SYNNEX diversity paying off in 2014

Computer Products distribution dark days

Many years ago my professional career was primarily working for several computer product distribution companies.  We offered products such as hard disk drives, computer memory, video cards and computer monitors.  They were all specialty items at the time but quickly became commotized where the buyers simply needed availability of a particular part number and the current price (of a hard disk drive, for example).  Fortunately, my particular business unit at each of these companies was focused on a slower sales cycle, yet highly profitable products such as document scanners, document imaging software and optical storage solutions. Law Cypress, International Computer Graphics and Bell Micro were the companies and the business was typically low-margin, high-volume and lazy (quite frankly).  At the time, in the 90’s, there was one company that was a little bit annoying but never amounted to much because they rarely earned the business.  This company was SYNNEX who was known as the low-price, no value-add, awful product knowledge, limited line card distributor.  They were the epitome of distribution scum among many scummy contenders.  In fact the current SYNNEX corporate profile at Yahoo Finance (http://finance.yahoo.com/q/pr?s=SNX+Profile), as of 4/5/14, still reads like their traditional business:

Business Summary

 

SYNNEX Corporation provides distribution and business process outsourcing (BPO) services to resellers, retailers, and original equipment manufacturers (OEMs) primarily in North America. It operates in two segments, Distribution Services and Global Business Services (GBS). The Distribution Services segment distributes information technology (IT) products, such as IT systems, peripherals, system components, software, networking equipment, consumer electronics, and complementary products to value-added resellers, system integrators, and retailers. This segment also offers data center server and storage solutions; and contract assembly services, including systems design, build-to-order, configure-to-order, and assembly capabilities, as well as value added services comprising kitting, reconfiguration, asset tagging, and hard drive imaging. The GBS segment provides BPO services, including customer management, renewals management, back office processing, and IT outsourcing through voice, chat, Web, email, and digital print. The company also provides logistics services consisting of outsourced fulfillment, virtual distribution, and direct ship to end-users; financing services comprising net terms, third party leasing, floor plan financing, letters of credit backed financing, and arrangements; marketing services, such as direct mail, external media advertising, reseller product training, targeted telemarketing campaigns, trade shows, trade groups, database analysis, print on demand services, and Web-based marketing; and online and technical support services. It also has operations in China, India, Japan, the Philippines, Costa Rica, Hungary, Mexico, Nicaragua, and the United Kingdom. The company was formerly known as SYNNEX Information Technologies, Inc. and changed its name to SYNNEX Corporation in October 2003. SYNNEX Corporation was founded in 1980 and is headquartered in Fremont, California.

 

That was then, this is now (perception is everything)

Each company I mentioned above has since seceded to exist as a business or has been acquired for next-to-nothing of its once great market valuation.  Why and why does SYNNEX’s business continue?

Because selling a tangible hardware product such as hard disk drives, computer memory or video display components becomes such a commodity over time that the only thing that matters is ‘price’ and ‘availability’.  Hence, there is no value-add and, therefore, little profit margin.

Since those long-ago days I had not paid any attention to the Company SYNNEX because I just assumed they would eventually become irrelevant and meet the same fate of many of the other computer products distributors.  However, I watch CNBC for several hours every morning to catch up on the daily business news and recently SYNNEX (NYSE: SNX) was in the news so that immediately peeked my interest.  The stock was up something like 15% in the early morning trading and I wanted to know why so I investigated this Company that I once had little regard for.  For the record, SNX’s stock price ended up over 23% for the day of 4/4/14.  But why?

stock price

Changing the corporate DNA dynamics

First and foremost, the obvious reason is that SNX had great financial results in the previous quarter and had solid guidance for the upcoming quarter.  These are the facts, but what drove these great financial results and such optimistic forecasts?  With nothing more than browsing the SYNNEX website for the answers, it’s my personal opinion that they have gone to great lengths to change the corporate DNA from a low-margin distributor persona into a true value-added solutions provider and ‘cloud’ seems to be a key component of this strategy.  A quick look at the SYNNEX corporate website is quite telling of the transformation for the Company.  No longer is a ‘great price on this particular disk drive’ prominently featured on their website.  Rather this language is replaced with language more relevant and value to business consumers such as ‘process services company’ and ‘technology solutions’ (instead of ‘distribution products’).  While it’s clear that SYNNEX still runs their traditional distribution business these corporate DNA changes are significant and ‘cloud’ plays a big part into this.

main page

SYNNEX to the Cloud?

