Going Inside Diversified: A Roadmap for Integration Success
Diversified’s CEO, Eric Hutto, explains how the billion-dollar global integration firm plans to transform and scale after having made key acquisitions in recent years.Leave a Comment
Eric Hutto, CEO of Diversified, readily acknowledges that he’s probably not the guy to call if you need help programming a remote; he does, however, know a thing or two about leading billion-dollar businesses. The former Unisys, Dell Technologies, Home Depot and Bearing Point (formerly KPMG) executive was tapped earlier this year as successor to Diversified’s founder, Fred D’Alessandro. Hutto stepped into the CEO role back in March; meanwhile, D’Alessandro now serves as executive chairman. As CEO, Hutto steers the ship on the billion-dollar global integration firm’s strategy, direction, operations and success.
One facet of Diversified that initially attracted Hutto was that the Kenilworth, N.J.-headquartered integrator, which serves 70% of Fortune 1000 companies and has more than 50 offices worldwide, was built by acquisitions that assembled a formidable portfolio. Another attractor for Hutto was Diversified’s strong growth. But actually, he says, Diversified was arguably growing too quickly. “I knew there was a lot of synergy and integration work that was still yet to be done,” he explains. And that was where Hutto immediately saw the value he believed he could add.
Unifying Under the Diversified Name
In his first weeks as CEO, Hutto, when asking employees how long they’ve worked for Diversified, quickly realized that his team members were not acting as one company under one roof. Rather, they were still associating as though they were part of an independent acquisition, such as being part of MCW Solutions or HB Communications. “I knew right away that I was going to have to find a way to bring us together,” Hutto recalls. “Everybody identified with their old company. But those companies don’t exist — Diversified exists.”
Related: Why Diversified Acquired HB Communications
Part of Hutto’s strategy for Diversified is to restructure operations to be more streamlined and unified. His first step was to wrestle down the conglomerate of business territories to six in the U.S. “It took away all those acquired companies and their territories, [creating] one way to do things across the company,” he explains. The “one way to do things” idea is critical to Hutto, who believes in leveraging Diversified’s brand equity. “When we roll out for a client across all those territories, the client should expect the same experience,” he stresses. “We found some clients were getting an MCW experience or a [Technical Innovation] experience.”
In the last year, Diversified has shuttered 15 physical sales offices in favor of embracing flexible remote work. That aligns with some of the integrator’s key strengths, as well — namely, remote commissioning as a core service offering. This reflects prime positioning for the renowned integrator, as the AV industry merges with the IT world. Hutto sees software collapsing physical hardware needs, meaning that integrators, if they want to service clients, must acclimate to the as-a-service model. “We’re still going have to integrate and hang things,” Hutto acknowledges. “But, once you’ve done that, we’re going to do a lot more from offsite and make our customers’ lives easy.”
But let’s be clear: Diversified is exceptionally qualified to handle those large, complex, showpiece projects, often involving hundreds of line items, that A-list clients seek it out to execute. These projects represent such a core competency, in fact, that Hutto says Diversified now tends to screen out lower-margin projects in favor of those grander-scale endeavors. “When we were [a collection of] small companies, that was how those companies built themselves,” Hutto says of smaller-dollar projects. “But now, as a billion-dollar company that has scaled in both size and talent, we can apply [our talents] to more complex projects.” With more and more clients coming to recognize what one Diversified has to offer, the company has experienced double-digit booking increases this year. In fact, it has added more support people to billing and collections to accommodate that growth.
With Hutto already having made meaningful strides to unify Diversified, he’s now turning his attention to efficiency. Under his leadership, the integrator is going through a review process, looking at all company systems and finding out how employees can do their jobs more easily and with fewer steps. One consideration Hutto focuses on is time on the ground — for example, how long it takes from the moment Diversified steps on the client’s site to the moment the job is complete. “If it takes us three weeks to do a room, we want it done in three days,” Hutto declares. “If it takes three days, we want it done in three hours.”
Hutto also makes clear that, as Diversified’s chief executive, he is fully embracing the industrywide shift to an experiential mindset. “People don’t buy products or services; they buy outcomes,” he states. “Like Uber did when it disrupted the taxi business, we [as integrators] need to orchestrate all that exists in the marketplace to deliver an experience.”
And that, Hutto believes, encapsulates where integration businesses are today. “We must do the work, [and] products are part of it, but we’re not designing to that,” he emphasizes. “We’re designing to an outcome — enabling human connection and/or helping deliver parity in a remote world.”
Focusing on the ‘Why’
According to Hutto, his leadership team and he are spending a lot of time honing Diversified’s raison d’être. As he puts it, “We’re getting focused on the ‘Why do we exist?’” That’s critical, Hutto believes, because up-and-coming talent is eyeing integrators closely, looking for something to grab onto. “They’re more interested in company purpose…the mission and what we are doing for the community,” he declares. He describes Diversified as a “people-based business” and affirms his abiding belief that the integrator must take good care of our people, even if macroeconomic challenges like high inflation and lingering pandemic effects make it difficult.
As a seasoned executive leader, Hutto knows that every company — big or small — needs a three-year plan, and he’s bringing that intentionality to Diversified. But he also acknowledges that business trends, technology and the world can change quickly, making longer-term planning hard. Ultimately, Hutto and his leadership team have been looking at how to grow the billion-dollar company with the right mix of revenue, creating a healthy company and allowing it to continue to innovate and invest in its people.
