MB: The early days of technology was so fast moving and there was so much more margin to be had. You could afford to make mistakes without having huge repercussions and it was still a bit of a black art. It was a bit of a mystery.
In the early days, where I got a lot of my background, the channel was really immature. There was multi-tiered distribution where there was sub-distribution, grey marketing, all sorts of terrible behaviour was occurring in the distribution market in my early days of distribution. Over a period of time, when the bigger players came into the market, they stabilised a lot of that. And also the vendors took a stronger role as well. The vendors were responsible for some of that behaviour, but then they took more accountability as the market grew.
What was distribution like?
MB: Distribution in the early days was only a small part of a vendor's business. It was mainly through resellers or direct, so as the distribution business grew the vendors realised there was a mechanism for them to push most of their business through that and with that came processes, disciplines and all of the other things that needed to take place.
I had grounding from a system integrator perspective (AMS and Alcatel) and then moved into setting up distribution business. I knew nothing about distribution, but that didn't seem to matter in those days, and we grew that to be a $250 million business in nine years, that was Prion, and it was sold for a significant amount of money at that time.
Looking back, what are some of the big trends to sweep the industry?
MB: Big trends are dramatic margin decline as well as significant new players coming in and players disappearing — with some really big players disappearing. Vendors now have a better understanding today than in the early days regarding business acumen. They didn't understand what it was to run a business. They just thought it was a mechanism to move more product. They used to do a lot of channel stuffing in the early days — millions of dollars' worth of channel stuffing. A lot of that has disappeared now with better systems. The B2B commerce, the evolution of that, has helped dramatically as we've grown the businesses.
A lot of companies that have seen failure over the years have been disorganised and gone too many different ways. The successful ones stay focused. There is still a lot of revenue and profit to be made in technology. A lot of the organisations, especially the SIs, these companies, they haven't evolved dramatically over the last 20 years with regards to their business practices and how they go about it. It is different product, but if I looked at any of them I would say it is very similar to what we were running at AMS 20 years ago, which is surprising — I would have thought there would have been a lot more evolution. There seems to be a lot more emphasis around larger SIs from the market, but they struggle with the same issues: they are spread too thin, issues with hiring the right people, alignment to the customer versus the vendor, a lot of instances vendors try to direct them in their backyard.
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