While this might be a bit of a stretch since I don’t know anything other than what’s available on their website about their cloud business, I bet that ‘cloud’ is a significant part of the overall SYNNEX strategy.

technology solutions

For example, only one-click deeper on their website displays a well-organized list of who’s-who in the IT space such as Microsoft, Symantec, Adobe and many others as technology partners for SYNNEX CLOUDSolv Solutions.

cloudsolv

What do you think?  In your opinion is this enough of a good strategy to help SYNNEX be successful in the long run?

Governance Gone! Wild!

While to some the acronym, ‘GGW’ might conjure up beautiful visions of fancy tour buses traveling the country capturing everything in sight on video for the whole world to see (as long as you pay the $9.99 per DVD, or opt for the $19.99 for full-DVD collection, or get their online subscription for $9.95 per month — or whatever it costs), I have just witnessed a different version of ‘GGW’ that is anything but beautiful.  In fact, ‘Governance Gone! Wild!’ is down-right scary!

I just attended several days of the Dreamforce 2012 conference in San Francisco and, as always, I was impressed with the innovation, which is clearly evident at these events.  I was impressed with the creativity of all the Software as a Service (SaaS) applications available built upon the Force.comheroku and/or other Salesforce platform services.  There were apps for this, and apps for that, and apps that work with other apps, and integrated apps.  In fact I’m on “app-overload” right now and tonight, instead of sweet sugar plums dancing through my head, I will most likely have a nightmare about all the possible lack of governance issues that are not being addressed in this quickly-evolving ‘cloud’ environment.  It’s truly like the Wild West!

This is not to say that these SaaS application vendors have overlooked governance issues completely.  In fact I suspect many of them take these items seriously and have built their respective solutions accordingly.  However, I can tell you what is an obvious generalization is the main pitch-points in these solutions is (1) easy user experience with a simple, familiar web-interface and (2) ability for organizations to self-manage or re-configure solutions without the need for costly professional services or software development.  These are not bad pitch-points in the least but what I must say is that conversations seem to rarely dig too much deeper than the surface of some point-and-click functionality and a demonstration or two.  I admire these vendors for their passion to solve very specific needs for enterprise customers and I’m invigorated with their energy to quickly have their Killer SaaS app deployed and being utilized by their customers to improve operational efficiencies.

Yet, as I put myself in the shoes of the SaaS vendor the last thing I would want to do is possibly slow down the sales cycle by bringing up governance and organizational readiness topics such as policies, processes or people that wasn’t directly related to my particular technology.  These topics are somewhat related to the technology but it’s more about the organizational readiness by the customers themselves.  We must remember that these applications are promoting their solutions to enterprise organizations, not consumer.  Therefore, I would like to give one specific example of what caused my “Governance Gone!” nightmare.

 

Wild! 

As seen below in the photo below (not to the left), Salesforce.com introduced their new “marketing cloud”.  At the Dreamforce conference they setup an example of the ‘Dreamforce Social Media Command Center’.  They had a full-time agent at each of several work stations.  Each of these work stations was monitoring a different social media feed.  One each for Facebook, Chatter, Twitter, LinkedIn, YouTube and maybe even a few other social networks to provide an example of a Social Media Command Center and how this could be a reality within your particular organization.  As I saw this incredible activity of feeds, tweets, #hashtags, likes, posts and other real-time social interaction – this is where it really struck me about Governance (or lack thereof in this scenario).  It was Wild!

