From AI To Security: PCM's Stephen Moss On The Solution Provider's 2019 Initiatives

PCM: Future-proofing The Business

PCM is now No. 25 on the CRN Solution Provider 500 list. That is a far cry from when the El Segundo, Calif.-based was founded in 1987 as PC Mall, a direct marketing and telemarketing seller of computers and peripherals.

Product sales are still a big part of what PCM does, said Stephen Moss, the solution provider's services president, in a wide-ranging conversation with CRN. Moss said that services in all forms are now driving the company's business. Even more important, the company is looking to make emerging technologies like IoT and artificial intelligence go-to drivers of future business, but only after taking the time to build the right internal resources and making sure customers understand the implication of those technologies.

PCM today is nothing like the PCM or PC Mall of only a couple years ago. Click through the slideshow to see an edited version of the interview.

So where does PCM fit in the channel?

[The channel has] VARs, super regional VARs, NSPs (national solution providers), and globals. We fit firmly in that NSP category. But we also have global attributes. So, if you really look at who we are, we can now today not only provide a footprint of a national solution provider, i.e. the United States, the contiguous 48, we can go up into Canada because of our Canadian entity PCM Canada, as well as PCM UK. We have a lot of customers that have premises that cross the borders. And so when they come to us looking for solutions, whether it's endpoint or network or whatever the case may be, we can do more than just a normal NSP. We can get in there and handle that global solution.

Was PCM's move from its traditional retail product and direct marketing focus to a focus on services good for the company?

I believe it was. 2006 and 2007 was [when we acquired GMRI and Sarcom] that really started to super-heat that journey towards more services-centric opportunities for us as a company. And we've not looked back. Every time we look at acquisitions, typically there's a services component to it, including some of the most recent acquisitions. We made one up in Scotland, in the United Kingdom, as little as 10 months ago.

How does PCM break out its product revenue vs services revenue?

I'm going to give you round numbers there. About 89 to 90 percent is product and product resale, inclusive of cloud solution provider [business] and things of that nature. We count that on the product side. And roughly 10 percent is services. But that 10 percent of services, that's typically services that are performed by our employee base and our close third-parties. These aren't [things like] Cisco SMARTnet agreements. We count all that over in the product family.

So which side is growing faster?

The services is statistically growing faster. I'd refer you to some of our comments in our last two [SEC] filings in that area where we did talk about the pace of growth. In fact, in this last quarter I think we led off with the statement that our fastest growth was managed services.

Is managed services the biggest component of PCM's services business?

Recurring services is, and managed services is a component of recurring services. About 70 to 75 percent of our services is recurring services-based. That's everything from our config and integration services for endpoint products, everything from a mobile phone or a tablet all the way out to laptops and even edge-type components and WAPs (wireless access points), and stuff like that that we can configure that way. And all the way through any of the other devices that we can take across the config bench. And it's field services. We have a lot of customers where we are the field for them. We are the dispatch for them. And then you have the managed services, the RMM, remote managed services. That now for us is follow-the-sun.

When did that happen?

In the last two years, much of our development has moved from a national play to an international play. We were already using Manilla [Philippines]-based resources and some of our captive resources over there to help provide services like patches. Think of the things that we can do prescriptively. We've been doing that for five to seven years. But then we started moving into the languages, the full managed services, the follow-the-sun model as well, because our customers didn't want us to just answer the phone and get back to their IT. They wanted to add that managed services experience as well. And we do everything from managing the endpoint to the most complex Azure or AWS or private cloud or a combination multi-cloud.

What are some of your key initiatives for 2019?

It's going to be interesting. 2019 is going to be a year where we continue to grow heavily in the security space. Everything that we work on, we're realizing that we need to have a security component to it. It's not like security lives by itself. It's now, what are we doing in security around the network. What are we doing in security around cloud implementations or migrations. What are we doing in security around the endpoints and encryption and things like that. So I expect to see security be one of the fastest growth areas. But I think we're going to do it a little bit differently because we're going to be embedding a lot of that into the experience that we have in other service domains.

What kind of investments is PCM making in security to carry out those plans?

Three things. One, we're still pushing resources. We've been hiring very talented individuals [including those with] subject matter expertise around various domains of security. But then we're also working really hard on our partnerships. Some of the things we're doing in the MSSP (managed security service provider) space in particular is helping us be very relevant to the market so we don't end up with the fox in the henhouse scenario. We literally have bifurcated our MSSP to allow us to get those logs and events. We keep that separate from our managed services so our customers know that at any point in time we're actually managing it in the right way. And we have out-of-band communications being able to show if we had an alert or an event. We're growing some of that natively, and we're also growing out some of our partnerships.

What other key initiatives do you have planned for 2019?

The network is going to be key for us. It's always been a strong growth area. But I would tell you that Wi-Fi and things of that nature are continuing to be very hot products for us. And we're selling more of it. Where we used to sell Wi-Fi and networking components for a networking upgrade, very rote, very traditional types of things, now we're getting it from an angle of attack that's very different. Folks want us to come in and be part of a warehouse management implementation, or IoT, or supply chain. And so we'll come in and do the network, the security, all the work around it that is driven by an application workload. That's why we think the solution-first approach for us is a market differentiator in 2019.

Those two areas are incredibly important. We know when we do well in networking, it also drags a lot of security.

Anything else?

Anything around the Microsoft space is always very important for us as well. We know that nearly 100 percent of our customers have a Microsoft technology, whether it be endpoint or cloud or combination thereof, or applications. We know that we perform well there. And that builds a halo effect for us. So we want to go in there and continue to drive the very traditional Office products, the very traditional back office products, all of those capabilities. We've become a very material player in the CSP (cloud service provider) space, Azure and workloads there, and helping customers do the hybrid of those environments. Our strategy is to continue to invest very strongly there, and take down more CSP deals, and fully manage this part of it.

When you talk about being a CSP, are you talking about a focus on Azure, or does that include other clouds?

We do AWS as well. We do some other cloud environments as well. I would just say that we have a more-than-proportional amount of Microsoft resources around Azure because it's just such a big part of our DNA today. But we continue to make investments in other clouds: AWS, Oracle, IBM Cloud, and others.

Is PCM looking far down the horizon at things like IoT?

With our solution-first approach--warehousing, logistics, supply chain--our customers are talking a language that is application first and infrastructure second. … (IoT) sits between those two. These are not traditional devices that are endpoints that users carry around. They're static. They're cameras, they're sensors, they're about anything with a PLC (programmable logic controller) at the end of it and come back with logic that you can drive a solution. … We're looking at all of those types of solutions and saying, how can we take the field resources that we have, the support resources and managed resources, and implement them on the recurring managed side, but also drive our professional services business by being the implementor of record as well. We believe we're going to put two firm feet in both of those in 2019.

At your recent PCM Vision conference, one of the keynote speakers was Jeff Crume, a distinguished engineer at IBM, who talked about artificial intelligence. What is PCM doing in this space?

Every product and every vendor out there is talking AI. So going out into the market and saying we're going to do AI for AI's sake is not being good stewards for our shareholders and our customers. It is more important to actually drive that AI conversation around [things like], how is AI impacting the security world, what is it doing in the networking world, what is it doing in the application and business intelligence world. We think of AI as a layer in the stack of solutions. We think it is one of the layers that you're looking at and thinking, what does it do, how does it fit with the customer, what partnerships make the most sense around that. But we're not going to come to market anytime soon and say, hey, we're the experts in AI... But we do want to be experts and understand how it fits in each and every solution that we come to market with.