The proposed acquisition of General Electric’s IT Solutionsunit by a U.S. integrator could mean more competition for large enterprise andgovernment accounts here.
Dallas-based CompuCom is a well-known firm that focuses onhelping companies implement multi-vendor platforms, and is particularly
strongin large enterprise accounts (it has a number of Fortune 1,000 accounts, suchas General Motors and Boeing). GE ITS, on the other hand, is more focused onspecialized, high-end technical services, and has a foothold in the Canadianpublic sector market – which CompuCom will directly benefit from.
CompuCom itself was recently the target of an acquisition:It was purchased by L.A.-based Platinum Equity in October. Platinum’s strategyis to team CompuCom with a number of partners to strengthen the reseller’sofferings. With the acquisition of GE ITS it hopes to make CompuCom anend-to-end solutions provider. GE ITS has 300 employees in its Mississauga,Ont. headquarters, with 1,700 employees in sales offices around North America;CompuCom has 3,450 employees.
This will also affect distributor Ingram Micro Canada, whichsigned a sourcing agreement with GE in 2000. As part of the agreement, Ingramprovides product procurement services of hardware, software and personalcomputers, as well as electronic data integration and custom configuration– freeing up GE to focus on technical services.
While Canada is largely made up of small and mid-sizebusinesses, and IT growth is slower here than in the U.S., neither of thesefactors seems to concern Platinum executives. They should know what they’redoing: the company specializes in acquiring solutions and services companies– it’s acquired 50 companies since it was founded in 1995. Its plan is tomake CompuCom an independent provider of IT products, services and consulting;however, no specific details on organizational change have been announced at this point.
Platinum may be playing its cards well. While the ITbusiness hasn’t bounced back as quickly as some had predicted (or hoped), it isslowly picking up steam. According to IDC Canada, hardware replacement,software upgrades and increased capacity will continue to drive spending forinfrastructure-related IT products and services this quarter in the medium andlarge business markets – which is likely where CompuCom will focus itsefforts.
According to Evans Research (ERC)’s 2004 Canadian ITReseller Report, 60 per cent of IT resellers categorize their businesses asconsulting and systems integrating or as an IT solutions provider – whichis how CompuCom will position itself. Specialty markets, such as retail andprofessional firms, are key areas for sales growth, according to ERC. Hardwaresales represent a key component of the industry, with PCs and networkingequipment accounting for the bulk of activity.
The acquisition of GE ITS not only gives CompuCom a foot inthe door to the Canadian market, but also fills in the gaps in its own businessmodel. With Platinum’s resources behind the acquisition, CompuCom is likely tobecome a significant player in the Canadian market – and a significantcompetitor to Canadian VARs.