Ask the experts
Resellers hoping to benefit from tax breaks under Home Computing Initiatives would be well advised to team up with the right partners
The government's Home Computing Initiatives (HCI) could mean huge sales opportunities for the channel.
They offer generous tax breaks when employers loan PCs to their employees for personal use, which means staff can get a PC for as little as half price, while employers save on National Insurance (NI) and get a more IT-literate workforce.
But, as we saw last week, HCI can be a minefield of regulations, and involve sales, fulfilment and support models that can be quite alien to the average business reseller. Even the experts admit they need partners.
"Anyone considering getting into HCI should think long and hard before going it alone," says Martin Prescott, managing director of specialist HCI reseller RedPC. "You have to be absolutely certain that your partners have got it right."
Despite being an HCI specialist, RedPC relies on several partners. Finance firm Syscap provides a specially structured corporate finance package.
"Syscap worked hard to change its terms and conditions and produce the right package, which makes it easier for us," says Prescott. "We can go into a customer with a RedPC-branded finance package that we know won't cause any problems."
RedPC uses distributors to provide personalised fulfilment, with every PC hand-delivered by an accredited engineer.
Warranty and servicing are contracted out to three service companies whose engineers work with business customers during office hours, leaving them free to look after HCI systems in the evenings and at weekends.
RedPC helps flexible benefits companies to implement HCI deals they have negotiated, and the reseller retains a lawyer to vet all its HCI contracts. Only support is kept in-house, with a 24-hour call centre to sort out employees' problems.
Other HCI resellers may outsource support, often to the system vendors.
John Laity, director of marketing at another specialist HCI reseller, OneCallPC, says: "If you're prepared not to be greedy, partners can add considerable value to your offering. As well as partners in logistics and leasing, and vendors, we've effectively franchised our sales network."
This includes working with local chambers of commerce, and consultants and advisors working in likely fields such as the NHS, to generate sales leads. OneCall even works with its local trading standards office to ensure its documentation is in order.
Most of the main vendors are enthusiastic about HCI. Names that often crop up include Acer, Fujitsu Siemens, Hewlett-Packard (HP), IBM and Toshiba, as well as tier-two vendors such as Evesham. But often the vendors are feeling their way as much as resellers.
"Some vendors are nicely geared up for business and consumer sales, but they don't often combine them, so we're having to educate them about the HCI sell," says Laity. "Acer reworked its warranty for us, because HCI products under, say, a three-year agreement have to have a three-year warranty."
In these early days, resellers will look in vain for HCI incentives and special deals, and some think there's little to choose between the big brands.
James Galloway, projects director at specialist HCI reseller Nicator, says: "If you look at standard PC packages there is nothing to choose between them on specification or price. HCI schemes are basically just another channel for the vendors."
Sol-Tec, a general reseller trying to make its mark in HCI, chose to partner with Evesham, although it offers a big-brand alternative if customers want it.
Evesham's kit is cheaper and better specified, according to Simon Taylor, Sol-Tec's financial director. "People at home would prefer an all-singing, all-dancing multimedia station than something with a brand-name label," says Taylor.
To simplify administration - and to avoid swamping novice PC users with too much choice - most HCI offer only a handful of specifications, usually ranging from entry-level to state-of-the-art entertainment centres.
Because they're saving 40 to 50 per cent of the cost, most employees go for high specifications and good peripherals, and the average price of an HCI system is about double that of a retail sale. Nearly a third choose laptops.
HCI systems are definitely consumer models, not business PCs. "We would never offer a corporate box through HCI," says Sarah Scott, desktop business manager at Acer.
A clued-up vendor should be able to offer useful advice and support, on such matters as how to handle the 'B2B2C' sales process, which means selling the idea to the employer's human resources (HR) and finance people and the kit to its staff.
Vendors also can give advice on how to keep the IT director sweet; what products to offer; pre-sales support for staff who may not have much IT experience; how to forecast sales volumes; how the tax breaks and VAT exemptions work; how to set up contracts; how to get approval from the Office of Fair Trading; the effect on pensions; and the implications for low-paid workers.
Vendors also may be able to advise on whether the deal is worthwhile at all. "If you're thinking of selling HCI to a 10-employee company, you have to work out whether it is worth the cost of the logistics, back-end paperwork and other costs of sale," says Scott.
Good support and fulfilment are crucial to the success of HCI; without them the employees feel they've had a bad experience and complain to the IT support desk at work, which is the last thing their employers want.
Vendors with consumer experience are usually good at supporting inexperienced users and providing evening and weekend cover. They should be able to cover the whole HCI package, including other vendors' software and peripherals.
Some offer special phone numbers for HCI customers.
HCI deals tend to be negotiated directly between reseller and vendor, with distributors only becoming involved to handle fulfilment. This, however, is a vital part of the HCI experience, and distributors such as Northamber and Westcoast are making a name for themselves in HCI fulfilment.
A distributor's service may include not only personalised delivery and set-up services but sales order processing, invoicing, product bundling, software loading, and even providing a database of serial numbers so the customer's HR department knows exactly which employee has what.
Resellers expect their partners to know their stuff, and they will be expected to reciprocate by taking their own responsibilities seriously.
"We want to know that the resellers we do HCI with are going to run it 100 per cent correctly and not cause us problems at the back end," says Nick Bailey, an HCI specialist at Northamber.
Partners look set to be a permanent fixture of the HCI market. "Unless the government makes it less complex, which isn't likely, then I think there will always have to be specialists," says Paula Medway, HCI programme manager at Fujitsu Siemens.
But the partners need resellers just as much as resellers need partners. Vendors and distributors are keen to increase the profile of HCI in the channel. Some enterprise salesforces will pass on HCI leads.
"We're actively looking for HCI partners that can add value," says Norman Richardson, consumer sales director at HP. "We need differentiated resellers out there before we can develop HCI further."
CONTACTS
Acer (01753) 699 200
www.acer.co.uk
Fujitsu Siemens (01344) 475 000
www.fujitsu-siemens.co.uk
Hewlett-Packard (0845) 270 4215
www.hp.co.uk
Information on HCI (020) 7215 5000
www.dti.gov.uk/hci
Nicator (0141) 585 6433
www.nicator.co.uk
Northamber (01932) 333 888
www.northamber.com
OneCallPC (0870) 777 0999
www.onecallpc.com
RedPC (0871) 424 2400
www.redpc.co.uk
Sol-Tec (0118) 951 4200
www.sol-tec.com