In this Q&A with Scott Maccabe, president and CEO, Toshiba America Business Solutions and Toshiba Global Commerce Solutions, Maccabe talks acquisitions, big data and what’s in store for 2018.
Last November, Toshiba acquired a dealership, something we haven’t seen from you in a long time. Does this mark a new strategy for the Toshiba Tec Corporation?
It’s been a long time since an acquisition has been made from the print side, but under Toshiba Tec Corporation (Toshiba Tec), we’ve been busy prior to this activity. We spent many hundreds of millions buying the retail business from IBM. We then needed to get that retail business on the right footing because it absorbs so much cash liquidity within Toshiba Tec. Getting that acquisition on the right track would then allow us to open up the door to execute some of our other plans. I’m happy to say that after just under two years, Toshiba Global Commerce Solutions (TGCS) — the retail business acquired from IBM — is self-sustaining.
Toshiba Tec is now looking at other acquisitions around the world, not just in the Americas — we have a global acquisition strategy. I can say that we’ve identified a couple of potential opportunities in the Americas that we’re doing some due diligence on and investigative work. Beyond that, we have ventured into providing some of our dealers with additional cash flow and liquidity so they can make acquisitions. While we personally may not have purchased a particular acquisition target that they were looking at, we have funded expansion opportunities with some of our dealers.
It’s a commitment to our dealer partner base. Several years ago, I had an offsite activity where I invited some of our key dealers to a council meeting. We went through an exercise of really looking at the competitive landscape, to understand where we were, where our strengths and weaknesses were in the market, and where all of our competitors’ strengths and weaknesses were.
Something that came out of that meeting was that many of our dealers were facing concerns over the consolidation of large dealers buying smaller or midsized dealers. At that point in time, we decided that we could take two tactics. We could own the market segments ourselves with our own acquisitions, or we could take a joint strategy to expand and invest in trusted partners where we felt that they had a better expertise and footprint in their market segments to build a business, then expand in areas where we felt we had that advantage. We asked our dealer partners to come to us when they have expansion opportunities, and over the course of the last couple of years we’ve taken investment positions with key dealers to really help them expand. I’ll tell you, the derivative is positive.
This effort has helped our dealers with cash flow and also helps them because we consult with them and work with them to understand what their challenges are and it keeps people loyal. It was a strong message to our dealer base that partnership is critical to us and we have a balanced model between our direct and our indirect business.
Our intent behind our acquisitions is both defensive and offensive. As we see other activities from competitors, we may respond accordingly. If we view that it’s in our best interest to make an investment like we did in Northern California recently, then we’ll respond accordingly.
Your recent financial numbers looked very strong – what do you attribute the good results to?
Overall, there’s been a very good acceptance of our new product line (many of the new products launched at the 2017 national dealer meeting). There’s also been expansion in our other product categories. MPS continues to be very strong and our digital signage business is growing, thanks in part to our partnership with AEG.
Our barcode business has been very strong as well, and that’s a huge opportunity space for us. Beyond that, the results were impacted by our operational focus. We’ve been very refined in our execution plans, in how we run the business, and how we have our organization set up to support the business. I’m happy to say that Toshiba America Business Solutions (TABS) continues to lead Toshiba’s entire global Printer Systems Business Group (PSBG) in profit contribution, driving even the top line of the company. Overall, we’re operating really, really well.
From a global perspective, I’m happy to say that within the PSBG we have exceptional global business interactivity with all of the companies working together. We meet quarterly and are really working as a cohesive team. It’s not a competitive situation.
Let’s talk a little about the global landscape. Are there specific regions where there’s more momentum and traction than in others?
Toshiba Tec is very focused on continuing to evolve as a solutions provider, which is one of the underpinning reasons that we bought the IBM retail business to add to our portfolio, incorporating the skill sets that existed there. We see that in Europe, they’re more advanced than in the United States in certain retail segments, specifically in their product categories and their buying habits and the types of tools they utilize. The lessons we’ve learned in Europe provide us with opportunity to apply them now in the United States because many of those European companies are now crossing the ocean and coming to the U.S.
