D&H Distributing – the 104-year-old employee owned SMB distribution stalwart – helped its partners power through the global pandemic and in the process posted a whopping 160 percent increase in cloud sales for the fiscal year ended April 30.
The triple-digit cloud sales growth helped drive an impressive 19 percent growth in U.S. sales for the pandemic-plagued year, allowing D&H to break the $5 billion sales barrier. Overall, D&H’s VAR sales were up 34 percent for the fiscal year. The number of active D&H partners, meanwhile, was up 11 percent for the year.
The strong results show that D&H grabbed a bigger chunk of the cloud services and midmarket enterprise business during the pandemic. In fact, D&H says it grew four times faster than the overall distribution market during the pandemic.
The breakthrough global pandemic performance came as D&H added an additional $225 million in credit every month for partners and doubled down on its high touch service model to help partners navigate the chip, laptop and supply chain shortages. Through it all, D&H kept its warehouses up and running, shifted the majority of its employees to work at home and added 75 new employees.
At the same time, D&H’s 600 employees that work in the company’s four distribution centers, who were deemed essential workers, remained on the front lines, shipping products to partners.
D&H Co-President Dan Schwab said the company’s passionate co-owners, who committed to going above and beyond for customers, were the difference makers for D&H during the pandemic.
“D&H’s differentiator has always been our culture and our people,” he said. “We definitely have a unique DNA with the employee owned model. You would think when you go through a year of being remote your culture would slightly diminish. We saw the exact opposite which is our culture increased. We developed stronger bonds with employees and customers during the pandemic.”
D&H Co-President Michael Schwab said the company’s three C’s were paramount during the pandemic: communication, collaboration and culture. “Those philosophies really made the difference in the midst of the pandemic,” he said.
D&H’s emphasis on establishing steady, long term relationships with customers and vendors came to the fore during the pandemic, said Michael Schwab. “At times our business can seem transactional, but relationships matter, both with the manufacturers and the reseller partners,” he said. “They matter to the nth degree. The trust we have built up over many years made a huge difference in our ability to deliver great technologies for remote learning, remote working and telehealth- all the things that truly changed how we learn, work and get healthcare this year.”
D&H’s ability to source products in the midst of supply issues helped drive more partners to do business with D&H, said Michael Schwab. “Resellers recognize they can not just rely on one single source of product for any manufacturer,” he said. “They need multiple sources. They need choices. That really allowed D&H to be a very strong source of supply for a lot of customers that did not know us or weren’t focused on all that we could do for them. D&H was able to really help them succeed where maybe others weren’t as successful.”
Among the product categories growing more than 25 percent during the fiscal year for D&H were notebooks, desktop displays, commercial displays and projectors, components, computer accessories, network security, wireless networking and even printers/imaging. D&H’s Professional Services offerings including white glove integration services on behalf of partners was up 53 percent during the fiscal year.
Dan and Michael – who did video calls with employees and customers multiple times every week- said they felt more connected than ever to customers and partners grappling with the personal and business impact of the pandemic. “This was a year that not only hard work paid off, but empathy paid off,” said Dan Schwab. “We put our people first and made sure we took care of them, their families and all our partners. Every decision we made was with that in mind.”
D&H’s decision to pump an additional $250 million in monthly credit was critical to helping many partners overcome delayed payments from customers and tightening credit from banks. “A lot of partners during the pandemic were concerned about the banks tightening up credit,” said Dan Schwab. “We wanted to make sure that we were the lifeline. We were a credit facility for our partners that they could count on and if they needed extended time they knew we were in this shoulder to shoulder with them for the long haul.”
D&H partners pivoted quickly to drive their cloud and security solutions during the pandemic, said Dan Schwab, defying conventional wisdom that small business focused VARs would be financially battered by the pandemic.
“We did not have one small business VAR go out of business this year,” said Dan Schwab. “Not one out of the thousands and thousands of VARs we do business with. Small businesses and the small business reseller community are very resilient. Because of that they weathered the storm.”
ACE IT Solutions, one of the top MSP/MSSPs in the country, credits D&H’s cloud and security prowess as key to its double-digit growth in those areas during the pandemic, said Warren Finkel, founder and managing partner for ACE.
ACE IT Solutions’ Microsoft Azure sales were up considerably during the pandemic with robust growth for Office 365, SharePoint, and Teams, said Finkel.
Finkel credited D&H’s superstar cloud team led by Cloud and Services Vice President Jason Bystrak for making a big difference during the pandemic. “Jason is a hero,” he said. “D&H has become a bigger MSP cloud innovator under Jason’s leadership. He has brought in a great cloud team. We buy a tremendous amount of Azure from D&H. They opened up our eyes to CloudCheckr (cloud optimization/cost savings) and ReadyNetworks (VDI security services). They have a dedicated knowledgeable sales team, engineering team and provide great resources for Azure, Cisco and SonicWall for us. We have a very strong bond with D&H. They are a premium distributor for us.”
