WWT Jim Kavanaugh: 10 Big Cisco, Supply Chain And M&A Bets

From partnering with Cisco and boosting World Wide Technology’s supply chain to acquisitions and hiring, here are WWT CEO Jim Kavanaugh’s 10 big bets for 2022.

World Wide Technology’s Jim Kavanaugh is betting big on Cisco’s software strategy, boosting WWT’s supply chain and hiring “at least” 1,000 new employees in 2022, with potentially some “boutique” acquisitions ahead.

With chip shortages and supply chain constraints rocking the IT industry, Kavanaugh is doubling down on growing WWT’s supply chain footprint and data center capabilities to meet customers’ growing IT demands.

“Our supply chain area has continued to grow in a significant way. I’d say in the last 18 months, we’ve added almost 2 million square feet of incremental space in our logistics and supply chain area,” said Kavanaugh.

The $13.4 billion digital transformation superstar is also betting big in 2022 on Cisco’s software and Software-as-a-Service (SaaS) future. “Sometimes people from the outside may not recognize that, but [Cisco is] absolutely moving more towards being a software and SaaS company,” said Kavanaugh, who co-founded WWT in 1990.

Jim Kavanaugh is a legendary channel CEO who has transformed WWT through multiple acquisitions over the past three decades, making the St. Louis-based solution provider one of the largest across the globe.

Kavanaugh tells CRN about 10 of WWT’s biggest and more critical IT investments and bets for 2022.

Boosting Supply Chain

Our supply chain area has continued to grow in a significant way. I’d say in the last 18 months, we’ve added almost 2 million square feet of incremental space in our logistics and supply chain area.

We’re going in to help organizations really design their data centers. Then from designing their data centers as we collaboratively work with them, we help design these high-density racks of equipment and networking infrastructure that are going into them. We come up with final designs and there’s a multitude of different configurations.

We’re building out more high-density racks for large enterprise customers across the board—the big banks, big financial services companies, health-care organizations, hyperscalers. So literally thousands and thousands of racks that we’re building, and that is continuing to grow at a very exponential rate.

We have a little over 4 million square feet in distribution logistics facilities that’s focused on large areas of very concentrated clean rooms around the building and designing of the racks that we build out.

So we have those facilities here in the U.S. that are in St. Louis. We have them in Amsterdam to support the U.K.; Singapore to support Asia; and in India to support a broader space of Asia. That’s been a really big growing area of our business so we can help customers from that design, engineer, finalize statement of work—and then literally go more into a production, contract manufacturing mode of building and rolling out those. Then deploying those to their data centers and their corporate infrastructures around the world. That’s been a big growing area.

Cisco Software And SaaS

We have a lot of activity with Cisco. So good growth in just about every sector with Cisco as they’re growing. Our numbers have been very strong every month and every quarter.

Some things that are very interesting is their business is very strong with a lot of demand across the board. Probably their biggest challenges are chip supply and some supply chain issues that they have. But overall, demand over the last several quarters has been very, very good.

Another thing is Cisco’s thoughtful and prudent transition into software and making sure that they don’t lose any of their core competencies and core business around infrastructure and hardware. So there’s still that opportunity and that focus on growing, but a significant focus on listening to their customers around how to drive a more software-enabled outcome and solution for customers. And that’s through the deployment of these large enterprise agreements that really help bundle and drive the enablement of Cisco’s overall portfolio of software and hardware. We have been working very closely with them to think through how that is being enabled to make sure that we’re hitting the mark with customers.

That is a big move for Cisco. Sometimes people from the outside may not recognize that, but they are absolutely moving more towards being a software and SaaS company.

M&A: Potential ‘Boutique’ Cloud, Security Or Digital Transformation Acquisition

Probably 99.9 percent of World Wide over the last 31 years has been all organic growth. That’s one thing we may begin looking at a little differently, just from the perspective of continuing to invest aggressively in regard to growing organically but looking at some boutique acquisitions potentially in areas that could be security, digital or cloud.

We just think on-boarding people is a more effective way to continue growing to make sure you’re hiring people in a very thoughtful way that makes sure those people map to the culture and the behaviors that you have. It can be a bit more difficult to do that through acquisitions. I’m not saying acquisitions are a bad thing. It’s something that I believe we need to be thinking about more seriously and looking at.

But when we look at some things that we may want to accelerate in some of these core areas, an acquisition may be the right thing and the most prudent thing to do.

Acquisitions are a little challenging at times because of the price points of some of the boutiques. So that is not something that anybody I would say enjoys paying--some of those multiples. I’m not committing that we’re going to go out and do that, but it’s going to be something that [we are] more focused on. There will be individuals that will be looking at those things specifically. We feel very good at where the business is today. The activity that we have coming out of the year is very solid. … We’re going to continue to do the things that we’re doing and continue to keep our eyes and ears open.

IT Infrastructure Upgrades And Testing As ‘New’ Workforce Comes Back

Bookings are very, very strong when it comes to our traditional IT infrastructure business.

