Synnex CEO: SMB VARs Need To Embrace Cloud, Recurring Revenue Opportunities

Calling All VARs

During Synnex's Varnex 2014 spring conference, CRN spoke with Synnex CEO Kevin Murai about the distributor's growing focus on cloud, telecom services and recurring revenue models -- and why traditional legacy resellers need to explore opportunities in those areas before it's too late. Murai also discussed demand in the PC market as well as growth around hybrid mobile devices. Here are excerpts from the conversation:

Cloud Demand In The SMB Market

We're focused on the SMB market. So what's the vision there for cloud? If I'm an SMB [customer] I can wipe out 90 percent of my physical infrastructure and move to the cloud so I don't have to worry about equipment failing. And also, now a lot of the enterprise software that I couldn't use before like Oracle and others are now available to me as a cloud service. We want to help the SMB market get there as quick as possible.

Distribution's Role In The Cloud

We always felt our role was to provide resellers with a platform of pre-integrated offerings that can consolidate billing for all of the different offerings. So ultimately a lot of the value we provide is provisioning all of these cloud offerings in one place [with Synnex's CloudSolv marketplace]. And where I really want to get to is to be able to attract more ISVs and cloud app providers that are vertically oriented. There are a lot of sub-solutions for different business processes.

Cloud Confusion

Options are great. But when you present too many options, it can create confusion. So we'll provide the platform and the pre-integrated offerings and the consolidated billing, but we'll also help VARs figure out what they need to have a successful cloud business. And that includes choosing the right products to fit their customers' needs.

Recurring Revenue

We're absolutely hearing that [VARs are struggling with sales compensation models] as they move to cloud and recurring revenue streams. There's also the issue of cash flow. That financial model is different; you're getting the life of the contract paid out over a monthly basis in smaller bits, so there's a short-term cash flow issue. And that needs to be resolved one way or another. VARs know that the recurring revenue model is a great opportunity, but the challenge is making the transition to get there.

Getting Cloud-Ready

Helping facilitate the conversation around transforming your business is something we do. But I think it's important before you even get to that point to show resellers that are in the traditional legacy business how to sell cloud. And that's where we see our value. Our message is, change is coming, and you'd better recognize it and adapt.

Born In The Cloud Vs. Traditional VARs

The so-called born-in-the-cloud guys have been doing cloud for a while, and some of them have become very successful. And when you look at that kind of business, really what they're doing is consulting. And that's a different model than the traditional legacy reseller. For the SMB market, since our VARs are trusted advisers, they can also provide that for cloud. And because they are the trusted advisers, I think there's still time for them to make the move to cloud. But time is running out.

Telecom Services Opportunities

[Telecom services] is a very big opportunity because it's very hard to separate the carrier services from the rest of the mobility solution. The opportunity there is huge. These kind of services have a lot of drag-along for mobile products and vice versa. So telecom services, like 3G wireless switching and routing, are really part of the overall mobile device opportunity.

New Carrier Partners

Many of the telecom operators are coming to us because they're interested in the channel and they want to increase their business there. We formed a partnership with Comcast recently, and we have existing partnerships with Verizon and AT&T. But there are other telecom providers that we're working with, such as Broadview Networks. So we're working with a variety of companies on that end. But we've never been the kind of distributor to just sign up a lot of vendor partners. We like to go narrow and deep with a select group.

PC Demand

We're feeling good about the market. The U.S. was very healthy in the last quarter. We're seeing strong demand for IT. One thing that was a pleasant surprise was the uptick in PC sales. A lot of that was from the end of Windows XP support. That was a big plus. But we're also seeing demand for new touch-based systems, and those new PC sales have a lot of drag-along with other products and services for our VARs.

Mobility Convergence

There's a real convergence with how we identify types of devices [with hybrids and convertible systems]. We're seeing a lot of those kinds of products now. And we get asked a lot about how we define products between tablets and PCs. The tablet that I use is a computer. It's a mobile device but it's got the computing power I need. And at the end of the day, for me, I want a single device that gives me the computing power I need but that's mobile and that I can dock when I'm back in the office or at home.