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Softcat CEO talks opportunities, expansion and the impact of AI
With the channel player sharing its full-year numbers, its boss has talked in greater depth about the business
Softcat’s CEO has talked of significant opportunities existing in the UK market for the business to exploit.
Speaking after the firm released its financial year numbers for the 12 months ended 31 July, the channel player’s boss, Graham Charlton, outlined his thoughts on the year ahead, international expansion and the reasons why there remained plenty of opportunities in the UK market.
“The guidance that we’re putting out and the expectations we have for the year ahead do not depend upon the market improving,” he said. “That’s the first thing to say. Personally, I think next year, next calendar year, will be better. I think the device refresh ... we’re starting to see it come through a little bit, and I think that’ll gather pace next calendar year.”
Although Softcat does not rely heavily on hardware, a shift in the narrative around IT spending would be a positive for the channel.
“With all the doom and gloom, we’ve seen companies be very careful with their expenditure,” said Charlton.
“That usually affects their IT spend last, but it has affected it, so slower decision cycles, sweating assets and so on,” he said. “Some of those assets, they just can’t sit on them any longer.
“I’m personally optimistic that conditions improve next calendar year, and I don’t think our industry can stay in the doldrums for too long, because it is the fabric of society and industry these days,” added Charlton.
Embracing AI
Softcat has rolled out Copilot across the business, and Charlton said it was already starting to see some of the benefits from embracing artificial intelligence (AI) tools.
“When you adopt it on an organisational basis, rather than pockets, ones or twos, you do start to see the change in ways of working,” he added. “It’s how smart you can work. The way that meetings can be summarised and shared, the way large bodies of content documents can be quickly sifted and so on.
“[In terms of] generative AI [GenAI], we’re definitely seeing it unlock some new and interesting ways of working now,” he said, adding that as more users adopted tools like Copilot, they would see the potential for change and start to adapt more of their working processes: “People will get used to a tool like Copilot, and then they’ll start to build around and upon it.”
Charlton thinks that will take time, but that the next couple of years will see an accelerating adoption of AI tools.
“Three or four years from now, we’ll look back and go, ‘How did we ever live without GenAI?’ But I think it will take three or four years for it to come fully to maturity,” he said.
International expansion
Softcat has largely stuck to a strategy of focusing on the UK, and has resisted international expansion on the scale of some of its peers, but Charlton indicated that position could evolve in the future.
“There is more than enough growth for us in the UK, but we are getting pulled outside of the UK by our UK customers, so we’re building that international capability to support them, and particularly in the US,” he said.
“At some point, that probably tips us into selling to US and maybe other international customers as well,” said Charlton. “Quite when that is and how that day arrives, I’m not really sure yet, but it’s pushing on an open door.”
Sustainability
Softcat has been in the vanguard of channel players sharing their carbon emissions reduction goals and trying to improve their sustainability positions, and Charlton said that remained a focus in its last fiscal year.
“We’ve put a lot of time and energy into it, as are a lot of the vendors and customers [who are] increasingly factoring that into some of their thought processes around their own IT,” he said.
“It’s building momentum, and it’s part of how we operate our strategy,” added Charlton. “If you think where we’re going to be five years from now, the sustainability of tech infrastructure will be a major focus for the world.”
At the Canalys Channel Forums earlier this month, the sizeable energy demands of AI were a major talking point, and Charlton said that discussion would encourage customers to think harder about sustainability.
“You’re starting to see AI really open that question up now, because the compute power needed by the AI algorithms is enormous, and that’s good because it forces the industry to look harder at sustainability, which is something that’s not going to go away,” he said.
Channel relevance
As a business, Softcat continues to focus on deepening relationships with existing customers and adding fresh ones, with the UK continuing to offer plenty of green space for the firm to go after.
“We think the opportunity ahead is still bigger than it ever has been,” he said. “We can’t grow fast enough to get anywhere near our potential in the markets that we operate in. We think there’s decades of terrific opportunity ahead, which is why we’ll keep balancing strong profit growth with lots of investment for the future.”
Charlton said that although market conditions had been challenging, the channel remained as relevant as ever.
“All you’ve got to do is look at the value chain and how it works,” he said. “IT infrastructure has never been more complicated. It’s never been more the fabric of society and industry, and customers do not have the capability internally to understand all of that and to choose the solutions, architect the solutions and implement the solutions they need, and the manufacturers of the technology do not have the capacity to talk to those customers individually. So, what we do in the value chain has never been more relevant.
“The future is incredibly bright,” said Charlton. “That is a fact, not an opinion. You can talk about ups and downs, and macro-economic impact and this, that and the other. But I promise you, 10 years from now, the channel will be thriving.”
