Avnet profits up as resellers buy white-label services

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Avnet profits up as resellers buy white-label services

Avnet has opened up to CRN about its two-tier model for managed services, providing white-label services such as a 24x7 helpdesk for partners in Australia.

The “powered by Avnet” service has been running for six months and is a first for the distributor in the midmarket space, said Darren Adams, general manager of Avnet Australia & New Zealand Darren Adams.

In the latest example of distributors evolving beyond the sector's legacy, Avnet can invest in capital purchases, such as infrastructure or software, and charge it back under a managed services arrangement.

But Adams stressed “powered by Avnet” is more than Avnet taking on capital risk for partners, with two-thirds of the value proposition in services. “Think if it like a menu of options, and that menu has a hundred or more options and you choose which options suit you and your customers best."

He said midmarket resellers might not have capital or scale when moving to a managed services model.

Guaranteed response rates are one part of the service, which Adams described as a “one-stop shop” that goes beyond financing capital.

“Let’s say you use GE Capital. They won’t package it up with service-level agreements about uptime performance for the helpdesk. A credit company is not going to do that,” he said.

The offering builds on a variety of Avnet services, including outsourced integration, hosted private cloud and co-location. “We’re a service provider to service providers,” Adams said.

He stressed that resellers continued to retain the customer relationship and contract at all times, with Avnet acting as a subcontractor to the partner.

Sales down, profit up

Avnet Technology Solutions Australia reported a five percent fall in sales for the 2015 financial year to $422.6 million, according to financial results recently posted with corporate regulator ASIC.

However, the distributor's profit after tax was up, from $3 million the previous year to $9.3 million in 2015.

Adams said investment had gone into sales and engineering, including the field salesforce. Better processes meant the same investment wasn’t needed in operational areas.

“Our result would indicate we competed very well in 2015,” he said. “We added more value for partners and because we did, they consumed more of the higher-value services like ‘powered by Avnet’.”

He pointed to Avnet’s storage and cloud managed services as a strength. Other highlights were bringing on Nutanix, Tintri, UPS equipment from Delta Energy Systems, Websense in New Zealand, and engaging Brocade to virtualise its local data centre infrastructure.

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