CRN Exclusive: Synnex President Michael Urban On The 'Rise Of The Super VAR'

'I believe we have more and more partners that go jointly to end customers to deliver solutions,' says Michael Urban, president of worldwide technology solutions distribution at Synnex.

Full Steam Ahead In 2020

After more than a year on the job, Michael Urban— who has run businesses in Europe and the U.S.—talked with CRN about the distribution landscape in 2020.

With the company poised to spin off its Concentrix business into a separate company, Urban said he is focused solely on IT distribution. He said this year Synnex will be ready to meet the “rise of the super VAR” as well as increased spend from SMB end customers working to complete their digital transformations.

Urban—who came to Synnex from rival Tech Data—spent 13 years at Germany-based Actebis Holding GmbH, and left the company in 2003 as chairman and CEO. Actebis, which was acquired by Switzerland-based ALSO Holding, is now known by the ALSO name. He said as market forces shift more solution providers into specialty areas, he sees Synnex partners working together to carry customer deals across the finish line.

“I believe we have more and more partners that go jointly to end customers to deliver solutions,” he said. “At the end, you have two or three partners delivering a complete package to the end customer. Each one of the partners has a specific delivery, a specific solution, but the others can complete the needs for the end customer.”

Are more acquisitions on the table in 2020?

If there are opportunities in the market that will fit in our portfolio and other future growth activities, that is exactly where we would like to invest. And there’s big changes in the market. The vendors are changing, our partners are changing, but also distributors are changing. I think there are many opportunities today in the market and I think for us it’s a good spot to be in. Yes, to answer your question, there could be acquisitions this year, but also next year.

What are the trends that you’re seeing that are going to be significant to Synnex’s earnings?

On the reseller side, we see the continuous rise of the super VARs. These companies will continue to grow and some will continue to grow through acquisitions.

On the SMB side, we see digital transformation as a big opportunity. Yesterday and the day before, I was with our Varnex council. We talked about exactly that … how we help our vendor partners and reseller partners to have success in digital transformation. Synnex is very strong in the SMB field, much stronger than anyone else in North America and ... Varnex is a good example of SMB partnerships. We help them and guide them and support them to find success on their digital transformation journey. This is not just for 2020. This is going to be 2021, 2022, and continue for the next three or four years.

End customers are looking for digital transformation, they’re asking for it, and we are helping them.

What are some of the issues you see in that SMB digital transformation?

The issue we are facing on our digital transformation journey is the complexity. Some believe that if I go digital transformation, that means I bring everything to the cloud. That isn’t right. Cloud is just a technology. I think the SMB reseller can play a very important and big role in this to guide the end customer to help and support them to make the change happen.

You have experience running businesses in the U.S. and Europe. As some MSPs begin doing business outside the U.S., can you talk a little about the complexities of running a global business?

We are a strong player in the U.S. and Canada, but also South America. South America is in some ways equal to Europe. If you think about the markets, to be successful in South America you need strength in the center, but you also need strong execution in the countries. You have to manage different types of businesses because the countries are all different and you have to deal with local habits and local languages. You have to understand different tax systems and restrictions on imported goods. So the complexity to run a business in South America is high. In Europe it’s a similar situation. Yes, you have the European Union. That should help. But the reality is if you do business in Germany, that doesn’t mean you can do business in France and Italy or in Finland. The complexity of doing business in Europe or South America or Asia varies, very much. For distribution companies like ourselves, to run a global business is complex.

Where do you see the biggest need among your partners? Where do MSPs and resellers need help?

What we have seen over the last couple years, especially in the SMB field, many of our partners have specialized and focused on a certain area. The issue that is happening now with digital transformation is the end customers are paying for a complete ecosystem delivery. In the old days if you look 10 years back, the reseller had to offer everything that was related to IT. So if an end customer came and needed new PCs, new network infrastructure, data center, this was all delivered by one partner in the past.

And at the time, technology was a bit more easy and not as complex as it is today. Over the years, the SMB partners have seen certain areas of investments where they would like to see their future growth and they’ve started to put their focus into those areas.

At the same time, if you focus on fewer things, that’s good news because there can be a higher-margin stake and you can focus on a vertical, like hospitals or health care. But the flip side is that if you focus only on a certain area, or a certain technology, if the end customer comes to you asking for a complete package of solutions, you have a gap. I think that’s the point where we jump in.

Synnex and its Varnex partners can help each other to deliver complete solutions. So I believe we have more and more partners that go jointly to end customers to deliver solutions. At the end, you have two or three partners delivering a complete package to the end customer. Each one of the partners has a specific delivery, a specific solution, but the others can complete the needs for the end customer.

Where is the growth going to come from in 2020?

The biggest growth is going to come from the SMB space. This kind of customer is a bit slower about driving new technology. Normally, the big enterprises start quite early with investments in technology. The big corporations, they have done their change to Windows 10 and now the SMB will follow. Not just on the PC side, it's all around. There’s opportunity to sell new Office 365 licenses, then adding security there. Let's say the $1,000 bill for the notebook will maybe end up as a $2,000 bill at the end. Everything goes as a service, so there’s a big opportunity for us to move this as-a-service model to the market, with a full life cycle behind it and hopefully replace the systems up to a three- or four-year time frame.