Ever the “numbers guy,” Hutto forecasts that, over the next three years, Diversified will grow at a compound annual growth rate (CAGR) of 9.5%. For those who’ve been watching Diversified as of late, that percentage might seem slower that the company is currently growing, but Hutto emphasizes that it’s a healthy growth rate. “You can’t change the wheels while the car is moving,” he analogizes. “Even NASCAR stops for six seconds. We have to [slow down] our own car — do it the right way. And then we can speed up.”
The “change the wheels” analogy refers to Diversified’s ongoing business transformation. “We’re changing the operating model,” Hutto explains. “We’re moving to three business units. We’re addressing skill gaps in areas in cloud security since software-defined networks are all around us now.” And, as he has made clear throughout the conversation, he is focused on building and sustaining one Diversified.
“[We] need to bring it together as one company,” he declares. “Create a structure to scale; have a consistent customer experience; get the right tools, systems and metrics in place so that we’re productive and our people enjoy the work that they do.”
From Hardware to Software
We’ve already alluded to the ascendance of software, but it’s worth exploring in greater depth. Hutto sees customers opting for more software-centric approaches to replace long-sought-after hardware amid continuing supply-chain snarls.
The supply chain has been a significant challenge for Diversified, just as it has been for every integration business. Like most integrators these days, Diversified’s backlog is substantial. What Hutto is seeing now, though, is more willingness among clients to embrace alternative approaches. He says that, unlike standards-driven global enterprise clients, which might be willing to wait nine months to get a particular SKU, the average client is saying, “I’ll take the alternative.” But he hastens to add, “[They] want integrators to test it, prove to them it works on their tech stack, and [show] it doesn’t create a security issue or a communication issue.” The bottom line, Hutto says, is that integrators and clients alike must recognize that there are other ways to solve problems.
Hutto recognizes and respects longstanding vendors relationships, referring to, in some cases, working with the same company and product for 20 years. “[They] have been great partners and still are great partners,” he acknowledges. There’s clearly a level of comfort there. Nevertheless, he says, other than for large, standards-driven enterprise customers, Diversified is leaning on its team of creative engineers to explore software-driven approaches. “A lot of them are making that change because that’s what our clients now expect us to do,” he explains. Leading vendors are starting to see supply snarls untangling, but, as Hutto observes, “[these teams] have a lot of people to serve.”
Strategic Vendor Relationships
We’ve already established that Diversified was built on acquisitions. With those onboardings came a challenge — simply too many suppliers. Hutto is looking to consolidate suppliers in the year ahead. “Each acquisition came with its own relationships,” he observes, “[and] that’s part of our problem.” He makes clear that every vendor is valued but says, “We must scale it down to a handful of really strategic partners and jointly develop solutions for our customers.”
Hutto also invokes rebates as a key consideration, especially as integration businesses keep an eye on profits. “If we’re not careful — if we go out and just do whatever, like we did as little companies [in the past] — we won’t have that rebate structure and volume,” he warns. “That part of project profitability could suffer.”
Pivoting to Services
Looking forward, Hutto says Diversified plans to move toward more plug-and-play technology solutions, leveraging concierge-level service offerings. “If you’re NBCUniversal, it’s a streaming contest…it’s a content race,” he explains. “That’s what they do.” The client’s technical team doesn’t want to have to worry about — or even think about — screens going up or down. “We need to come in more aggressively with our talent and our capabilities,” Hutto declares, “thereby giving them a value promise to take care of it so all they have to worry about is content and streaming.”
Related: Networking Deep Dive: Are AV Companies Transitioning to IT Companies?
Another key element of Diversified’s services offering is staffing services. The company hopes to increase its staffing capabilities for campuses, digital signage and content creation. “We’re beginning to shift in content creation, the production and the management of it for our clients,” Hutto says. “Digital solutions are probably what we’re going to put a lot of energy into, as we’re seeing growth faster than even in our workplace solutions.”
Hutto’s vision for the next three years is ambitious: twenty-five percent of the company’s revenue coming directly from services. “It’s complementing the integration work, and it’s still growing,” he says. As such, it’s paving the way for a whole new revenue mix.
As Hutto explains it, Diversified sees its future as leaning into disruptive forces. That means focusing on network-based, data-driven, analytics-focused work. “We’re not going to be rolling trucks up; we don’t want that business,” he states. “There are some great companies that do that, and they do it well. But that’s not us.” Indeed, he makes clear his vision of Diversified’s future, saying, “We’re really looking to have a strong understanding of network cloud security and how all that plays into delivering the experience.” Hutto adds, “We’re going to have to really get our heads around cloud security and continue to develop our networking expertise as we go into [everything]-over-IP.”
Hutto offers some parting wisdom that aligns with everything he’s said so far — namely, that all companies must keep up with change and transform, but it’s essential not to forget about your company culture and your people. “In essence,” he begins, “the people are what makes a company. It’s the people who can accomplish great things when they gather.” He laments that he’s found that, when you bring a lot of companies together, culture can be lost. “If you’re a small [integration firm], it’s easier to keep your culture.” But he’s determined to ensure that one Diversified cultivates and maintains the kind of culture that not only brings in associates but also helps keep them.
“Clients won’t love you until your associates do,” Hutto concludes. “Everything starts with our associates, as well as the internal quality of our environments, work design, responsibilities, recognition and how we treat each other.” He puts the stakes plainly: Culture and leadership are the essence of most organizations, and they can either keep you on track or produce a fracture. “When things get hard, you [can] fall apart and people start scurrying,” he adds. “But what I’ve seen at Diversified is, when things got hard, people came together.”
As Hutto continues to sculpt and refine one Diversified, that unity will continue, redounding to the benefit of every client along the way.