Podcast #133 Transforming to an IoT Solutions Provider

Good day, and welcome to edition 133 of our Digital Industry Leadership Series. Today I’m pleased to host Dr. Rafael Salmi, Global President Richardson RFPD at the Division of Arrow Electronics. Dr. Salmi is a technology executive with a proven track record of successfully building and transforming global organizations. With over a decade at Arrow Electronics he is currently Global President and General Manager for Richardson RFPD, an Arrow company focused on RF, wireless, and IoT technologies. Dr. Salmi was instrumental in transforming Richardson RFPD's value proposition from semi-conductor supplier to Edge, to Cloud IoT and RF solution provider. He’s on the advisory board of the IoT Solutions World Congress and co-chair of the IoT Council in Chicago. Dr. Salmi, welcome to our Digital Industry Leadership Podcast.

1:31
Hey Ken, thanks for having me here today on the podcast. 

1:36
I know we’ve had a level of great interactions over the last couple of years, we’re going back to exactly the IoT Solutions World Congress. I think it was the last time we actually could physically hold it, so good to reconnect on that. So, I always like to start off with one’s I’ll call it, digital industry leadership journey. What would you consider to be the red thread through your journey?

2:07
Ken, I think through my journey all the choices that I made, and the passion that I have, are really around understanding and applying technology. My background is a physicist and I’ve been passioned by science, but also applied science, that’s one thread of my journey and my professional personality. Also, very engaged and loving managing and navigating complex global businesses. So, I’ve been involved in global businesses back in the 90s, and here we are today, I don’t think globalization is going away, it's slowed down lately but I strongly believe that we’re going to continue to see the involvement of technology and different geographies. The last characteristic of my professional journey, and that’s what I’m really passionate about Ken is I’m a P&L operator with a growth mindset. I think it’s extremely important to keep that in mind, managing a profitable and growing operation is really exciting. So that’s really what shaped my professional journey, Ken.

3:27
I know you subsequently took on progressive leadership roles for Arrow across AMEA, and Latin America; how has the value proposition of Arrow evolved over the time that you’ve been with them?

3:40
I joined the company about 15 years ago, and prior to that, I would say 20-30 years ago electronic distribution was viewed as a peer supply chain play. But in the past 20 years, we at Arrow really invested in enhancing our value proposition. And the reason is that we saw a tremendous need from customers for a global strong technology partner like us, able to help them navigate the deployment for complex technology, helping them shorten their time to market, guide them from concept and design to mass production, helping them better manage their working capital, improve their cost to serve, as well as helping customers adapt to fast and involving markets, as well as disruption that continued to happen today.

So, we really successfully transformed our value proposition to become a global technology aggregator, with our global engineering capabilities and a tremendous partnership with suppliers that allowed us to be a successful company, and today we’re a $30-billion public company.

4:55  
That is certainly a great place to be, and well-earned it sounds like over the time that you guys have been there. I know in 2014 you became Global President of Richardson RFPD. Can you tell us a bit about the company and how you transformed it?

5:12

Yeah, sure. We acquired Richardson RFPD in 2011, I joined the organization at the end of 2014, and I was really impressed by the value proposition of Richardson RFPD. At that time, we were the largest global RF wireless machine-to-machine. We called IoT at that time machine-to-machine, and power distributor. So, the company was focusing on the telecommunication market, aerospace, and defense, industrial, medical, transportation, and a large portion in renewable energy mostly in Asia. We service about 10,000 customers around the globe and head offices in about 36 countries.

So, my objective when I joined the company was how can I help the organization to evolve, to address the needs of the market; what I explained earlier, the complexity of designs, you know when you are deploying 5G solutions the level of complexity increases multiple folds. At the same time, the domain of expertise that my technical salespeople or engineering had to evolve. And the ultimate goal for us was to help customers accelerate in their time to market having access to the latest RF Wireless IT and power technologies. So, what we did we basically drastically enhanced our technology offering capability, so we added a lot of partnerships, different technology stacks from large corporations up to fabulous start-ups, to be able to have really a good and sound offering on those technologies.

The other thing that we did Ken, to enhance our value proposition from a demand creation standpoint, and from an engineering standpoint, we attracted and invested highly skilled engineering talent from the semi-conductor or the software industry. So today we have multiple staff in different geographies, and we have a couple of RF PhDs in our staff which you don’t see in traditional distribution. At the same time, we evolved from helping customers in designing discrete components, to helping them really design and improve their system architectures. So, we became really a true technology advisor to our customers, with a cost-effective global supply chain arm.

At the same time since the beginning of 2020, we saw an acceleration of the digital transformation of companies. So, we had to adapt and be agile to leverage that opportunity and enhance our go-to-market strategy. So, we adopted more and more digital customer interfacing platforms and technologies, we also are more and more involved in new technologies like AI on the edge, and also applying AI on the back office to improve engagement with our customers. So, the same thing, we launched recently our billing engine, and the ability for us now is to offer not only hardware and software but also offer subscription-based revenue and engagement with customers.

