Creating a legacy of its own

As Redington Value gets set to enter its fifth year of operation, the man at the helm of that division — Ramkumar Balakrishnan — explains the strategy that has helped it create an identity of its own.

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Creating a legacy of its own
By  Andrew Seymour Published  June 13, 2010 Channel Middle East Logo

When broadline giant Redington Gulf first announced plans to develop a value added distribution arm it was greeted with raised eyebrows by many in the market. But as Redington Value gets set to enter its fifth year of operation, the man at the helm of that division — Ramkumar Balakrishnan — explains the strategy that has helped it create an identity of its own.

Channel Middle East: When people talk about Redington they generally think of volume distribution. How is Redington Value different to the box-shifting side of the business?

Ramkumar Balakrishnan: It is basically about three aspects and all our endeavours are on those. The first aspect is in terms of how we can shorten the sales cycle — be it for the principal or for the reseller. The second is how we can make technology expertise available locally and the third is how we can help demand generation. As an indirect company we cannot do that on our own, but we can definitely play a role in generating demand, which is why we work closely with the vendors and do a lot of co-branded events.

CME: Have you found Redington’s reputation as a volume player to be prohibitive when it comes to convincing prospective vendor partners of your value added skills?

RB: During the first two years, yes, because obviously we had to prove ourselves and vendors needed to know that we were going to be serious about it. But if you look at it today I think we have crossed that line quite significantly. Even for Redington, the value division is a very significant contributor to the bottom line, so the focus and attention has been dramatically different in the last two years, both internally and externally.

CME: Are there any benefits that the value division can derive from belonging to a much larger group? Or is it completely autonomous?

RB: Fundamentally we are a separate business unit so the only common things are finance and logistics; everything else is run separately. We even sit in separate offices, which was done for a reason because the kind of people that you have under the value division warrant different compensations and structures. In terms of benefits though, it does give us a ready made channel that knows Redington, as well as infrastructure, logistics and finance capabilities. And most of the vendors initially look at us for the reach — they know that if they start talking to Redington they can get across to 19 end-markets almost instantaneously. That is a huge benefit which we drive out of the volume distribution.

CME: Your portfolio already spans technology from vendors such as Avaya, HP ProCurve, Juniper, Molex and SonicWall. Are you looking to pick up more franchises?

RB: Yes, we intend to bring a few vendor franchises on board for the infrastructure and security silos of our business. This will be purely on areas where we don’t exist today. By their very nature, security vendors are very specialised so there are quite a few areas in the security portfolio to look at, while infrastructure is a completely virgin area for us so we intend to bring in a few more vendor franchises there.

CME: What parameters do you use to measure your success as a VAD?

RB: The fundamental characteristics are return on human capital and profitability. Those are two very key measurements for value added distribution as compared to volume distribution, which is driven by return on working capital.

CME: So having feet on the street is an important element of the value added distribution business then?

RB: Yes, because it is about being able to deliver a value proposition on a solution basis. 80% of the business that we are able to do today is some kind of a solution. We don’t have anything in our portfolio which is just off-the-shelf and you are able to just sell. We currently have 56 people in the value added division across the region and those are split in terms of sales, sales support, products, product support, operations, marketing and pre-sales. And for us, the investments in pre-sales have all been in-country.

CME: Who do see as your main competitors when you survey the Middle East VAD landscape?

RB: I think the most respected players are Westcon Group and Aptec Group. Avnet is also a player but it is only restricted to a certain portion of its business, it doesn’t represent the entire portfolio. Once you start looking at the specialised kind of distribution then you have FVC and Computerlinks, but they are very boutique players and we don’t usually cross paths because we are not dealing with the brands they are.

CME: How do you see the dynamics of the VAD landscape changing?

RB: I feel that in the next three to five years there will be three large players which will probably have a significant portion of the play, so there is scope for some consolidation to happen. It is something that will definitely happen in due course because of all the consolidation taking place at vendor level.

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