Ingram Micro Executive Panel

Good morning everyone. As you said, I'm Larry Walsh from the 2112 Group. I've been partnering with Ingram for what seems like forever and talking with them about cloud since almost the beginning of this trend. From my experience, I've seen a lot of companies talk about getting in the cloud and enabling partners, but with Ingram I see a true evolution — they truly are leading the way and taking the cloud through the channel to another level. That's what this panel is going to be about. We have the executive team of Ingram Micro here. I'd like to introduce my panelist Alain Monié, the CEO of Ingram Micro; Paul Bay, the President of North America; and Naveed David, the Executive Vice President of Global Cloud Computing. Please welcome them to the stage.

All right, so let's jump right into it. When I started looking back at cloud, I was surprised to learn that we've actually been using this term since the 60s, but it's only been in the last 10 years that it's truly come to the mainstream. Alain, could you please elaborate a little bit on what you think the present state of cloud is and where it's going?

You don't think we're done? You look around the cloud trend and you see that it's reshaping and disrupting a lot of legacy technologies. You don't think we're done reshaping?

I want to pick up on that, and Paul, I'd be interested in your thoughts as well. Back when we first started talking about cloud computing, it was spoken of as almost an all-or-nothing proposition — you had to go all in on cloud and abandon legacy hardware and software. That really never materialized. What do you think the state of it is? What is that balance going to be, and what does that look like in terms of the impact on legacy hardware and software products?

I think it's interesting, and picking up on what Alain said — if you look at software sales and system sales, we're at an all-time high last year. There's still good momentum from endpoint products, and from an advanced solutions standpoint, there's still a lot of data center work, networking — those areas are still very relevant. But to Alain's point, it's about that hybrid opportunity. You heard the message from Judson and Renee this morning — we're setting up that platform to be able to operate ubiquitously in any environment. I don't know where that watermark is going to be. I was here five years ago at one of the first Cloud Summits, and the sky was falling — it was going to be all cloud, distribution was going to be disintermediated, partners were going to be disintermediated if we didn't change. We are evolving collectively as an ecosystem. That's why we're here today — to make sure we're looking at those opportunities to help build a monthly recurring revenue base while still servicing our core technologies.

Naveed, picking up on what Paul said about systems and server sales being up — do you see cloud dragging hardware and software sales instead of replacing them?

So far, you're seeing that there's still a big refresh cycle happening on premise. If you've made significant investments in your data center infrastructure, you're going to continue investing there because you have mission-critical applications — manufacturing, banking — a lot of applications where companies are going to leave them inside their own data center as a source of competitive sustainable advantage. As Alain said, what we're going to see is a complement — cloud adding onto those to give extended capabilities in terms of big data, business intelligence, analytics. That's the first big wave. You'll see additional areas in terms of security. But I think you're going to see the old business combined with the new business to create the hybrid going forward.

Let's shift the conversation a little bit. We are here to talk about leveraging the power of the cloud. Paul, do you see managed services and professional services keeping up with cloud adoption? How do partners leverage existing capabilities to continue adding value into this equation?

Professional Services is one of the single biggest investments we'll be making from a technology solutions standpoint. We've been building out significant resources — from wireless assessments, the assessment phase, virtualization health checks, security threat assessments, all the way into implementation, deployment, and then how do you service and manage and support that. You heard Renee talk about opportunities within the Unite cloud services offering and how we migrate from an on-prem solution to an off-prem solution, making sure we have those white-glove services for all of you as you make that transition. It's not all or nothing. We're going to continue building out those services. I'd encourage all of you to make that investment, and where you need us to help augment, that's where you should focus. You'll continue to see us build out those four or five pillars on how we go to market to help support your business.

Paul, can you elaborate on the white-glove services? What is the benefit of doing that? Is there a certain economic logic behind having the partners leverage Ingram Micro's capabilities as opposed to building their own?