8:48   
You clearly have come a long way from being as you said earlier, simply a supply chain play or a distributor play for electronics, full solutions shall we say. As I mentioned earlier, you and I first met at the IoT Solutions World in Barcelona, and I do hope we have the opportunity to attend such conferences again in the future, but we were part of a panel discussion on the industrial IT ecosystem. At least the way you’ve described Richardson RFPD, it sounds like you guys play very much in the middle of such an ecosystem, what does ecosystem mean to you, and how have you woven this into Richardson RFPDs focus?

9:30
Yeah, first I’m also very excited, I’m hoping that at the end of this year we’ll have the opportunity to go again to this amazing event, the IoT Solution World Congress. As you know, IoT for me is a complex aggregation of horizontal stacks of different technologies. So, to be able to successfully deploy and scale IoT solutions you need to partner with a complex ecosystem, and that ecosystem includes hardware suppliers, software suppliers, system integrators, telecom operators, software platform suppliers, cloud services, design houses, etc. None of these companies alone can resolve or solve the one specific aspect of an IoT deployment. We are in the middle of that ecosystem and that’s the beauty of being originated distributors, we can bring all those technology partners to offer a similar solution to deploy IoT solutions. So, as a technology company, we built that ecosystem with our suppliers, to help customers deploy those IoT solutions in different use cases, different vertical markets.

The other thing we did, we accelerated investment in our transformation that I mentioned, and we launched a billing platform, we launched an engagement tool and AI on the edge. The idea is really to deliver the different business models to customers, depending on their use case and what they want to achieve. So, we can now deliver recurrent billing services, a subscription-based offering, and we are now looking at offering and have already started offering products as a service. So, it’s really exciting, I really believe that transformation is just the beginning, I think we’re going to see a lot more innovation and transformation moving forward.

11:30
Yeah, I’d fully agree, especially as you look across any of, formally let’s say CAPEX, the idea of product as a service, or you’ve seen a lot of service as a product, right? And so, it is interesting in terms of the changes and the different options you’ve got to go to market with, and that really is kind of the crux of digital transformation, at least what that catalyzes.

Let me go back, as I mentioned earlier you talk about yourself being an Edge-to-Cloud solution provider, what does that mean to you?

12:05
First and foremost, our DNA is RF Wireless and connectivity, but what we didn’t realize, if I’m a customer trying to transform my business model, enhance my productivity, and I want to deploy IoT solution if I’m an executive of those types of companies, what technology is going to be used is not really relevant. So, what I want as a customer, I want a seamless deployment of IoT to get access to data. What we try to do is, while our DNA is RF Wireless and connectivity, we looked at what are the other stacks that can help a seamless deployment of IoT solutions, and that’s why we invested in new expertise like cloud, services, platforms, software, security, etc.

Our customers need access to the data, it’s all about the data as you know Ken, so the data is really important to unleash the power of artificial intelligence, it helps improve the operation of our customers, helps them offer new services or enhance their service levels and grow profitably. So, our objective by really being an Edge-to-Cloud solution provider is to really help customers to get easy access to data in a secure and cost-effective way, and a reliable way independently from the technology applied.

13:40
We see several players along the value chain, Edge-to-Cloud including Telco’s, hyperscalers, industrials, with a similar claim or value proposition; what do you see, or maybe said another way, whom do you see as best positioned to win this given those different groups, and why?

14:05
Today what is very interesting, the opportunity for growth is tremendous, it’s very important in our space, but the market is unfortunately over-crowded and very fragmented. Let’s say for example if we talk about IoT platform, you know Ken that today there is between 800 and 1,000 platform suppliers. The winners are going to be the companies that are able to build a cost-effective seamless deployable solution, and most importantly those that are able to scale those solutions. So, I believe, there will be a Darwinian evolution of some players, some players will disappear, and some will drive. We really believe that we are very well positioned to be a major player in that space with our IT suppliers because nobody has an answer to the entire complexity of IoT deployment. So that’s why being able to partner in the complex ecosystem is key.

15:15
Interesting that given your original focus and continued focus on RF, there has been obviously a lot of new entrants, and a movement within the wireless world particularly around both on license spectrums like LoRaWAN, and of course the new license spectrum players, NB-IoT, LTEM, and such under 5G. What’s your perspective there, speaking of Darwinian evolution do you see all of these continuing on, or do you see some type of convergence down the line?

15:54
I think we are just at the beginning again of this journey. So, what is very exciting, RF is becoming more and more important as we can see, so what I do believe Ken is the 3GPP license, 5G application, have a strong value proposition. I mean 5G will definitely allow higher bandwidth, lower latency, large and easy IoT deployment, and this is a very important value proposition for larger adoption of IoT, not only in the consumer market but most importantly in the industrial applications.

