Hardware reseller Tangible Benefit is beginning to offer its customers solutions and services on top of its traditional hardware offering, citing strong customer demand.
The London reseller is a big partner of Intel, NetApp, HP and Microsoft, and turned over £20m in its last financial year, for which it has just completed its books. Following an MBO in 2009, the firm has been growing at between 15 per cent and 20 per cent annually over recent years.
The hardware specialist has about 20 sales staff and is based in a co-located office and warehouse facility, which it claims is a key differentiator for the firm.
Although it is remaining close to its hardware roots and has no plans to abandon this market, solutions and services will be a new priority for the firm for the first time.
"We're not reinventing the wheel on this one, but traditionally we have been a bit of a shifter of tin, and we have done that pretty well to grow to where we are now," explained Tangible Benefit's marketing manager Stuart McLean. "But we want to move more into a solutions model, hence [we're] hiring some new solutions chaps."
McLean characterised the move as a rebrand, but said the company name will stay the same, and that solutions and services will receive more attention than ever before.
In recent years, industry watchers, analysts, vendors and resellers themselves have all talked at length about the risks of remaining in the hardware space, and many believe moving to solutions and services is the only way to keep up with customers' changing needs.
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McLean insisted that despite the industry hype in recent years, the firm has decided to look at solutions now due to customer demand, not peer pressure.
"From speaking with an awful lot of our clients, [I found that] they have been happy with the service of the hardware provisioning - supply and deploy - but now we're looking to add a third tier to that," he said. "We're noticing demand from the customer side.
"You're absolutely right about the industry trend, but we would never do something just because everyone else is doing it. If it wasn't right for our customers, we wouldn't do it."
He added that he envisages Tangible Benefit will "always operate some sort of hardware provisioning", meaning the new model will be a hybrid, rather than moving 100 per cent towards services.
"I think we will always operate some sort of hardware provisioning, so it would be a hybrid model, rather than 100 per cent managed services," he said.
For its next financial year, the firm expects sales to reach the £25m mark. McLean explained how the hardware-focused reseller has managed to enjoy growth despite margins plummeting on products.
"One of the keys to our success is we have always retained the small business feel even as we've grown into a larger player in the market, so we retain control over every aspect of our business and we're quick enough to respond to any market changes," he said. "We also own all our own assets and have a capable team of in-house technicians and consultants so we maintain low operational costs without relying on external agencies."
He said the "skinny but sustainable" margins will continue, even as it moves to solutions.
"We don't think there will be explosive growth overnight [because of the move to services]," he said. "It would be nice, but we're not naïve enough to think we are going to start offering solutions and then every man and his dog are going to come to us. Hopefully, there will be a steeper rise after that.
"It can take a while for things like this to get off the ground, but we are lucky we are a cash-rich business. Any growth we experience, we tend to do organically with additional headcount or training accreditations."
Some hardware players have moved into solutions quickly by acquiring others in the space, but McLean said this would be an unlikely move for Tangible Benefit.
"We absolutely respect the acquisition model, and a number of our competitors have done it very successfully," he said. "But we never like to think about the loss of ownership or control. We like to own the whole model."
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