The opportunity — and we've got to make sure it happens seamlessly — because I think that's some of the challenge or concern out there. As you move from an on-prem solution to an off-prem solution, making sure we make that transition with no service level disruption helps you start building that base of recurring revenue. Although it may be small to start, you still have that hybrid opportunity. As we move over and migrate, we make sure we carry that with the white-glove service and get that recurring monthly revenue — the MRR — up and going. As you build out, bring on new partners, new opportunities, new end users, we build that consistency to allow you to be successful with your end users.

The other thing I would say, Larry, is when we talk about areas we're building out — as you make that migration, we're looking at distribution differently and how we go to market with things like app development. We've actually launched three new services recently: one is migration, another is mobility, and the third is app development — to help that transition and smooth process as you move over.

One of the things you touched on is having assessments available. Through our research at 2112, we've seen how many partners are using intellectual property or development of their own methodologies as a differentiator. But there's a lot of headwind — most of the challenges are finding people who not only have the technical skills but also have the ability to develop these methodologies and strategies that translate into sales opportunities. What do you consider, Paul, the state of this talent drought that we hear about on a chronic basis, and what can we do about it, especially when there's so much competition for that limited pool of resources?

I don't think it's just a cloud conversation — I think it's just a general talent concern we all have, and we're in the same boat. I go back to the different pillars we're focused on. We have everything from partner-to-partner, which we call IM Link, allowing the collective community to partner with one another. We've made significant investments in deployment services — more of a contractor model where we are the knowledge base and going through that process with you as the leader out to the end user. We've also hired a number of what we call badged experts — Ingram Micro associates out there doing assessments. The one thing I'd tell you is that came out of feedback you've all given us. Where do you need the opportunity? Are your technical resources spending time doing technical assessments when we could be doing those on your behalf? Then you can get into the deployment phase and maximize those margin opportunities. Coming out of the feedback we received, yes, we all have a talent resource gap, but are you maximizing your current resources and using us as an extension to your business? I don't want to discount the complexity of moving between on-prem and off-prem models.

Let's expand on that for a moment. It does require investment, it's not an all-or-nothing proposition — we've established that. But there are different economics associated with it and it does require investment. How do you overcome, or what advice would you give the people in the audience, to overcome the risk associated with it? Even some of the large companies are looking at three- to five-year returns. How do we overcome that hurdle of risk associated with adopting cloud and truly building out the team, resources, and capacities to eventually make the money?

Let me ask about that because as I asked the question, it was about the risk associated with the investment. What is the risk of not making the investment? What happens if we wait too long? There's an argument that many have already waited too long to make that initial jump.

I'll take both sides of the coin. The risk of the investment is that you have people sitting around not being utilized the way you'd wish. The way you de-risk that is working with a company like Ingram Micro who's making those investments in technology platforms, innovation programs to help you be successful. That's a commitment, as Alain said — it's a pledge we've got going forward. We're here to help you be successful. The risk of not taking that first step is that someone in this room takes it, and as I was saying before, cloud is a long-term journey you're entering with your customer. Once they start working with you on that transition, once they're working with you on a marketplace, they're going to stay with you long-term. If you don't start, you never have the customer relationship, you're never on that journey. The other thing is you've got to look not only at your traditional base but be very active in sales and marketing, creating a new base — looking for new enterprises and businesses that are emerging and looking for technology solutions and for you to be an adviser. Take the initiative, spend your money and time in sales and marketing, and let us worry about the technology, because we're going to be your partner of choice. And the last thing — you're going to have to choose. I don't think people in this room are going to manage the cloud services of their customers from 10 or 12 different platforms. You'll have to choose who you're going to work with and align with over time.

We've touched on the technical aspects of talent and support integration, but you did talk about sales and marketing. What do you advise or see as best practices for developing or retraining the sales talent within an organization for a cloud practice?