So 5G architecture is really very different from 3G and LTE, in the sense that its deployment is more difficult, the deployment is going to be more distributed, so the 5G hardware would be deployed not only in the form of a micro-based station like we’ve seen in LTE or 3G, but it’s going to be also deployment of a multitude of small cells and will be deployed even in premises or houses. It’s like the wi-fi router 25 years ago.

So, we are currently living the deployment of 5G networks around the globe, but it’s just the beginning. So far, we are just talking about six-gear technologies which is an evolution of LTE, but there is really a tremendous growth opportunity at higher frequency bands with millimeter-wave technologies. There are also a lot more innovations going to happen now and in the future in beamforming, Massive MIMO. So, the higher we go in frequency the more complex the deployment, but also it's going to allow a lot more transformation to happen and acceleration of adoption of IoT solutions.

If you look at the data, as we know the data is oil, and for me, the pipeline to take all that we collect from a sensor and move it to the cloud is going to be through a pipe, and this is the 5G pipe. At the same time, we see companies and research institutes are already talking about 6G or even Quantum Wireless post-2030, so we are just at the beginning of that revolution. At the same time if I look at the other use cases and the other growth opportunities really around a licensed spectrum. You mentioned LoRaWAN for private networks, I think there are more and more use cases for industrial applications, so I can really see that large Global industrial companies will want to deploy their own private networks around the globe, and they want to own and manage and operate their network. So, I really believe Ken that these two options, license vs unlicensed will coexist and that’s a great growth opportunity for all of us.

19:07
Yeah, I’d agree and we’ve seen what’s interesting in the on license spectrum play, I like the way you refer to it as private, that is ultimately what is driving, that it’s the ability to control the pipes, the data and even in essence kind of roll your own network on your barn, on your farm, in your city, etc., and you could call it the kind of open systems, or community if you will approach to setting up a Telco in some sense, right, or at least likely. So, it is pretty interesting to see how things are going to come together, and didn’t even mention Starlink in all of this! So, it’s going to make for a very interesting network of connectivity, but certainly benefiting all.

Let me go back to a question really quick, the way you’ve described Richardson RFPD was certainly an eye-opener for me, and I’m sure it is for a lot of the audience as well. If somebody wants to engage you, what does that engagement model look like? Do I talk with your salesperson, do I send you an RFP, how do I engage you because you’re a little bit of a system integrator, software provider, hardware provider and it’s a pretty rich model?

20:23
Yes, the engagement can be in multiple ways. Generally, our technical salespeople engage with CTOs, Head of Engineering, that’s the traditional model we have, and then when we succeed to design a solution then it goes to procurement, purchasing, etc. But now when we talk about new technology disruption, subscription-based businesses, etc. the engagement goes above and beyond engineering and supply chain, it goes also to C-Suite. I really believe Ken that if the CXOs of companies do not understand the opportunity and the challenges of IoT deployment, or even 5G deployment then the company will not be successful. So that’s why our go-to-market I would say, we are taking really multiple channels, we’re looking at an omnichannel approach, online, offline, but also with major personas within the companies, it starts with the head of a company, to engineering, to supply chain, so it’s really a multitude way of engaging with us.

21:40
Very good, well finally we always like to ask the individual really, what books, people and/or resources inspire you?

21:54
Oh, that’s a great question, Ken! One source of inspiration for me is reading, I love reading as well as I love interacting face-to-face with partners, customers, executives from different regions of the world, but reading gives me really a concise way of reflecting on what is happening in our world. So, I do read a lot about leadership, I love reading about global cultures, technology obviously, and also, I’m fascinated with biographies. I think that learning through the biography of successful people is very enlightening.

So, for example, lately, I’ve enjoyed reading a book from Erin Myer called ‘Culture Map’ and I really encourage people to read that book, which is around how you approach engagement with customers, suppliers, partners in different cultures. I also enjoyed reading Satya Nadella’s book, ‘Hit Refresh’ or even Hans Rosling's, ‘Factfullness’. And I can cite a multitude of books that I love reading. But also, another topic that inspired me a lot is, I’m very fascinated by the brain and cognitive and positive psychology. I enjoy reading or following Martin Seligman or Christopher Andre. So, all that can help me to continue to develop myself to become a better leader.

23:33
You are a veritable renaissance man!

23:38
Thank you, Ken, thank you.

23:40
Very impressive, and we will include links to all of these books in the transcript as well. Dr. Salmi, thank you for this insightful interview today.

23:50

Ken, thank you. Thank you, it was really as always, a pleasure talking to you Ken.

23:55
As well, and certainly eye-opening for me. So, this has been Dr. Rafael Salmi, Global President of Richardson RFPD. I’d like to also say probably the tip of the arrow relative to the company.

So, thank you for listening, and please join us next week for the next episode of our Digital Industry Leadership Series.

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