CDW, World Wide Technology: Cloud Is An Opportunity Not A Threat

The chief executives for national solution provider behemoths CDW and World Wide Technology Monday were among the channel giants telling investors they see cloud computing as a big opportunity rather than a threat as customers embrace a hybrid private-public cloud model.

"We view cloud computing absolutely as an opportunity, and it is because we have a holistic view of what cloud computing is," said CDW Chairman and CEO Tom Richards, speaking before investors at the annual Raymond James Systems, Semiconductors, Software & Supply Chain Conference in New York City.

The issue of whether the cloud represents a threat or an opportunity to established IT giants like CDW has been a hot topic for years at the annual Raymond James Conference.

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Richards, for his part, left little doubt that CDW, a $10 billion company, is in a good position to deliver on the promise of cloud for the 250,000 customers it has served for more than 30 years.

"Most customers are implementing some version of a hybrid solution," he said. "I have been in technology my entire business career. It seems like I have seen this movie before."

Without counting its substantial private cloud computing solutions, cloud represents $70 million in recurring revenue for CDW, said Richards. "When we stand up a private cloud solution, it is pretty much what we have always done in the data center," he said.

Richards said CDW is fully prepared to attack the cloud opportunity with what he called the company's 6,900 coworkers, of whom two-thirds are in customer-facing roles.

CDW has already built out a full cloud portfolio including software-as-a-service (SaaS) offerings, cloud migration and integration services, and cloud hosting/managed services. "It's a pretty pervasive go-to-market strategy at this point," said Richards.

Given CDW's annual sales represent just 5 percent of what it sees as $200 billion-addressable information technology market, Richards said he sees significant potential for growth with cloud. "It presents a meaningful opportunity for us depending on where the customer is and what segment they are in," said Richards. "I look at it as upside."

Richards was one many channel CEO executives appearing at the Supply Chain conference at the InteContinental New York Barclay who said the hybrid cloud model is paying off in sales growth for their companies.

Jim Kavanaugh, CEO of $6.5 billion national solution provider World Wide Technology, predicted 2014 sales growth of 15-20 percent based in part on the cloud phenomenon. He said customers are looking for companies like World Wide Technology to help them grapple with complex cloud issues.

Solution providers like World Wide, he said, are providing critical technology consulting on a wide range of architecture issues involving public-private cloud from security to scalability, said Kavanaugh.

"Where we spend the majority of time with our large clients is helping them sort out what infrastructure they need to have internally," he said. "There are a lot of complexities in regards to really managing a cloud infrastructure."

NEXT: World Wide Technology CEO Is Bullish On 2014

World Wide Technology's Kavanaugh said he has seen a number of large enterprises bringing once public cloud workloads back in house. "Everything is not going to go to the public cloud and everything is not going to be just done internally," he said.

"I am very bullish, very excited about going into 2014," he said in an interview with CRN. "If the past is any indication, we have grown over the last 10 years at 25 percent compound annual growth. And this year we grew our top line 27 percent." World Wide Technology plans to add 450 new employees next year, he said.

Vincent DeLuca, CEO of Logicalis, a $1.5 billion national IT services company, said he sees cloud as "synergistic" with the company's traditional infrastructure business. In fact, he said, Logicalis is seeing significant growth from helping IT organizations effectively become cloud providers themselves with IT orchestration and services capabilities.

Logicalis' aim is to drive its revenue mix to 40 percent services with 80 percent of that coming from recurring revenue over the next three years, said DeLuca. He said the big upside for Logicalis is the high margins that come from cloud computing managed services. "The margin being pulled off of cloud-based services or managed services is so much stronger," he said, comparing it with traditional infrastructure.

Paul Lidsky, president and CEO of Datalink, an Eden Prairie, Minn.-based infrastructure provider, said his company, like Logicalis, is also helping customers build out their own IT services units with orchestration and service-level capabilities. He said that is making Datalink more valuable to customers and opens the door to hybrid cloud engagements. "Having helped customers build a private cloud, we can take them to the hybrid model," he said.

Lidsky said solution providers that embrace the cloud computing movement will thrive while those that don't will go out of business.

"In 30 years of doing technology, I know if you endorse [new technology] and find ways to be of value to your customers, you come out healthy," he said. "If you put your head into the ground and ignore it, eventually your business is gone. For those of us realizing cloud computing is an opportunity [and] it is not necessarily a threat to our company, there are a lot of enhanced services and capabilities we can offer as we go forward."

PUBLISHED DEC. 9, 2013