You can do enablement sessions and train people. Tomorrow I'll show a slide which is relatively interesting — the definition of insanity is doing the same thing over and over expecting the same result. To a certain extent, what we're seeing is we're building a new sales force as well, adding new competencies, new skills in terms of selling services. You'll notice the people in the services organization — the first thing they ask is 'What problem am I solving for you?' It's a different mindset. We're now educating our internal departments on that sort of mindset, giving them tools like CRM systems. Paul's rolling out a huge CRM system to give them the tools to facilitate those transitions and go after the opportunities. Again, changing the mindset is the first step. You have to start with your lead — which is not what you want — it's 'What problem am I solving for you?'

That's a key point too. If you look at them being combined together — the sales organizations as an overlay — there are a number of different ways you can solve for that business outcome. That's what I think a lot of people in the room — when I talk to solution providers every week about challenges — it's that sales cycle. We're very focused on helping you shorten that sales cycle because there are so many different options and opportunities. If we're showing up with the right consistent message about why this solves the best way for that business outcome, it helps shorten that sales cycle collectively.

Something I want the three of you to address — an argument could be made that we've already commoditized pieces of the cloud business. There are platforms racing, dropping down in price. The providers are racing to the bottom. The compensation models vary for the partners, so it's hard to make money. And the customers themselves have an expectation of less expensive. How do we maintain at least price integrity and profitability of the cloud so that we don't lose the opportunity before it truly goes through the commoditization cycle?

I think Alain summed it up very well. You wrap around that entire solution, put professional services around it. There's no different than what we've had to deal with for the last 20 years. Products start early on and you have an opportunity when there's complexity. I talk about the four C's and one of them is complexity. There's opportunity when it's not mainstream. As stuff becomes mainstream, we continue to see pricing pressures and commoditization. So there's an opportunity to wrap the full complete solution around it. If you're going at it as a one-point conversation and it's not around that total business outcome, you're going to struggle from a profitability perspective. You've got to wrap it all together. Going back to the conversation about some of these products — how do we make sure at that point you've got monthly recurring revenue in the pipeline? Because then you've got a good base to build on. You heard Judson and Renee talk about the stickiness — once you're there, it's tough to unwind. It's not just about one and done from a transactional perspective, it's about having you in the room as the trusted adviser to your end users, relying on us to help with those services.

All right, last question. Beyond cloud, we always come up with a new trend or a new buzz that's coming to the fore. Now it's the Internet of Things — 50 billion devices will be connected to the internet, having huge streams of data. I would make the argument that the Internet of Things does not exist without the cloud. What should we be thinking about when it comes to this emerging trend about the Internet of Things as it relates to cloud computing?

I think we have one track during this session which is called the SMAC track — Social, Mobile, Analytics, and Cloud. It combines them together, and the trend of the next big thing is the connected world and connected devices — app accessories and accessories. We're going to get into a place where everything we do that's connected, whether it's my watch or the toe ring I'm wearing, is going to be a monitoring device transmitting information via Bluetooth. Actually, it's going to be connected and collecting data. So one of the things I think the next big trend you want to think about is how you develop analytics skills — analytics and business-solving skills. I think that's the next big trend we're going to see.

I absolutely agree. A lot of you already have the infrastructure in place to be able to get that. When Alain talked about a complete solution, now it's being able to take out that data and index it, understand what's really going on, to have a valuable conversation. It's very similar to what we're doing in our business intelligence center with all the data we have — helping you understand where the trends are, where the opportunities are, because it becomes a business conversation out of all that data they're generating. It's a huge opportunity for us as it's coming from all these different devices. A lot of you have set up the opportunity to already have that data. Now it's how do we pull that data out and look at data analytics. That's actually one of the app development areas we have — it's the third one we've developed, data analytics, because of this opportunity and this cresting wave that we see coming.

Very good. Well, we are out of time. This was a great conversation. I hope everybody got a lot out of the insights. Alain Monié, Naveed David, and of course Paul Bay — thank you so much, gentlemen. Thank you.