For a man with the unswerving courage of his own convictions, Steve Soper's plan to build Beta Distribution into a £500 million business within five years is entirely plausible.
Soper's longer-term growth strategy confirms what those familiar with Beta Distribution have long known - that the company is a sleeping giant and sooner or later the industry would wake up to its growing influence. According to Soper, that time has come. He grasped the reigns as Managing Director in 2008 after a seven year stint in the firm's FD seat, taking over from founder Gary Wilson, now Chairman, who established the company with his wife Irene in 1980 as a fixer of Canon calculators, moving into print distribution. Those days are long gone. "During the past 10 years we've transformed the business from a niche print distributor with revenues of around £30 million into an international operation approaching £220 million," said Soper.
The printer consumables market still accounts for over 50 per cent of Beta's business and gave the company a broader footprint across the reseller channel. Alongside this Beta established a Technology Solutions division to capitalise on the growing data storage market, becoming an authorised distributor for the likes of Fujifilm and Maxell based largely on tape back-up products. "In recent years we have entered the hardware and software side of this market with new distribution agreements," added Soper. "This business has a service led proposition so we now provide VARs and MSPs with a range of pre and post-sales services through technical experts."
Last year Beta set up Digital Media Solutions which provides end-to-end digital signage solutions, covering the supply of the product through to final installation, and offers a content creation service. "The signage market is set to undergo a significant change in the way it is sold as Samsung, in particular, is targeting a model where users can effectively rent screens through Samsung Capital, allowing hotels, retail outlets and many other verticals to entertain large scale projects on an opex rather than capex basis," noted Soper.
Beta employs circa 140 people and trades with around 3,000 resellers of all descriptions including IT resellers, MSPs and VARs. In particular, Beta is increasing its presence in the data/technology market through new vendor and customer trading relationships and the recruitment of skilled staff such as Solutions Architects.
The company is also growing its presence in more regions at home and overseas. "We have expanded into Europe with sales operations in Benelux, France, Germany and Poland, which are all serviced from a warehouse in Maastricht," said Soper. "This European business, that didn't exist three years ago, now generates annual revenues of 40 million euros. In the UK we have our head office in London and warehouse in Birmingham as well as two recently opened sales offices in Reading and Leeds."
To say that the past three years have been strategically active would be to greatly understate the extent of recent developments at Beta. "We have added 35 more vendors since 2014, largely in the enterprise storage arena," said Soper. "We have introduced a ten-strong Technology Solutions sales team to provide the expertise needed to support MSPs; and we have completed a number of high profile technology based projects from concept to final installation."
Projects such as this show how IT distributors can do more than simply provide product and credit to the channel, observed Soper. "To survive distributors will have to look at services and solutions to protect their margin and act as a partner to resellers rather than merely a source of credit," he added. "It's all about services. VARs will need to transition their business and become solution providers and they will expect their distribution suppliers to support them in this transition."
Three focus areas are the new paradigm for Beta Distribution - providing print hardware, consumables and data storage to IT resellers; delivering disruptive data storage technologies, products, services and solutions to VARs and MSPs through the Technology Solutions business; and supplying end-to-end digital signage products, services and solutions (plus off the shelf meeting room solutions) to AV specialists and resellers. "Our main focus is on organic growth across the three business areas," added Soper. "But consolidation is all around us, notably the acquisition of smaller specialist or niche distributors by the big broadliners. We were recently involved in the potential acquisition of Entatech, although ultimately we pulled out. I expect further consolidation to take place and we remain on alert for any future opportunities."
As well as consolidation, the changing demands of end users and how they purchase has an impact on distribution. "As end users move from capex purchases into various opex models such as consumption, pay-as-you-grow and subscription, resellers want support from their vendors and distributors to ease the financial burden sitting just with them," Soper explained. "These models are not just confined to cloud-based services. More and more end users, and therefore resellers, have a requirement for hardware, software and services to be wrapped up in monthly payments.
"Vendors have been adapting their finance and leasing models to accommodate this transformation. Samsung Finance is a great example of how large LFD projects can be deployed in this way. Distribution has to adapt both commercially and operationally to be able to deliver these changing business models with, or on behalf of, the vendor."
Given a magic wand, Soper would dismantle a market structure that allows tier 1 brands to have a monopoly on what resellers, and ultimately end users, see as the only solution to their problems. "There are so many vendors with great technologies and stories that, given the chance, could enhance the end user experience and resellers' margin," he said. "I'll give you an example, we recently designed and helped install the entire IT infrastructure of a new UK clearing bank. It was given the usual tier 1 options, we gave them an alternative that went over and above the customer's requirements and saved them over 25 per cent. Technology Solutions will generate growth by bringing disruptive products and technologies to VARs and MSPs in a direct challenge to the tier one vendors."
Presented with potential new market opportunities such as this, Soper never takes a 'wait and see' stance if he senses tangible potential. But while confident about future revenue growth, there is still much to do. "My biggest achievement is growing Beta to its current size, but the job is far from done," he stated. "Beta Distribution is still one of the industry's best kept secrets. During the next five years the challenge is to ensure more and more resellers have access to us and fully understand what we can offer to the channel." •
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