Inside Hitachi's new partnering strategy

Sometimes, companies are such a perfect match for each other that it’s almost wrong not to work together.

And that’s exactly what happened when Hitachi Data Systems Federal Corp. announced last week a single distribution partnership with Avnet Government Solutions LLC, which was also launched last week as a wholly owned subsidiary of Avnet Technology Solutions.

The two companies have a lot of synergies, said Mike Tanner, president and CEO of the Hitachi Data Systems Federal Corp., or HDS Federal. For one, both companies recently split from their larger organizations in order to act as subsidiaries with a tighter focus on the federal IT marketplace.

While Hitachi Data Systems focuses on the worldwide marketplace for IT systems, servers, data storage and software solutions, HDS Federal is focused mainly on the U.S. federal marketplace. The company was created on April 1, 2013, as a separate subsidiary because it aimed to focus on a strictly U.S. federal market, and its parent company is a foreign entity, Tanner said.

Hitachi Data Systems has historically been a hardware company, with about 70 percent of its work coming from hardware and about 30 percent coming from software and services. As vertical markets like cloud and big data have dominated the marketplace over the past few years, however, the company’s hardware to software/services ratio is an even 50-50 these days, Tanner said.

Avnet Technology Solutions, a global redistribution company, was already one of HDS Federal’s distribution partners, but it was not the only one they had. “We made a decision to consolidate our distribution capability down to a single partner, and in making that decision, one of the things that led us to Avnet Government Solutions was their focus on the federal marketplace,” Tanner said.

It wasn’t a difficult choice to go with Avnet Government Solutions. Avnet Government Solutions is integrating lots of different types of technologies, which is aligned with how HDS Federal sees the federal marketplace – as being dominated by vertical markets like cloud, mobile, and big data.

“We, as a company, are becoming much more mission-centric,” Tanner said, “and the solutions [that customers need] aren’t always built just from our products, but also from other third party products,” which makes the role of the distributor more crucial than ever.

Avnet Government Solutions is an evolution of something that Avnet Technology Solutions has been doing for almost a decade, said Ray Ramey, vice president and general manager of Avnet Government Solutions.

The company saw that the public sector IT space is a $150 billion economy all to itself, and decided to branch off as a subsidiary to better focus on it. As a subsidiary, compliance issues become easier to handle, particularly within the intelligence community, and the company also can be more agile with their customers, Ramey said.

Through and through, the two companies decided to pair off because they are making the same moves. “We’ve got a broad range of capability which meets their needs of their entire supply chain, and a single distribution supply chain is typically a simpler one; it’s one that’s easier and more consistent for all of the resellers to utilize,” Ramey said.