CRN Exclusive: D&H Co-President Schwab On SMB Cloud Adoption, Office Depot's CompuCom Buy, And The Space He'd Like To Dominate In 2018

Doubling Down On Small Businesses

While competitors consolidate through enterprise-focused acquisitions, D&H Distributing has continued to prioritize hands-on training and support for partners that service what Co-President Dan Schwab calls the "true small business community" – the 15-person law firms and 20-person doctor's offices.

As of late, the Harrisburg, Pa.-based IT distributor said those investments have paid off. From September to November, the privately-held company reported that it enjoyed double-digit growth, contributing to 7.4 percent growth in North America from May through early December. Highlighting that uptick in sales were spikes in D&H's digital signage and connected home practices, which increased 51 and 42 percent year-over-year, respectively.

"(Partners) thought there were great growth opportunities, and we put together a focused effort on training and educating," Schwab said.

Last week, Schwab sat down with CRN to discuss the state of D&H heading into 2018, including its plans to provide additional levels of support at an expanded lineup of events and hiring more sales reps with technical expertise. What follows is an edited excerpt of that conversation.

The total number of partners you serve is expected to grow about 5 percent, and you've said other distributors have seen that number fall slightly. Why is that the case?

Many distributors have opted to focus more upstream, on the data center and enterprise. They've highlighted that with many of the acquisitions they've made, very aggressively going into the enterprise market. They've pivoted their resources away from SMBs. At the same time, D&H has been doubling down on small businesses, investing in more training, more support, and having dedicated sales reps with an average tenure of nine years. We've become, over time, the ideal solution for a small business reseller that's looking for a true partner. Someone to help them identify opportunities, which emerging technologies they can get behind, train their technical staff, provide free end user demand-gen creation, and recommend the right vendors and channel programs.

In terms of support, what can partners expect from D&H in 2018?

Additional levels of education and training at our events. We've added more events throughout the U.S., going into new markets. Everything from small city dinners where we have 15 to 25 customers, where we'll do almost a boot camp, hands-on training event, to the streaming media solutions app where every week we're doing trainings for our resellers. We provide brass tacks on how to deploy a new technology, such as a security solution. Our events have pivoted from being a trade show to being an educational expo. We added a Chicago show next year. It's getting filtered to the partners.

What about sales support?

We're adding more inside and outside sales reps. We have field coverage for small business resellers, unlike every other distributor. Most other distributors have walked away from those customers. It's been an accelerated evolution. We've added half a dozen more outside sales reps and well over 10 inside reps. We have even more coming. They're focused from a customer support standpoint on helping them move upstream. We want to make sure we don't overwhelm our sales reps.

How will those new hires be working to support partners? Do they have an area of expertise?

They'll have more technology and manufacturer specialization, such as cybersecurity expertise, to help our partners identify risks and recommend the right vendor solutions. It's more specialization as it leads to hosted opportunities. The hybrid environment for small businesses is different than the enterprise market. What are the opportunities with mesh computing or in K-12.? We continue to add specialization and go deeper.

You reported 51 percent growth around digital signage and 42 percent around connected home from September through November. What's driving that uptick in sales?

When you look to stratify the strong overall double-digit growth we have, you can bifurcate it into different groupings. The larger one – the SMB back-office upgrade cycle – that is a big part of the growth. Secondly, it's more point solutions where there's a little more color around them. The digital signage is a practice we've always been good at, but when we queried our resellers where they would like to build out their business acumen, this is an area they noted as being under-penetrated. It's widely-delivered, but they still felt there's opportunities in their small doctor's offices, independent retailers, large restaurants. They thought there were great growth opportunities. We put together a focused effort on training and educating.

How have cloud services fit into D&H's recent growth? Are you seeing more small businesses move workloads to the cloud?

We've had strong double-digit growth. Although small businesses have a slightly less complex environment than enterprises, data integrity and security are just as critical. Our VARs share that their end-users like the hybrid approach. They won't solely put their mission-critical data in the cloud. At the same time, the cost savings aren't nearly as significant as a mid-market or enterprise customer. It's more of a hybrid solution. We've seen robust growth in our cloud solutions and adoptions, starting simple and then adding more technologies. That's growing in paradigm. Small businesses were maybe lagging behind other markets in cloud adoption. The value prop wasn't as great, and they need to have the right partner to hold hands with them, educate and support them. I think that's why the acceleration is occurring.

Office Depot bought CompuCom with the intention of establishing a VAR channel that could deliver IT services to the SMB space. What's your reaction to that, and does it affect D&H?

Today, the lines are blurring. That's been going on for a decade or more. Many big retailers have B2B components. Our commercial resellers also have a consumer portion of their business. When we hear about mergers like that, it has a lot to do with the disintermediation of some retail entities as the market has evolved. The likes of Walmart and Amazon have grown. There's always people that get hurt in those transitions. The office superstores are trying to evolve and reinvent themselves. This evolution is blurring the lines as the market moves. It's a continuum we've seen for a while. In this specific instance, I’m excited at the direction Office Depot is taking to align their products, services and capabilities with the additional CompuCom services to continue to improve the customer experience.

So you'd file it under the "consolidation is nothing new" category, then?

We've kind of lived through this for a long time. We've seen different waves come and go, and the pendulum shifts. But in the small business marketplace, especially for someone like D&H and our partners, it's still heavy lifting, foxhole-to-foxhole. Maybe it's identifying a dentist's office that's opening up a second location. Maybe it's a real estate firm that's rapidly expanding and wanted to create a mobile workforce. Maybe it's a school wanting to upgrade their back office and deal with their auditorium's digital signage. Each situation is unique. That market is somewhat insulated. Many things go at the 10,000-foot level. But when it comes to feet on the street, it's a local company servicing a local business.

What's one area, whether it's technology- or industry-related, that you'd like to see D&H dominate in 2018?

It's D, all of the above. We have to become experts across the board. But if pressed to pick one, it's got to be security. Businesses may not have an IT budget, or it's reduced. When it comes to security and there's that level of risk, it's whatever it takes to secure the business because the downside is so great. Brand integrity. Financial implications. The risk is immense. This is a business that's going to continue to grow at a dramatic pace. The bad guys continue to stay one step ahead of the good guys. They're always developing schemes, from phishing on down. It's a moving target.

How does D&H capitalize on that huge need for better protection?

We have to do our best to look around the corner, identify trends and share this with our resellers so they can educate their end-users. Partner services like doing end-user demand gen for free. When we identify these trends through third-party evaluation and support our knowledge base, we then have to take that to resellers and train them, and help them educate their end-users. That is a tremendous level of effort that's not going away because it's a moving target. It may not propel business productivity, but it's an ongoing analysis.