We are seeing large organizations coming back [from COVID-19] needing to upgrade their IT infrastructure and really modernize that. In the early to mid stages of COVID, because everybody was working remotely, people were putting some of the budgets on hold and maybe building out some things to actually enable remote work—that’s not going to go away. It’s going to be a way of life. But people are going to come back into the workforce and that’s going to start happening in a more significant way, I would say, over the next three months to nine months.

From an IT perspective, that also requires companies and organizations to make sure that they have the right technology infrastructure for the remote workers. And they also have to make sure that their corporate infrastructure is up to grade and that they’re able to provide—when those massive groups come back into campus and are lighting up videos, Wi-Fi, etc.—all of that infrastructure needs to be retested and upgraded. And we’re seeing those things happen.

Hiring ‘At Least’ 1,000 New Employees In 2022

I absolutely see us hiring at least 1,000 people next year when I look across the organization. It could be more based on the trends and the things that we’re seeing today.

This year, we’ll probably end up somewhere around 1,000 people that we will hire by the time we close out 2021. We don’t have our final budget for next year, but I would imagine—as we’re building that up, and based on the trends and the things that that we’re seeing today—I would see that number being very similar next year. That is really all organic growth.

Activity is very strong in just about every sector that we’re going after, whether it’s commercial enterprise, service providers or even hyperscalers. Also in the public sector, we’ve seen good activity and movement from both federal and state and local government, both domestically and globally. Even with all the craziness that’s been going on, this been a very strong year overall.

Digital Transformation Consulting And Management

We’re seeing a lot of growth in a couple of different areas. If I dissected it, one would be just overall digital transformation. So that would be digital strategist, management and consulting helping organizations think through and lay out a plan in regard to how they digitize their business and enable it through software.

Then really roll that into driving differentiated patient experiences, such as in health care, or it can be a fan experience or employee experience. That requires both understanding the IT infrastructure, but really what’s possible from a digital strategy and a transformation standpoint. Then actually starting to put into work the software development that needs to go in to create that integration, which a lot of it will end up being mobile through some type of an app. So we see a lot of opportunity there. A lot of opportunity and continued growth on services-related IT infrastructure modernization—looking at it across the board.

Anytime we do a software development or a digital transformation project, we are always connecting our management consultants, our software developers, with our big data team. Because there’s always an element of data analytics, AI and machine learning. It is literally being integrated into those architectures, but more importantly, the outcomes that are being delivered.

Hybrid Work For WWT Employees; ‘COVID Is Not Going To Go Away’

At the end of the day, I’d say what people want is they want their cake and eat it too. They want to be able to work from home. Then they want to be able to come in and have some social interaction. From my perspective, culturally, that’s what we will end up doing at World Wide Technology. We will provide that level of flexibility and autonomy and empowerment to our employees.

Just how COVID is actually playing out … it’s going to be a marathon. And I think it’s an even longer marathon than many of us expected. COVID is not going to go away. The virus is not going away. It’s something we’re going have to live with. Because of the vaccine and different protocols that have been implemented, it will subside, and it becomes something that we all just have to deal with and live with.

From my perspective, we’ve taken a lot of time to make sure that we’re staying very close to our employees. We’re communicating on a very regular basis in regard to our commitment to their safety and well-being.

So our culture and our values are more important than ever, especially when you’re going through challenging times like this in making sure that our employees know that their safety and well-being—and their employment—is our No. 1 priority. That’s one thing that I’ve communicated from day one going through this, and I’ll continue to communicate, as we slowly work ourselves into whatever that new norm is going to be.

Cloud And Security

There are really specific areas of opportunity and growth around security. That obviously is going to continue to be a top topic in every sector and every business, especially as there are more and more devices that are being deployed. So that creates more endpoints in a number of different ways, shapes and forms that open up opportunities for breaches that create a higher level of complexity. So security is one that we see growth in as fast as we can find talent to bring into our security—both deep technologists, but also senior-level management consultants that specialize in advisory services around security.

The same thing applies in cloud. It’s both building out private cloud platforms for customers, but also hybrid, and connecting into the public cloud providers, specifically Microsoft Azure, AWS and Google Cloud Platform.

Investment In Cisco’s Chuck Robbins’ Growth And Transformation Vision

We spend a lot of time with [Cisco CEO] Chuck [Robbins] and their executive management team. They’re coming out of their well-received Partner Summit. So I would say at a high level, there’s a number of things that are going on with Cisco. That’s both Chuck’s commitment and executive team of growing organically and through acquisition. So they’ve looked at doing that in a very thoughtful and prudent way. But really knowing that they need to continue to grow and they need to invest—and they’re doing just that organically and through acquisition.

There’s a lot of things behind the scenes in [Cisco’s software and SaaS transformation] and we’re working with them on those things, but also to make sure that they don’t lose any opportunity within the traditional infrastructure side of the hardware and software pieces that they’ve done. It’s really driving a difference in enablement and providing more flexibility for the customer in regard to how to consume the overall portfolio of Cisco products and services.