There are also activities in the U.S. that we’re taking over to Europe and expanding. Specifically, digital signage, because it’s something on the forefront that’s been very active. With the grocers in Europe, it’s astounding to me how much they’ve implemented digital signage and RFID tags and digital pricing components on all their product categories. Not just sales — it’s also in supply chain and manufacturing. It’s really interesting.
Clearly, the data analytics are becoming extremely powerful for you and your ability to help your clients. You’re talking about taking sophisticated applications that are working in one region and implementing them then in another region. How are you leveraging your data?
You hit the nail on the head. I’m a data guy. Those that own that data and have the opportunity to provide value from it are going to have the keys to the kingdom. Just as an example, we recently introduced our e-BRIDGE CloudConnect platform, which allows us to go out there and touch our devices, wherever they may be. Now we can start to manage those devices, capture information on those devices and see how well they’re performing. We’ll now be able to build continuity of that data management toolset, which is a huge opportunity.
In our retail space, all of the data that crosses the point of sale and is captured is immense. Even very large companies struggle with trying to not only capture the data, but manage and then understand what that data is telling them and figure out how to derive the value of that data. Many of those companies have spent hundreds of millions, if not billions, of dollars on going in that direction. We’re working very closely with many large market players to create that linkage, and to be able to provide that data insight. It’s tied back to speed of access, speed of transaction, continuity of capture.
What if we could be the manufacturing provider who can guide a major retailer like a Walmart, as an example? They have point-of-sale systems, they have print systems, they have barcode systems, they have digital signage systems. If all of those systems could talk to each other and interact and capture and provide insight, it would provide a huge value to their operational efficiencies. And if that same system was also able to reach out to the consumer directly and provide the consumer with personalized types of commerce transactions, think of the power of that.
You are running two separate companies within Toshiba Tec at the same time. Talk to us a little about the challenges you have been experiencing.
I have two organizations that are bicoastal. There are significant time and physical demands that have been a bit of a challenge to work through.
One of the real challenges has been a business cultural challenge. With the TABS organization, which I had the luxury of running for four years, I have a very stable business culture that we’ve been able to evolve and refine. On the retail side, I had a company that was in need of reconstruction and resurrection. I needed to find a way to deal with a lot of the emotional issues inherent in that in order to be able to get people to cross the chasm and to understand that there is a plan and if the plan is executed we can come out the other side.
Understanding the business hasn’t been as much of a challenge, nor has getting people to work together. Business is business, and if you have good business management practice and structure and people around you, then you’re able to address whatever business segment that might be, as long as you have a good plan. The bigger challenges really have been to address a lot of the infrastructure issues that had not been correctly put in place that needed to be put in place.
Then about nine months ago, Japan provided an added challenge, and that was ownership and integration of the Japan retail organization globally outside of Japan. Toshiba Tec had its own retail company, globally. Japan operated separately in its own segment, and then the rest of the world operated. Integrating those two elements, Toshiba Tec’s previous retail company and then the TGCS retail company, integrating them, getting them aligned with a cohesive business strategy and execution plans, those have been some pretty significant challenges. I’m happy to say that we have achieved operational profit, which allows us to then start showing further expansion.
I’ve been blessed with really good team members. I have had a lot of the TABS team working in partnership with the TGCS team. That’s really brought us together as one cohesive, global organization. Everybody has learned from each other.
What are you focusing on for 2018?
Toshiba Tec’s strategic imperative as a corporation is to become a one-stop product and solutions provider in our market segments and provide a much higher differentiable value than others. Toshiba will do so by creating innovative products, solutions and services and fostering strategic partnerships to complement our technology.
The economy is doing well and we think that 2018 is going to be very exciting and prosperous for us.
This article originally appeared in the February 2018 issue of The Imaging Channel.
Patricia Ames is president and senior analyst for BPO Media, which publishes The Imaging Channel and Workflow magazines. As a market analyst and industry consultant, Ames has worked for prominent consulting firms including KPMG and has more than 15 years experience in the imaging industry covering technology and business sectors. Ames has lived and worked in the United States, Southeast Asia and Europe and enjoys being a part of a global industry and community.