SLTN is one of the Netherlands' largest channel partners. After initially selling the business to a systems integrator in 2007, founder Eugene Tuijnman bought the business back in 2009 after its new owner faced financial difficulties. He has since grown its revenues from €45m to €175m over just 10 years.
During that time, Tuijnman has retained a 49 per cent stake in the SLTN business, with Dutch-based Rabobank owning the majority 51 per cent. But now, with its long-time investor selling up, Tuijnman has become SLTN's majority investor with a 80 per cent stake.
Tuijnman opens up on becoming a majority shareholder in SLTN in an interview with CPI, while also assessing how the Netherlands' competitive landscape has drastically changed over the last three years.
You bought back SLTN in 2009. How has the business changed since then?
During those 10 years, we transformed the company from a VAR to much more of a system integrator, cloud provider and managed services company. If you want to compare our activities, you can compare us with Computacenter. Actually, in 2009 when things went bankrupt from the private equity side, the German activities were bought by Computacenter, so Computacenter and SLTN are very similar - not in size but in activities.
Computacenter are now active in the Netherlands after buying Misco's Dutch business. How has that changed the competitive environment?
Yes they acquired Misco Netherlands. But for Misco it was either go bankrupt or get sold, so they bought it. So now Computacenter is a competitor for us in the Netherlands.
I think from a strategy perspective, Computacenter bought Misco as a point of entrance in the Netherlands, and I think they're going to transform the business much more towards the same kind of activities they do in the UK and in Germany.
From what I see, the Dutch market is now dominated by international players. Is that the case?
Yes, we are one of the bigger ones. Centralpoint is of course a Dutch company but it's owned by a Swedish investor. Computacenter is in there, Bechtle is in there and then you have some local players like PQR for example which is a competitor. But there aren't that many. I think if you look at the top five that are battling it out, I think SLTN and PQR are Dutch-based and the rest are internationally owned.
What happened to the local competition?
The traditional competitive landscape has really changed in the last three years. The traditional IBM business from a VAR perspective, the power systems and everything, that has vaporised - it's gone now. So it is either transform or die from a VAR perspective. If you look at IBM's revenue in systems from a global perspective, it has declined by over 50 per cent. So now we're seeing so much more of the cloud piece and then, on the other side, the Intel and AMD platform is dominating the market. And that is really changing everything.
What made you take a majority stake in SLTN after being a minority shareholder for so long?
Well, I founded the company and then bought it back. Yes, Rabobank kept the majority stake, but there was never a board of directors or supervisory boards; I was the sole director.
So for me now having a majority share of 80 per cent, it's fine, but it doesn't change anything in the way we're running things. Rabobank was in there for 10 years, and from a lifecycle perspective, their portfolio ends.
I said I would still like to continue building the business. We could have either sold together or they could've sold their share. I decided I wanted to keep on going because it's fun doing the business and we have the ability to grow our market share and wallet share. And ING Bank was very interested and said they wanted to have a share and work with me.
What made Rabobank want to sell up?
I think it's about the timing. Rabobank was at the end of their cycle and ING is starting their cycle. Rabobank had made a great return on our investments and wanted to exit. While in the current market, there are lots of chances to grow from an autonomous perspective, but also from a buy-and-build perspective and ING like that.
Can you see yourself divesting some of your 80 per cent stake in the future?
I would prefer to have the majority of the business, so there are no plans for me to divest at any time at this stage. We just did this step and I'll start growing the current business and look at acquisitions.
What trends are you seeing in the market at the moment?
For most companies it's a cloud-first strategy where we see our customers using our private cloud datacentres. You see a global trend where it's great to have Office 365 from a SaaS perspective, that's fine. But from Amazon, Azure and Google, where's your data? What's going on with your data? And they are not cheap.
From a private cloud perspective, you see a lot of customers say ‘hey, I don't want to own the IT anymore for myself', especially the datacentre IT. They want to use it, but they want to use it from a cloud perspective and as-a-service perspective, with companies they know and trust, where they can pick up the phone and be sure that their data safe.
So we see we see two trends: it's cloud-first, and the other one is a SaaS first.
When did SLTN begin the transformation from a VAR to a systems integrator?
We actually started that in 2006. Before, we were running a big IBM systems business - the big Unix servers, the mainframes etc. And even then customers were saying they couldn't do it on their own. Then I think VMware emerging really revolutionised the Intel server business. And then you were able to migrate workloads off-prem. So I think really in 2010, 2011 and 2012, managed services really took off for us.
How much of your annual revenues come from services today?
We do about €175m in revenue and that's about €110m in products and about €60m to €70m in services.
Both are growing, and that's the fun part. We see smaller VARs are going extinct because of pricing and volume and because they're being eroded by cloud transformation. The fun thing for us is, we can still compete as a VAR to sell the IT to customers, but we can also offer them the full public and private cloud, but we can also do a hybrid model where the customer has its own stuff which could be a private datacentre and not their own datacentre.
The smaller VARs and companies cannot do that. That's our strength.
Are you optimistic about the health of the market in the next three to five years?
I think people are a bit more cautious from a purchasing perspective, but at this time in the Netherlands, which is our main operating base, things are still healthy. Of course, we're getting some extra income and revenue from Brexit, with companies moving to the Netherlands. I know I shouldn't mention the "B" word, but that's something that's going on.
From a product perspective we are supplying a lot of items to a lot of national and international customers. And our services area is growing and our unemployment is pretty low at this time and we're making money from a GDP perspective. We're still healthy.
Sure, you look at balance sheets and banks right now are cautious about lending out money, so you've got to use your common sense and see what's going on. Be careful with investments, but there are still a lot of chances out there.
I think China and Trump need to begin to agree with each other, because it's wearing too thin now. I think if there's certainty, then I think we'll pick up steam. And it's the same with the Brexit. If there is certainly people will invest because the overall economy is okay and there's lots of money out there. It's more expensive to keep money in the bank than invested. And as long as that's there, and there's political stability, then I think we'll still move on at a fast pace, because there is a fast pace in the global business at this time.
Some say performance, others say money but it may be systems and processes that carry the day
Cheryl Cook responds to claims from competitor that legacy vendors aren't investing enough in innovation and how it plans to adapt to an evolving server market
Distributor's head count moves past 400 with latest buyout
Vendor appoints two co-CEOs as long-time leader steps down