These are the types of things I was thinking to myself, not from a technology perspective itself, but rather ‘are these people considering the following types of items’ before going buck-wild to immediately implement this type of Command Center within their own organizations:

  • People:
    • Since these are mostly real-time conversations and, naturally, the business wants to represent themselves professionally, what type of special training will be required for this new type of social media command center operator?
  • Policy:
    • As we all know, social networks are filled with people that sometimes spew nasty, disgusting or plain hateful messages because they think they are completely anonymous to the world.  In these cases what is the organizations policy about any responses, deletion of messages or any other action?
  • Process:
    • With this gluttony of electronic information overload from such a wide ranging variety of sources, in different formats and with such a diverse contextually meaning, what is the process to accurately analyze the data?  After all, I would imagine that video-’gamers’ are quite active on these types of social networks and “rad”, “bad” or “bitchin’” don’t quite translate into the true meaning if you just consider the official dictionary definition of a word or phrase.

In summary, in our zeal to innovate and offer powerful, useful, as well as, truly remarkable technology, which is going to revolutionize the way we do business, we should not be in such a rush to not consider and overlook an organizations preparedness from a governance standpoint.  Great technology is not always good enough.  If your organization decides to not consider well-thought out governance plans then the “Governance Gone!  Wild!” bus may be paying you a visit sooner than expected!

Salesforce (report of $140 million from State Farm Insurance) and Concur $1.4 billion from GSA

As of my writing this blog, 8/13/2012, this news is only a rumor so I want to preface my post, but Salesforce.com reported scored a $140 million dollar deal from State Farm Insurance:

http://allthingsd.com/20120813/salesforce-com-just-landed-its-biggest-deal-ever-but-cant-brag-about-it/?reflink=ATD_yahoo_ticker

What isn’t rumor is that Concur was awarded a $1.4 billion dollar contract from the General Service Administration (GSA) to provide online travel booking, authorization and voucher-processing services for the next 15 years.

http://www.bizjournals.com/seattle/news/2012/06/05/concur-wins-14b-government-contract.html?ana=yfcpc

The Fad of the Cloud is getting ever-so murky!  #CloudIsAFad

Process is most important

I’ll never forget a simple, yet powerful, comment I heard many years ago that really struck a nerve with me.

I was attending a small local trade show event in Denver.  I was talking about document scanning and storing images at our companies booth to attendees that would stop by for a chat.  One of our technology partners was in the booth next to me and heard my elevator pitch several times.  What I didn’t know, or realize, at the time was that my message was ineffective and boring.  Let me explain.

See….scanning an image and storing it has some, but limited value unless the purpose is just to archive the images for occasional retrieval at a later date.  What this technology partner did was something subtle and amazing (to me at least).  He took my elevator pitch and slightly modified it and, viola!, instantly the simple process I had been describing to the attendees of this trade show became something of genuine interest to them.  What this technology person said was this:

“Instead of scanning to a destination, you can scan to a process.”

Simple, but a powerful statement and instantly scanning documents now took on a whole new meaning and was a sincere business value proposition.

So, on a related note I just read an article in Forbes that was entitled “Forecasting Public Cloud Adoption in the Enterprise”.  In this article the author cited a recent forecast from Gartner on the market size for “Cloud Business Process Services/Business Process as a Service (BPaaS)”.  The most interesting forecast statistic to me personally was the following:

Cloud Business Process Services/Business Process as a Service (BPaaS)

  • Gartner is predicting that BPaaS will grow from $84.1B in 2012 to $144.7B in 2016, generating a global compound annual growth rate of 15%.

$84.1B is 2012 and $144.7B in 2016 surely validates that Business Process is most important and simple storage is basic and lame!  You can read the entire article at the link below:

http://www.forbes.com/sites/louiscolumbus/2012/07/02/forecasting-public-cloud-adoption-in-the-enterprise-2/

Thanks Chris for the terrific insight!