Major Network Distributor Westcon Keeps Growing

Since 1999, revenues have surged from around $200 million to nearly $4 billion based on Westcons 2012 internal fiscal target.

November 11, 2011

7 Min Read
Major Network Distributor Westcon Keeps Growing

By Josh Long

Dean Douglas travels overseas more often than most Americans. Over the course of several weeks, he had visited Europe, Kenya, Singapore and Sydney, Australia.

I havent been to Brazil in the last six months or so but I expect to go down there sometime before the end of the year,” said the 54-year-old Douglas, CEO of Westcon Group, during an interview in September at the companys LEAP Center in Lafayette, Colo., just east of Boulder and the towering Rocky Mountains.

Circumnavigating the globe goes with the gig when you are the top executive of a global technology distributor that is rapidly expanding. Tarrytown, N.Y.-based Westcon operates in 70 countries with 17 logistics facilities and customers in 70 countries. The company distributes unified communications, infrastructure, security and data center solutions through a vast network of channel partners, including value added resellers, systems integrators and service providers.

Since 1999, revenues have surged from around $200 million to nearly $4 billion based on Westcons 2012 internal fiscal year target.

With the global economy in a rut and millions of Americans out of work, Westcon may reflect a silver lining in an otherwise gloomy employment market. We are hiring across the globe,” Douglas said, although he declined to specify the number of workers that would join his company of 2,500 employees.

Westcons growth is partly attributable to an aggressive M&A strategy the distributor acquired seven companies in 2007 alone.

We are a company that is very very comfortable in doing acquisitions and garnering some real leverage from them,” said Douglas, who has been with Westcon for three years.

Case in point: Over the summer, Westcon announced an agreement to acquire entrada Kummunikations GmbH. Westcon said the company is the second-largest value-added distributor of security products in Germany with 2010 revenues in excess of $90 million. And just this week, Westcon disclosed a deal to acquire Sentronics, a South African value-added distributor of electronic video and security equipment and solutions.

Were continuing to look at potential acquisitions,” Douglas said. Weve got a list of companies that were looking at. Some are saying, yeah we are interested, some are saying no were not and so we continue to monitor the marketplace.”

International Growth

Owned by Datatec Group a private holding company based in South Africa Westcon is not shy about expanding abroad and into developing countries. The company has two major joint ventures in Africa with a majority interest in both. Westcon operates in roughly 20 countries in sub-Saharan Africa outside of South Africa.

It seems they are finally getting the corruption and dictatorship issues under control and thats presenting some real opportunities for growth,” Douglas said.

More than a year ago, Westcon entered Mexico for the second time in the history of the company by opening an office in Mexico City under its Cisco Systems-dedicated Comstor business unit. And Westcon recently started business south of of the U.S. border through its own namesake, distributing products on behalf of such vendors as ArcSight, Blue Coat Systems and Brocade.

That business continues to grow,” Douglas said, and I think it will grow well.”

Westcon, whose Latin American headquarters are based in Sao Paulo, Brazil, also is reporting significant growth in Brazil, a country that Douglas claims is absolutely on fire.” In the Asia Pacific region, Westcon has expanded greatly over the last year and a half, developing a physical presence in six countries in Southeast Asia: Indonesia, Malaysia, Singapore, Philippines, Thailand and Vietnam. Douglas also noted Westcon has opened offices in Hong Kong and is expanding into Greater China.

Westcons international expansion and Douglass globetrotting ways is not surprising given that 60 percent of the companys revenues derive from outside North America.

Getting an opportunity to go out and visit with our customers and our vendors is an important part of my role,” Douglas said.

Still, North America remains a vital region for Westcon and Douglas, who works out of the companys New York office.  Just ask Lynn Smurthwaite-Murphy, Westcons senior vice president of U.S. and Canada. She has outlined three goals for the company in North America: growth in profitability; productivity enhancements and improved relevance.

Those are very broad but everything we do falls into that category,” Smurthwaite-Murphy said. As a distributor, you have to continue to become more efficient in order to scale and be cost effective.”

Smurthwaite-Murphy said Westcon is constantly looking at process improvement.” Citing one concrete example, she described a program in which the Westcon retrieves feedback from employees on processes that arent working or slowing down the company. She said Westcon has a method of determining the biggest problems and assigns a team to correct or fix the pain point.” Westcon also defines how much money the company saves through the fix.

Opportunities In the Cloud

Douglas said the biggest opportunity for the company over the next year to 18 months is the private cloud.

The challenge is that at home [consumers] can have reliability or availability that isnt quite perfect and they are willing to put up with it,” he said. In a corporate environment for some reason the requirements are totally different. End users are looking for five nines availability. They are looking for response times that are so much better than they get at home .”

Bill Hurley, the executive vice president and chief technology officer of Westcon, understands the challenges, opportunities and perceptions around the cloud.

I joke all the time. Whats going to be hot for the next 12 months about the cloud is going to be all the bad news. Oh this cloud was down for two days. Nobody could do business What you’re not going to hear is the 99 other stories of people who are saving tons of money by going to the cloud and they are saving tons of money.”

Resellers understand the cloud, Hurley said, but they are going through a transition to incorporate cloud offerings into their portfolio. Some resellers are still trying to figure out not necessarily what the cloud is but how do I marry the concept of the cloud to what Im doing today and how do I help my customers be more successful and take advantage of” cloud or virtualization as part of the services that a reseller offers.

A challenge for the reseller is determining the end users business problem and how the cloud can help solve that problem, Hurley said.

Vendor Relationships

Westcon works with roughly 100 vendors around the world, including some of the biggest names in the communications business like Avaya and Cisco. About a quarter of those companies represent the lions share of Westcons revenues and profits. The distributor doesnt anticipate significantly growing its base of vendor relationships, although the company is interested in partnering with vendors that support its goal of focusing on what Westcon executives refer to as the four Ss: software, storage, servers and services.

I dont see us growing the number of vendors significantly,” Douglas said. Were a very very focused player, a niche player in the marketplace, and we like that spot.”

Westcon, however, does hope to develop more global solutions with its vendors. Thats part of the companys three-pronged strategy: expanding geographically; supporting a consistent line of products around the world; and becoming more relevant in the data-center space.

If you were to work with us in the U.S. and you wanted to do a deployment across the globe, wed like to have relationships with all of our vendors across the globe as well,” Douglas said. Wed like to have a more global partnership with the vendors we represent, especially among the top 20 or 25.”

Westcon’s Chief Enjoys Being ‘Drained’ at Day’s End

Westcon Group CEO Dean Douglas says he actually cannot wait to get into the office.

That may seem strange considerating he faces a crisis or other issue most days occurring somewhere on the planet. But Douglas appears to genuinely like his job, actually thriving on it.

“And by the end of the day I hope to have that crisis resolved or that issue resolved. Sometimes it takes 15, 20 minutes. Sometimes it takes several hours and a number of other people but somewhere there is always something going on,” Douglas said. “So at the end of of the day there are times when I leave my office … I’m exhausted.”

“I don’t know how I’m going to get home, driving home. But I enjoy that. I enjoy the fact that I’m drained at the end of the day,” he continued. “I really feel zapped, that I’ve contributed pretty significantly, [I] get a few hours sleep and then I’m in the next day.”

But what does he do to unwind? Douglas said he sails and enjoys sports. But his favorite hobby appears to be what most Americans desperately need but dread most days: the job.

“I really do like to work,” he said.

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