Another big D&H differentiator during the pandemic was its ability to provide supply for hard-to-get products including notebooks and Chromebooks, said Finkel. “We didn’t see any issues with supply chain with D&H,’ he said. “They understand the SMB space and the importance of stock and availability. We had a lot of situations where same day shipping was key.”
Finkel also gives the distributor high marks for being “forward thinking” with deep investments that are making ACE IT Solutions a better MSP particularly with the D&H cloud marketplace. “D&H is helping us to learn more about the technology as it continues to change,” he said. “They are investing in our training which is key. They offer us training on any products we ask them about. That is helping us learn. Through the digital transformation as products continue to evolve, D&H is always there for us, ready to help us, support us and educate us. I am certain D&H is going to be a big part of our future.”
In fact, Finkel expects D&H to become an even more prominent distribution player in the future with private equity playing a bigger role with larger distributors Tech Data -Synnex and Ingram Micro. “I think D&H moves up because of private equity getting involved with mainline distributors,” he said. “D&H is now the third largest distributor behind Tech Data – Synnex and Ingram. Five years ago they were maybe number six or seven. They have made some real smart moves and are now a major player. At the same time they have remained nimble. The bigger companies are hard to navigate. D&H is flexible. Dan and Michael are still involved day to day. D&H started the business as client centric and have never waivered from that. Even though D&H has grown tremendously they have retained the same client first principles that have been a hallmark of the company since its founding. As long as D&H remains employee owned and client focused they have a lot more runway to grow.”
With D&H’s support, Bridgehead I.T., a San Antonio cloud solution provider that that prides itself on providing enterprise class support for all customers, no matter their size, posted its best revenue growth in the last nine years during the pandemic, said Julia Acosta-Kester, head of procurement and vendor management for Bridgehead I.T.
“We had stellar performance during the pandemic,” she said. “You can’t have those kinds of numbers with the kind of enterprise support we provide unless you are structured so that whether you are working at home or at the office your clients are taken care of. There was no break. We just kept moving. It was a major accomplishment and very humbling to have our clients place so much trust in us. Our customers relied on us to keep them up and running and productive. At the end of the day our behind the scenes saviors were D&H. A big part of our success with our customers during the pandemic was because of them.”
Acosta-Kester also credited the D&H cloud team and the cloud marketplace as key factors during the pandemic. “We were able to get licensing from D&H in just five minutes,” she said. “That was huge during the pandemic where we had tens of thousands of requests for licensing whether it was Microsoft or SonicWall. The provisioning was absolutely seamless.”
D&H’s ability to provide supply for hard to get products was also a big difference maker, said Acosta-Kester. “D&H kept stock, they kept pricing and estimated time of arrivals,” she said. “It was a matter of having a game plan and forecasting. Forecasting was everything for us these last 13 months. D&H secured product and held stock for us so we could just keep moving. They more than earned their keep.”
The D&H relationship goes well beyond the traditional partner-distributor relationship, said Acosta-Kester. “When we talk about D&H we talk about them as being an extension of our team and family,” she said. “They are team Bridgehead. They are not a vendor to us. It is very much a partnership that is like family.”
When a snowstorm – on top of the pandemic- left many Bridgehead I.T. employees with no power and water for four days, D&H team members reached out and provided assistance. “The relationship with D&H goes beyond the office and the workplace,” said Acosta-Kester. “There is a deeper personal connection. That really hits home.”
D&H’s stable, long-term sales and support reps are key to Bridgehead I.T.’s success with customers, said Acosta-Kester. “It is a consistent relationship, the knowledge base that has been acquired over the years with the D&H reps is amazing,” she said. “That takes time and time is money. They know how to treat people, escalate priority responses and offer technical support.”
The D&H employee-owned, co-ownership model has created a culture aimed at working together to solve customer issues, said Acosta-Kester. “The co-owner model is amazing, when people feel a responsibility like that they go above and beyond. Everyone has the same mindset from the top with Dan and Michael to the boots on the ground. Dan and Michael are two of the most humble leaders I have ever had the pleasure of meeting and working with. They keep their customers top of mind from the executive level on down. That is very important to partners.”
Acosta-Kester said she expects continued strong growth ahead for Bridgehead I.T. working hand in hand with D&H. “We are going to continue to accelerate with innovation, staying ahead of the times to support our clients with the latest and greatest technology. D&H is going to continue to be our top distributor to keep growing.”
D&H, for its part, is also optimistic about the prospects for the new fiscal year with plans to provide $300 million in credit extensions to as many as 2,000 partners. Furthermore, D&H is poised to unveil in September a new 750,000-square-foot distribution center — two-and-a-half times the size of its existing facility — in its hometown of Harrisburg, Pa.
“When we look into our crystal ball we are very optimistic for this coming year. We think the demand curve for the next two or three quarters is immense. We anticipate strong robust demand,” said Dan Schwab.
“Fiscal Year 2022 will be D&H’s largest single investment year in our company’s history,” he said. “We have already approved 50 new hires for this year…I don’t think technology in our 104-year history has ever played a greater role in people’s lives than it is now. We are fortunate to be in an industry where we are able to help deliver these new technologies to market.”