Tech Data’s Joe Quaglia said purchasing public sector stalwart DLT Solutions will allow the distributor to establish relationships with systems integrators (SIs) for the first time.
The Clearwater, Fla.-based distributor has traditionally serviced commercial, state, local, and education customers through an SMB-oriented solution provider community. But Herndon, Va.-based DLT Solutions, No. 42 on the 2019 CRN Solution Provider 500, relies extensively on large, multinational SIs to fulfill the technology needs of U.S. government departments and agencies.
“I think it’s an opportunity to expand and extend the Tech Data value proposition with DLT into those types of partners [SIs] that really didn’t have a relationship with Tech Data before,” said Quaglia, Tech Data’s president of the Americas.
Tech Data announced plans Wednesday to acquire DLT Solutions from private equity firm Millstein & Co. for an undisclosed amount, and expects the transaction to close in the fiscal quarter ending Jan. 31, 2020. The distributor’s stock is up $0.58 (0.47 percent) to $122.72 in trading Wednesday afternoon.
Once the deal closes, Quaglia said Tech Data hopes to extend their relationship with the newly-acquired SI partners beyond the U.S. government space serviced through DLT Solutions and into the commercial market. Attacking both the public sector and commercial arenas with an array of new SI partnerships provides Tech Data with massive upside, according to Quaglia.
The go-to-market motion for DLT Solutions is entirely partner-led, Quaglia said, even though the company is a solution provider itself. DLT Solutions works closely with government agencies to build and aggregate solutions, Quaglia said, but that’s on behalf of a channel partner rather than on the company’s own accord.
DLT Solutions can transact with government agencies through teaming agreements with channel partners, by leveraging the contracts of an OEM, or by using DLT’s own contracts, Quaglia said. The company has a broad portfolio of more than 50 in-house contract vehicles, according to Tech Data.
“Those vehicles are a great way to push and move more business in the public sector space, and DLT is at the center of that ecosystem,” Quaglia said.
Under the leadership of Art Richer since May 2017, Quaglia said DLT Solutions has invested heavily in six key technology areas: application lifecycle, big data and analytics, business applications, cloud computing, cybersecurity and IT infrastructure.
In addition to embracing next-generation technologies, Quaglia said DLT Solutions has also pivoted hard toward a recurring revenue, cloud-based subscription model since most of their revenue now comes from software and the cloud. DLT Solutions has invested heavily under Richer’s leadership in hiring talent and repositioning the company’s portfolio to be focused on emerging technologies, Quaglia said.
All told, Quaglia expects the combination of Tech Data and DLT Solutions’ value propositions, portfolio, expertise, and execution to help channel partners achieve more in the highly competitive U.S. government space.
“We think Tech Data is underpenetrated in a very large, multibillion-dollar market,” Quaglia said. “The federal public sector space is $43 billion. And we think there’s a huge opportunity for us to capture some market share.”