Technology and business landscapes in the channel changes so quickly that it can be difficult for VARs and service providers to adapt their models for continued profitability. Kurt Klein of DataEndure, formerly CMT, explains why the company recently rebranded, the financial mistake many channel partners make when planning for the future and how to stay relevant when new tech disrupts your business model.
The first time CMT executed a pivot to address changing customer needs was about fifteen years ago. Once upon a time, it was the largest media magnetic tape provider on the west coast, according to CEO Kurt Klein. “We had a 100,000 square foot warehouse full of DLT and LTO tapes. We would just do truckloads and truckloads every day, and that was a great little engine,” says Klein.
Then disk duplication companies like Data Domain came on the scene, disrupting the tape back-up market. CMT soon realized that customers were quickly going to jump ship if it didn’t keep up. “It forced us, in a positive way, to really focus on our customers,” says Klein.
Fast forward to today, and the company is transitioning once more.
CMT, which last week changed its name to DataEndure, is rebranding to position itself as a player in the massive data security market. The company’s transformation is reflective of the fundamental shifts many VARs and solution providers make to stay relevant in a cloud-based marketplace.
“Relevant can be defined in many ways. It can be defined as profit contribution to our model as well as relevance in terms of the customers,” says Klein. When he recently reviewed the landscape, Klein decided the most relevant place for DataEndure to be is data security. Demand for security solutions among customers is growing, and security is a natural outgrowth of the existing offerings and partner relationships DataEndure has.
Image courtesy of Data Endure
But it’s one thing to recognize areas of opportunity, and another to be able to execute a fundamental shift in business offerings, especially in an age when technology evolves so rapidly. “The biggest challenge we have right now are shrinking margins in this model,” says Klein. His secret? Go for the quick profits.
“It might seem really obvious, but a lot of companies our size don’t focus on that. They go for the top-end growth. For me—I don’t even track revenue for the most part. It’s all about our gross profit goals and the percentage of gross profit and net profit,” he says.
This is a strategy DataEndure has employed with success over the last 10 years or so as it’s augmented its traditional storage practice with more and more information management and infrastructure offerings. In that way, Klein says, the company’s “new” pivot to data security has actually been underway for quite some time.
“It’s been ongoing. It doesn’t feel like a lever we’ve just flipped,” he says.
Just because the company has successfully pivoted before, Klein says, doesn’t mean its shift into data security doesn’t carry risks. But continued relevance in the channel demands such a gamble.
“It’s risky ramping new suppliers, and there are no guarantees,” he says. “You’re picking things in the hope that they’ll grow in the way that you want and add the amount of profit that you want, but there are misses as we try to ramp as eloquently as we can. We’re not 100 percent correct all the time.”
Time will tell if DataEndure’s gamble will pay off. In the meantime, Klein says, DataEndure is planning to bring on their first ever chief technology officer (CTO) to focus on refining and defining their new offering. “It’s just so dynamic right now, we’ve got to be aggressive with assessing partnerships. That’s the main intent of that new role.”