Westcon’s Security Bet

The technology market is quite vibrant and other than a short time between 2001-2003 there is always a good deal of optimism in the space. For me it has been quite exciting because I enjoy the marketing side of technology as well as the bits and bytes at the processor level. Case in point is the cloud computing market which is really a hot “new market” that is really a return to the mainframe.

And boy did it take a while to get us to the point where companies accepted it. Since 1999 it was the ASP market, then on-demand, then hosted, then SaaS and I probably left an acronym out – but more or less the concept has remained the same – host your application elsewhere.

In my never-ending quest to see where the “smart money” in the market is flowing, I conduct lots of interviews. And when I say “smart money” I am making a referring to the companies which are at the center of the market – they deal with product testing, supplying components or are resellers and distributors. Companies in these areas can see a downturn or upturn before most of us because they are entrenched in multiple supply chains.

For this reason I was especially interested to speak with Lynn Smurthwaite Murphy the new Senior VP US, Canada at Westcon Group to get a sense of where the company is looking to expand. In short, one of the company’s key spaces at the moment is security. Having been with the company for 12 years, she has certainly seen her share of ups and downs from a similar vantage point.

Westcon has two announcements in the space. The first is Andrew Warren has been named the VP of Westcon security and they have also struck a deal to resell products from security company Palo Alto Networks. The goal for the company is to become the go to security distributor in the industry.

The reasons security is hot? Simply, virtualization, cloud computing and any-time, anywhere computing. Smurthwaite Murphy said a CIO will not migrate to a virtual environment unless it is secure, scalable and reliable.

She went on to say that in the distribution market, when a VP position like this becomes available you look to see if it makes sense to consolidate or replace it and they decided it made sense to keep a dedicated security executive. She is very happy that Andrew has distribution, channel and security experience and “He is a welcome addition to our management team,” she said.

In terms of sales growth for the company they saw Q1 grow over Q1 of last year and Q2 grew a bit more than Q1. The growth was across the board and was likely good news for a company facing a turbulent business climate while simultaneously celebrating its 25th anniversary. She mentioned she is cautiously optimistic about the future.

An interesting comment in our conversation was that the complexity of solutions such as video or convergence means resellers aren’t likely to sell broad product lines, Instead she expects partnerships between complimentary VARs to continue.

Smurthwaite Murphy explained the reason the company has been around a quarter of century is that they run a very tight ship with processes and metrics and little margin for error. Moreover she says the last year the company with a better strategy rose to the top.

She says the world is getting flatter and it becoming more difficult for independents to deal with capital requirements, global procurement and the specifics like recovering VAT tax.

In terms of dealing with margin compression, Westcon is maintaining relevant relationships and doing their best to make a material impact on the bottom line. This includes training, help with sales and demand generation.


TMC’s Erin Monda discusses the government overbilling case between Westcon, Cisco and the Justice Department (the second story)

When asked about a recent US government overbilling case (video) where Westcon and Cisco paid $48M to resolve claims taxpayers were overcharged via a General Services Administration (GSA) contract the company provided the following prepared statement:

The reported allegations are associated with events that go back several years ago and in no way reflect Westcon’s business practices. As with any legal issue, items of this nature take some time to resolve. It is important to note this does not in any way affect our current government business – as Westcon maintains an active GSA contract – nor does it affect our strong relationship with Cisco.  We are pleased to have this issue behind us and will continue to build on our reputation as the market’s leading specialty distributor in data center, networking, convergence, security and mobility


TMC’s Erik Linask discusses Weston’s product portfolio and strategy with Anthony Daley, EVP The Americas at Westcon

Security will continue to be a huge and growing market for years to come and as more of our world becomes connected to the Internet like our electrical grid for example, the need to keep hackers and other malicious people out will only grow. Westcon is wise to be investing in this area and it is certainly one of a few really hot spaces which we at TMC will continue to follow closely for our audience.

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