Q&A: CompuCom CEO Talks Cloud, Mobility And Recurring Revenue
Private Practice
With a year of being a private company under its belt, CompuCom has made big strides in the marketplace, making investments in key technology areas such as cloud and mobility. In embracing those technologies and wrapping services around them, CEO Tony Doye said that the move to a private company has been beneficial in gaining the flexibility the company needs. In an interview with CRN, Doye revealed how the solution provider is positioning itself for success in the market right now and where he sees future opportunities for growth.
What's the biggest opportunity in the market right now that CompuCom is looking to take advantage of?
Because we're so focused on infrastructure, the obvious two things are anything cloud related and anything mobility. Cloud for us, we're being quite careful. We're not going into wholesale, public cloud IaaS investments. It's very commoditized, quite competitive and very capital-intensive. But, we are providing, deploying and installing as well as managing cloud environments for our customers. ... We're really in a traditional way still looking for customers that want to sign up to private cloud, whether procured from us or managed by us. ...That direction's why we're going to the cloud and it seems to be working.
What made you take that approach to the cloud?
It's really the capital intensity of any as a service model. You're really going to lead with a lot of capital. When I, at previous companies, built public cloud environments, it proved very difficult to be competitive. ... What's working for us is when a client wants us to architect a solution for them, as we have lots of solution infrastructure architects, the solution for them in a setting that they prefer...A couple of companies we're up against, the very big infrastructure players, "build it and they will come," which is a tough profitability balance. It's not that clever a strategy. It's really one of minimizing risk. I want to be in cloud, but I don't want a lot of capital intensity in the most competitive part of the market.
Why do you think more solution providers aren't approaching cloud this way?
Maybe the fact that we're a private company and we really value our cash in terms of investment. We'd rather be looking at small acquisition opportunities with our cash rather than move into a lot of hardware in a competitive environment.
What about mobility?
We manage between 300,000 and 400,000 mobile devices for our clients and we're into the millions of end user PCs. For us, it's natural that the two are going to blend together...Most of our work is how do we integrate both of those...taking the PC world, the mobile device world and bring them together in a way that the CIO can see what choices they can make around groups of people, functions, managed contained virtualization and security in those environments. That's the life cycle.
There's been some mixed reports on tablets, some are saying demand is up while others are saying the opposite. What are you seeing at CompuCom?
Definitely demand is still increasing because applications in companies where tablets are a simple solution, touch screen, mobile apps. In retail we see them a lot. I think tablets provide a nice interface for a lot of functions in companies. But we're seeing the rate at which the PC has been declining has slowed down. Last year we saw a really steep decline in PC sales but that speed of decline has slowed down. We're thinking maybe there's a limit to how many of those devices will replace or usurp the PCs.
With all of these solutions, how are you packaging services around that? How do you approach that and are you seeing a lot of growth?
You hit on what's probably one of the unique things about us and how we do things so differently. CompuCom started as a hardware reseller and our services business is of equal size. In getting the company to where it is, those two business units were run pretty independently, a product side and a service side. Of course, our product side is agnostic and has deep reach into all of the OEMs, which is [a differentiator] in itself. As we've looked over last 12 months in our portfolio, what we see is we really manage the full life cycle of infrastructure. We procure hardware, we configure hardware with clients' own devices and other manufacturer's devices, we configure software and then we deploy.
How is that unique in the marketplace?
What we've done with the portfolio is turn it on its side. Let's think about this for a moment. We're the only North American service provider that is agnostic and can provide any device all the way through procure, configure, deploy and manage. All the others either sub out one part or another of that, but we have been integrated end to end. You could call it a vertically integrated infrastructure supply chain. We are vertically integrated from the OEMs through agnostic integration all the way up to manage. What that allows us to do is build a portfolio in a very Lego-block way...They can go up and down the stack. We've redesigned our portfolio to have that vertical integration.
Are you seeing a more competitive market for services?
I think, probably yes as more players have tried to come down from applications and some of the resellers are trying to move up into services. I think there probably are more players. What helps us is having scale in both services and in products over and above some of the competition. ... We have a very big sales force of technicians, which new entrants find hard to replicate. It doesn't mean they couldn't acquire and it doesn't mean they won't build it but in terms of uniqueness, it is an infrastructure supply chain, it is a sales force of the best employees. We're only focused on infrastructure, that's why we do it well. It's not one of many businesses that we try to do.
All these different demands for services, hardware, what's the biggest factor driving demand right now?
As you'd expect, folks are trying to take advantage of cloud environments, so virtualization is still very important. For us, mobility and security aspects of that are driving a lot of front end discussions. How do we manage this environment? Who should pay? What about data and what if they lose it? That's causing us to have what I would call consulting-type engagements to start. It's just such a common thread with all of our customers. Mobility and security is driving a lot of conversations and a lot of opportunities. The challenge is: how do you turn all the conversations into meaningful business and not get caught in the merry-go-round of conversations?
How are you are accommodating that switch to services and recurring revenue and making sure you're staying up to date with it?
It’s a problem and it's an opportunity. If you saw my SWOT chart a year ago, one of the risks we had, our threats, was that mobility would replace the end user. If we didn’t get into mobility, we could be left on the sidelines as the end user gets replaced by tablets and smartphones. That was a threat. But opportunity is bringing together and harnessing the mobility trend and two bringing together with the PCs in the end user world. ... How are we doing it? We really put our investment in a fairly small engineering team that builds mobility and systems management under the CTO. ... We put aside, integrated it, chose our path on cloud, and chose our path on mobility and the end user, chose our path on portal. Those ones are the areas that are getting the most investment.
Over the next year, what are the risks and opportunities that you guys are either facing or taking advantage of?
It really is to continue down the path of personal, portal, private cloud and enterprise management. We're revamping tools around enterprise management, managing clients' virtual environments, we want to make the portal as frictionless to our clients as possible and we want to make mobility and the end user blend in the eyes of the CIO. That really is it in a nutshell. We're early in the journey but we have a really clear path on all three of those.