It wasn?t so very long ago that corporates were defining their IT departments in terms of suppliers. Some would say quite unself-consciously that they were IBM shops, others would pronounce their allegiance to Digital.
Nowadays, few companies think in these terms. Some, in Sun CEO Scott McNealy?s phrase, got Wanged or DECed out. For the rest, the notion of the one-stop vendor shop was killed off by the emergence of client/server technology.
Also not so very long ago, it wasn?t unusual for computer resellers to define themselves in terms of a single accreditation, such as being an Olivetti, Tandon or Tulip dealer.
Compel, a reseller in Welwyn Garden City, is a case in point. Once a Compaq-only dealer, in the early 1990s it signalled its ambition of becoming a major national reseller by taking on IBM. In order to gain accreditation, it had to buy a couple of bombed out IBM systems centres.
Nowadays, few dealers think in these terms ? they are corporate resellers, computer retailers or systems builders. The one-stop vendor shop is an irrelevance to most dealers, which will sell whatever their customers want to buy.
But there remains a small hard-core group which has rejected this promiscuous approach. PC Dealer talked to four resellers which have chosen, for better or worse, to tie in their fortunes with a single vendor. Strategy, some say, is the art of deciding what not to do. This makes our resellers very strategic people indeed.
Bell & Watson is an extremely rare beast, the IBM-only reseller. It has all the badges: it is an IBM systems centre, business partner and solutions centre. The 11-year-old company has two branches, in Hayes and Leamington Spa, deliberately close to IBM?s main South East and Midland branches in Bedfont and Warwick. The reseller employs 56 people and turns over #12 million a year.
Once upon a time, you couldn?t get fired for buying IBM. Nowadays, the IBM shop is receding into distant memory. ?These days, there has to be a very good reason to buy IBM,? says Dave Cross, sales manager for Bell & Watson. ?Customers are much better informed, and much wiser than in the 1980s.?
Bell & Watson has stuck with IBM through thick and thin. It has never even been tempted to broaden its hardware product line, according to Cross: ?It?s difficult enough keeping up with the technology for one vendor, let alone half a dozen.?
The most trying time in the relationship was around three years ago, when IBM had huge problems with product supply and availability. ?We foresaw that IBM would have to go through right-sizing and restructuring but there was still a big stress factor ? IBM hadn?t got its Just in Time right. And it was managing down its models from over 1,000 to 40, while moving all its European manufacture to Greenock.?
But Bell & Watson?s patience paid off, he says. ?IBM has a good product range, from entry-level sub-#1,000 servers right the way up to AS/400s. IBM Thinkpads are pretty much the best notebooks and pricing is quite competitive.?
Cross says reseller relationships with IBM are ?pretty good, considering how manufacturers are generally?. Bell & Watson receives more support, assistance and forewarning than resellers of equivalent size, he believes. ?As far as information, skills and transfer are concerned, we do as well as a Computacenter, but obviously we do not have the same sort of purchasing power.?
Cross is very keen on IBM?s latest marketing programme, Servicecare. ?IBM is stressing the business benefits of its hardware, in the way Microsoft majors on the business benefits of its software. It is taking the lead with hardware; for example, it is building security and asset control directly on to the motherboard. IBM?s service business is also an opportunity for us ? less than five per cent of PC company services go through the channel. And it is pushing FSL, its leasing arm, very heavily.?
He thinks IBM is in a good position to restore market leadership. ?Compaq is going through very difficult times. It has made some recent decisions on pricing, availability and going direct that have concerned resellers. It is beginning to go through the pain that IBM went through two or three years ago, but IBM has come through the other side.?
Anglia Business Computers has plied its trade in Silicon Fen since the early 80s. The Cambridge reseller turns over #3 million a year and employs 35 staff. Anglia has a strong solutions bias ? it is a Microsoft Solutions Partner and resells Tetra and Navision accountancy software.
But as far as hardware is concerned, the company has eyes only for Mitsubishi Electric PC Division, or Apricot as everyone prefers to call it.
David Hurley, Anglia MD, sets great store by relationships. Ever since he started the company in 1981, he has sold Apricot product ? ACT accounting systems and the ACT-badged Sirius, the original Xen I.
These days, Anglia prefers to concentrate on high-margin services. On the hardware side it sells only servers ? nearly all Apricots. In fact, Hurley likes Apricot so much that he chairs the Apricot dealer group, now known as the Mitsubishi Electric Partners Council.
