Five bold statements from TD Synnex CEO Rich Hume
Distribution boss opens up on lead times, investment priorities and market growth expectations
TD Synnex CEO Rich Hume this week sat down with our sister title CRN US to discuss lead times, investment priorities and distribution's place in the channel.
View the full article, from CRN's Joseph Kovar, here.
Here we round up five bold statements made by the distribution chieftain during the interview.
I suspect that by the time we get to the middle of 2023, most of [industry supply chain issues around datacentre and infrastructure kit] will begin to sort itself out, barring any unforeseen future circumstances.
What was Hume talking about?
Amid some concerns that the supply drought that has dogged the IT channel since the start of 2021 could drag on for another 12 months, Hume gave a more optimistic assessment of the situation.
"I think that the back half of next year should offer across-the-board ‘pre-COVID' serviceability from a supply chain perspective," he added.
Customers have adjusted well to longer lead times since Covid, Hume added, meaning that substitution of products in datacentre infrastructure categories has been the exception rather than the norm.
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Five bold statements from TD Synnex CEO Rich Hume
Distribution boss opens up on lead times, investment priorities and market growth expectations
If you look over the last couple of decades, IT as a category always outperforms GDP as a generalisation by two to three points. So the homework is, pick what you think will be the GDP for the US or the world, then add two or three points to it. Now, it'll be about what I would guess IT would be.
What was Hume talking about?
Asked about what he was expecting the economy to do in 2023, Hume said he would offer only a partial answer before setting everybody else a "piece of homework".
The Office for Budget Responsibility expects UK GDP to contract by 1.4 per cent in 2023. Using Hume's logic, that would mean the UK IT market would grow by between 0.4 and 1.4 per cent.
"Obviously, we're hearing about inflation and interest rates. We know that generally, the Fed is working to slow down the economy. And I think they'll have success in doing that," he added.
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Five bold statements from TD Synnex CEO Rich Hume
Distribution boss opens up on lead times, investment priorities and market growth expectations
There's usually an opportunity offered to the business partner ecosystem in slower times because vendors as a group become a bit more reliant upon our motion and capability. And one of the primary reasons for that is the variable cost model of the business partner ecosystem.
What was Hume talking about?
Hume said the slowing economy could play into the channel's hands as vendors look to optimise their cost structures.
"One of the plays that takes place when they optimise that cost structure is they need additional help, because they potentially have fewer bodies," he explained.
"And so they turn to the business partner ecosystem to potentially pick up some of the capacity where they might be a little bit more conservative on in slower times."
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Five bold statements from TD Synnex CEO Rich Hume
Distribution boss opens up on lead times, investment priorities and market growth expectations
Our high-growth business areas, which are all that I named—cloud, cybersecurity analytics, IoT, hyperscaler technology—they're beginning to approach 20 per cent of our gross billings. So it's becoming a very meaningful part of that basket of high growth areas of our overall business.
What was Hume talking about?
Asked about investment priorities for 2023, Hume said that TD Synnex would continue to "grow, grow, grow" its high-growth technology categories, which he said now generate nearly a fifth of the distributor's business.
"We've added quite a few new vendors in each of our line cards in those areas. And so the base of business as I said earlier is becoming quite meaningful," he added.
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Five bold statements from TD Synnex CEO Rich Hume
Distribution boss opens up on lead times, investment priorities and market growth expectations
I would characterise it as a work in progress
What was Hume talking about?
Asked about how well the investor community understands distribution, Hume retorted that it was a "great question".
"I personally commit a lot of my time to meeting with and educating investors. An indication that the market is starting to understand the business partner ecosystem, in particular distribution, over the last five to seven years, is the ramp up in PE (private equity) activity that we have seen," he added.
"Generally speaking, the PE community is a very astute, smart, savvy group of individuals. They've taken the time to understand the value. And I think when that happens, it brings a broader awareness to the entire investor market. And so I say it's a work in progress, but we have this rise in PE interest. We also have the opportunity to make sure that we're taking the story to market as individual distributors. And the GTDC (Global Technology Distribution Council) does their part as well in trying to make sure there‘s a good awareness as to what the entire end-to-end ecosystem has to offer in terms of value."