategy been for new customer recruitment in the combined organization?

We're spinning up a whole new set of partners out of these SBUs [specialized business units] because business development and new customer acquisition is one of their requirements. As we now put these business units together from both sides, we're still learning who's got the best platform for new customer acquisition. First quarter, out of the gate, we had 587 net-new customers that bought from us that hadn't bought from us before. As we do that every quarter, that's going to make a material difference in our ability to grow our business, specifically in the Third Platform [of digital integration technologies such as big data and analytics, cloud, mobile and social], but also ensure we can balance the portfolio across that end to end, advanced solutions to endpoint.

Have most of your new customers worked with a distributor before?

About 20 percent are those that really haven't worked with distribution before. The rest have worked with distribution before, but just were never customers of ours or Technology Solutions. The number of customers that haven't done business with distribution before is going to start to increase, just by nature of the capabilities we offer in security and some of these other next-generation technologies. Just by way of putting the two companies together, we doubled the sales force, we tripled the number of technical consultants available to consult to our partners, and we tripled the number of engineers in the company. That level of capacity will attract new and emerging partners.

What are the key skills and people you've gained in the Americas as a result of the deal?

A lot of the people that came over in the acquisition are highly skilled in helping partners build practices. They're highly skilled from an engineering standpoint. They're highly skilled in a consultative way to help partners' salespeople go on calls with their customers together to help build and design solutions. And that's a skill set that Tech Data didn't have a lot of deep domain capability on. That was a big, big part of what we knew and what we thought would help us accelerate our way into growing our next-generation technologies at Tech Data.

How does new customer acquisition compare to before the deal closed?

It's a little bit actually better than what we have seen in the past. I'm not going to say it's because of the acquisition — it's too early to tell. It's a bright spot, I'm calling it out, but we're not done. We still have a lot of work to do there. It's not easy acquiring net-new customers. It's expensive.

But that's a big part of the priorities of our SBUs. They are required to expand the customer breadth. Not only do our vendors see that as a value-add to them, but we obviously want to do that too as part of balancing our portfolio.

What strengths does each organization bring around new customer acquisition?

From the TS side, those SBUs and the skills they have in those SBUs are able to have really credible conversations with new and emerging partners to bring them on board. This industry requires an incredible amount of credibility, especially in the new, complex and emerging technologies, and that's one thing I think Technology Solutions does really well. On the Tech Data side for new customer acquisition, just the sheer breadth and scale of the sales and customer organization. Our ability to scale the organization from that high complex required value proposition to fulfillment, I think positions Tech Data better than anybody in the market.

How did you divvy up integration-related responsibilities within the organization?

On day one, we set an objective that we were going to be very aggressive and accelerate an approach to integration. We created two tracks within the company, basically dividing the organization. One group was going to be our integration management office, and they were going to be focused on integrating the companies. And then the other group was going to be the RTB, the ’run the business' group. The vast majority of the two organizations' workforce is going to be focused on running the business. So we had a really small group that was focused on integration.

What are you hoping to achieve from the new Tech Data Americas organizational structure?

It's going to give our reseller customers an opportunity to take advantage of the 'one plus one equals more than two' value proposition, far greater than any other design that we could have put together. We have a whole services organization that can help that partner augment the delivery and design and setup of that solution, whereas in the past, the transaction would have stopped right there at the enterprise Technology Solutions sale. And as we continue to accelerate that and invest in it, we believe that Third Platform, that specialization, will help more partners not only build practices, but also more loyalty, more revenue, and more profit as a result of that.

How did you go about minimizing disruption during the integration process?

We established that having enterprise, commercial and retail, and nationals as their own sales segments with their own go-to-markets was going to be important. We also said that the enterprise was going to be made up primarily of the Technology Solutions customer set, run by primarily the Technology Solutions leadership team and organization. And that was going to provide a lot of familiarity to the existing customer base because obviously they're very used to working with Technology Solutions. We've got a very resilient, very passionate, and highly skilled workforce from Technology Solutions coming into Tech Data.

What about for Tech Data's legacy channel partners?

You can look at commercial being our midmarket and our small-business VARs as the traditional Tech Data customer base. They are very familiar with how they work with Tech Data from a customer and service and IT and operations standpoint already. And because Marty [Bauerlein, senior vice president of U.S. sales], Jeff [Bawol, senior vice president of Enterprise Solutions] and Denny [O'Connell, senior vice president of national accounts] are all aligned to the overall Americas success, they're collaborative across each of those segments. If one of Marty's [commercial] customers wants to buy a value-add line on the enterprise side, they can do that, and they get incented to do that. So the whole go-to-market is engineered to deliver the entire end-to-end portfolio.

What integration work have you done beyond the go-to-market structure?

We've been really focused on making sure we can integrate the two organizations, not just at the frontline level—that being sales and marketing and specialized business units—but it's also important that we bring the organizations together from an operational standpoint.

So we created under Brian Davis, who is our senior VP of operations, a single operations organization that's focused on customer order, customer management, logistics, warehouse transportation, pricing, purchasing, inventory. All of the back-office functions have all been organized into single organizations as well — HR, finance, accounting, legal, IT. All of these areas are now one logical organization supporting each of those departments.

How does the reseller community benefit from having a single operations organization?

TS already had a North American operations team, and we had operations in Tech Data, but they were in different silos. For example, purchasing reported into a separate SVP, logistics and transportation reported into a separate SVP, pricing reported into a separate SVP. Operations was sort of spread out in the organization. Now when you think about the size and scale and our ability to digitally transform for our customers and our vendors, we're going to have to get more flexible and nimble. And that's why it made sense to roll it all up under Brian Davis, and leverage the best of both organizations.

Why is Latin America better suited to data center technology than broadline technology?

What we love about the Technology Solutions model that was built for years in Latin America is, unlike what we tried to do from a broadline perspective, which is a high-cost model when you had to put infrastructure and inventory and warehouses and all that in-country. This is a model that has more of an asset-light approach to it. And, as a result of that, it carries a better return for our shareholders and a better profit profile. We think we can not only help our vendors with their go-to-market and their route to market there, but we can help our customers in a way that perhaps we couldn't do if we were a traditional broadline distributor.