Ingram Micro’s cloud business has reached an inflection point. It’s now growing as fast as almost anything else in the company—and pointing a way toward tomorrow.


July 24, 2017

10 Min Read

Ingram Micro’s cloud business has reached an inflection point. It’s now growing as fast as almost anything else in the company—and pointing a way toward tomorrow.

So says Renee Bergeron, senior vice president of Global Cloud at Ingram. Her perspectives arrive in conjunction with news that Ingram has appointed three key executives, including two newcomers, to key positions. (It also comes on the same day that Microsoft announced fourth-quarter earnings, which were fueled by a big jump in cloud sales. More on that below.)

For the record, Ingram appointed three people to key roles this week. They include:

  • Richard Dufty to the position of senior vice president, Global Cloud Platform Group

  • Tim FitzGerald to the position of vice president, Cloud Channel Sales, North America, and

  • Jason Bystrak to the position of executive director, Partner Enablement, Ingram Micro Cloud

Dufty joins from AppDirect, where he led worldwide sales. In his time at AppDirect, the company transformed from a software startup with almost no sales to a VC-backed unicorn with a valuation of more than $1 billion. At Ingram, he will oversee Ingram Micro’s cloud platform business, which includes the Odin, Ensim, APS Connect, Federation and Concerto Cloud Orchestrator product and service portfolios.

FitzGerald, meantime, joins Ingram from Tech Data. He was there just a few months in a digital transformation role. What FitzGerald is really known for is the two decades-plus he spent at Avnet in various sales, marketing and leadership roles. In his new role, FitzGerald will be tasked with growing Ingram Micro Cloud’s platforms, marketplace and services in the U.S. and Canada.

Finally, there’s Bystrak, who moves from an Ingram sales role into a business development position. In his new role as executive director of partner enablement, he will be responsible for helping Ingram expand and deepen its relationships with cloud software developers of all ilk, be they focused on Software as a Service (SaaS), Infrastructure as a Service (IaaS) or Platform as a Service (PaaS).

That’s the news from Ingram this week. Now here’s the insight as to why all this matters.

It’s no secret that distributors have been under threat from the industry’s embrace of cloud computing. The more technology delivered through virtual channels, the less the industry needs the capital-intensive supply chains and best practices honed over two decades by the leading global distributors.

What makes Ingram so interesting is the way it reacted to this existential threat. Think about it: when challenged by disruptive innovation, most established market leaders double-down on existing business models. Think steel manufacturers in the 1970s, Detroit in the 1980s and retailers today. All of these and more doubled-down on an old way of doing business when faced with a disruptive threat.

But not Ingram.

Eight years ago—eight!—it launched its cloud business. It wasn’t big at the time. But it’s grown significantly since then and has reached an inflection point, says Bergeron.

“We’ve clearly seen an inflection point; 2017 is the inflection point,” she says.



Renee Bergeron, Ingram Micro

So what does that mean? Here’s the company’s story.

Despite its size and reach, Ingram was among the first to acknowledge that cloud computing was going to disrupt its business and the traditional channel by way of extension. Rather than do what most market leaders do when threatened, it pivoted.

Let me clarify: all big companies “pivot.” It’s the degree they do that matters. A decade ago Microsoft pivoted to the cloud, but only slightly. (It wound up costing then CEO Steve Ballmer his job.) IBM? It, too, pivoted, but not enough. (IBM's financial results have declined for more than 20 consecutive quarters.)

Ingram’s results haven’t exactly set the world on fire. But it did make a serious investment into cloud computing. It invested in building a cloud platform upon which telecoms could build their cloud businesses, and in a cloud marketplace place that VARs and MSPs could leverage to enhance their applications sales.

The combined platform-and-marketplace strategy sets Ingram apart, says Bergeron.

“We’re the only one that has that a value proposition where a partner can come to [our marketplace] and leverage all the commercial relationships that Ingram Micro has, or they can just leverage our software and bring their own commercial relationships. Or they can be in a hybrid model in which they select to have their own direct relationships with their key strategic vendors but for everything else they leverage Ingram’s broad catalogue of cloud services,” says Bergeron. “That’s really unique in the market.”

Both the platform and the marketplace are growing very quickly at Ingram. But Bergeron concedes that the revenue produced by its cloud business, both for it and its partners, doesn’t replace the revenue that traditional client-server product sales once did.

This is why Ingram has invested in tools, technologies and enablement to help partners transform their businesses. Nimble companies, including some very big telcos, have signed up in a big way. Today, Ingram is helping more than 150 of the largest service providers in telecom and IT technology shift to a cloud model. Today, one-third of the world’s largest telecom providers run their cloud businesses on an Ingram Odin platform.

But the rest? They are struggling with the transition that large, entrenched market incumbents have always struggled with.

To help, Ingram has invested in five different product categories. They include business applications, infrastructure, security, communication and collaboration, and cloud management services. Bergeron says Ingram is keenly aware that partners want more business and vertical market apps. While it already offers healthcare, retail and government apps, it is expanding into new categories including legal and more.

Here are some milestones, according to Ingram:

To date, the Ingram Micro Cloud Platform Group supports approximately five million users including one third of the world’s leading service providers. Additionally, with more than 40,000 registered cloud partners on the company’s industry-leading Cloud Marketplace and approximately 1,500 dedicated associates leading the way, Ingram Micro Cloud has evolved from cloud services aggregator to cloud services platform innovator and market enabler.

Ingram’s ultimate goal? Provide the business bundles that partners’ customers want most. More work remains to be done. And some of it will cannibalize Ingram’s traditional “pick, pack and ship” business.

But give credit to where its due. When faced with an existential threat, Ingram didn’t stick its head in the sand. Instead, it built a parallel operation that challenged its core business model. Does it make up for the lost sales that Ingram’s traditional business once generated? No way, at least not yet.

But just like the VARs, MSPs and ICT consultants that it serves, Ingram is adjusting.

“When all of your business is a traditional on-premise business and you’re looking to start your cloud business, you have a ramp up period that is inevitable. If you’re looking to replace, say, over a quarter, your on-premise sales with cloud sales, it won’t add up. [The transition] requires a partner to have a longer-term vision. I think we are starting to see partners really understand that,” says Bergeron.

Those who bought into the model early and created recurring revenue streams? They are ahead of their competition, Bergeron says. “They are operating and growing at a rate that can absorb any short-fall or defocus on on-premise solutions. Those that haven’t yet, are faced with a decision point.”

Which brings me to Microsoft.

Microsoft Results
Today, it released fourth quarter results. Microsoft, too, faced a decision point a few years ago: embrace cloud fully or double down on on-premise hardware and software licenses. Since taking over as CEO, Satya Nadella has obviously embraced cloud services. And the results speak for themselves.

Overall, according to The Wall Street Journal, “Microsoft posted $6.51 billion in fourth-quarter net income, or 83 cents a share, compared with a profit of $3.12 billion, or 39 cents a share, a year ago. Excluding the impact of revenue deferrals and other items, adjusted earnings climbed to 98 cents from 69 cents a year earlier.”

As for cloud sales, Azure revenue jumped 97 percent and Office 365 revenue rose 43 percent.

Here’s hoping it’s nothing but clouds where you are.

Read more about:


About the Author(s)

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like