Anglia also sources a second server line from ASI, which handles a range of Fujitsu kit. As far as Hurley is concerned, people are the key point about ASI ? they all used to work at Apricot.
A bad experience with a major hardware vendor reinforced Hurley?s determination to work only with companies he could trust ? even if it means losing the occasional deal. From time to time, Anglia loses server business to Compaq resellers, but Hurley shrugs: ?I value my relationship with Mitsubishi much more than the occasional loss.?
The reseller also has a long-standing relationship with Tetra and Hurley recently took on a second accountancy software line from Navision. Together, Navision and Tetra address the needs of 99 per cent of Hurley?s customer base.
He is anxious to maintain a close relationship with Tetra: ?There is never a situation in accountancy software where you can be totally independent of the supplier. These are quite complex systems and sometimes you do need help with product amendments or at the close of sale.?
The trouble is, Navision occupies the same market space as Tetra. And accountancy software suppliers can be prickly over such matters. Oh, for the simplicities of dealing with the single vendor.
Micro Dynamics is a #3.5 million accountancy software reseller based in Worcester. Last month, the company flogged its entire 50-strong complement of Multisoft contracts to the vendor. The sale, on undisclosed terms, leaves Micro Dynamics as a Tetra-only reseller. In the future, it will be focusing solely on Tetra?s CS/3 range.
?I am cleaning up my act,? declares MD Peter Reynolds. ?We are going to be a whiter than white Tetra reseller. The Multisoft business was a bit of a carbuncle. We couldn?t do anything significant with it and it made me realise we were not big enough to support two product ranges properly.?
Reynolds acknowledges that he is putting all his eggs in one basket, but he says the risk is worth taking.
Micro Dynamics has fewer eggs to put in its basket than most. Relying almost entirely on software sales and maintenance for turnover, it has next to no interest in selling the kit or infrastructure needed to run Tetra software.
The reseller will only sell hardware if it can turn a reasonable profit on the deal. And with margins of 56 per cent, who would quibble with Micro Dynamics? strategy? When it does make a hardware sale it sticks with its preferred supplier of 15 years. ?If you cut us we bleed Apricot,? Reynolds says.
Micro Dynamics is the UK?s eighth largest Tetra reseller, with 320 customer contracts and an annual spend with the vendor of #250,000 a year. It is perhaps a third of the size of Apex, Tetra?s biggest reseller, which was recently acquired by Lynx Technology.
Reynolds wants to be up there with Apex. He is growing Micro Dynamics by acquisition, hoovering up unwanted Tetra business from companies which are pulling out of accountancy software, and he is currently negotiating to buy 60 contracts from an unnamed dealer. He is also growing Micro Dynamics organically. By being Tetra-only, the company will earn huge brownie points with the supplier, he thinks.
Leading Edge, the #11 million Oxford reseller, has built its business around Microsoft. If customers ask, the reseller will sell Novell or Lotus software ? it operates one of the biggest Lotus Passport contracts in the country. ?But we always warn them not to look for support,? says managing director Paul Brenchley.
Brenchley set up Leading Edge on a hunch in 1990. ?I knew I wanted to get involved in Windows in some way,? he recalls. ?I could see it was the future.?
So he rented an office from a friend, hired a techie and cosied up to Microsoft. His reward was Microsoft specialist centre status for his fledgling company.
Brenchley began peddling Microsoft software into corporates. The pitch was to convert Wordperfect and 1-2-3 users to Microsoft Office. It was easier said than done.
?We are talking about years of embedded knowledge for these products. You would come across Wordperfect evangelists,? Brenchley says.
Leading Edge sold #300,000 worth of software in its first year and #1 million in its second. The company?s business has expanded over the years, but then so has Microsoft. In 1990, Leading Edge was one of a handful of computer resellers mainlining on Microsoft. Now it is one of hundreds.
These days, everyone buys Microsoft Office. Profit margins on business automation applications have slumped and Leading Edge?s response has been to climb even further into bed with the vendor.
Three years ago, the company diversified into consultancy ? wrapped around Microsoft Backoffice. It also took on Select, Microsoft?s volume purchasing programme.
At the time, few big resellers were interested in Select. The profit margins were too slim and the auditing procedures required by Microsoft were too onerous. Leading Edge went hell for leather for Select business, which today is worth more than #3 million. ?We have made sure that we have stayed ahead of the game,? Brenchley says. ?That has been our success.?
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