Internet dealer - When the virtual reality hits home

Just like the spinning jenny of the industrial revolution, those who have embraced e-commerce believe the Net will overhaul the way business is done in the digital age.

Brian Jackson, Now Distribution's managing director, acts like a who have embraced e-commerce believe the Net will overhaul the way business is done in the digital age. latter-day Moses beholding the Promised Land, when he predicts: 'One day, it will all be like this.'

Unimpressed by their role in this Messiah-like prophecy, the banks of computers in Now Distribution's Croydon head office whirl quietly away, their twinkling LEDs the only clue as to what the fuss is all about.

What Jackson is referring to are his invisible combat units - the sales staff, Vars and general administration people scattered across sundry homes and offices, all linked by a sophisticated phone and intranet network, and who constitute the distributor's virtual world.

Gone are all the huge office overheads associated with running an 180-dealer strong community, gone is the nine-to-five routine.

In short, Jackson is practising what he preaches as a distributor of internet software, using his own products to create an online mini empire that, if not quite yet a land flowing with milk and honey, certainly isn't far off it.

Not that it was always so. A few years ago, Jackson was in the same predicament as most PC dealers - confronted with vicious pricing and falling margins as the UK marketing force behind Korean electronics giant Lucky Goldstar, a job he had been headhunted for.

The deal was simple: he would set up and run the marketing and selling of PCs from ads in magazines, while the Koreans would fulfil the orders direct.

In effect, Jackson was a virtual distributor, with the arrangement an omen of things to come. 'Goldstar wanted an organisation that could work on a purely commission basis with some fixed overheads, and I did that,' he says.

'The idea was to market the PCs as if you were a distributor, although we didn't actually touch the products.'

At one point, Jackson had more than two dozen staff in just one office - 'I didn't get any work done, I was always sorting out their problems' - and was moving towards setting up a dealer channel when the Korean conglomerate decided the Goldstar PC brand wasn't working.

It was a problem compounded by the rising costs of manufacturing in its home country, making it increasingly prohibitive for the company to compete with the likes of smaller, direct manufacturers, such as Elonex.

'It couldn't get the premium on products that, say, Dell could,' Jackson comments. 'In the end, Goldstar decided it was a business that didn't work for the company and soon afterwards it closed its brands down.'

Unlucky for Lucky, but fortuitous in some ways for Jackson. Now Distribution had been slowly moving into software for some time and a break came when Commence Corporation, a US software house involved in Web-enabled personal information managers (PIMs), came round to his suggestion that it should be its sole distributor in the UK with Jackson at the helm.

It was a move that, accompanied by the selling of some Unix software, prompted Now to expand its Var network and refocus its marketing and support strengths on the burgeoning market of the Net. In short, the ethos was goodbye tin and hello to the brave new world of the Web.

Since then, Commence has repositioned itself strategically as an internet tools developer - its latest product, due to be launched in the UK soon, promises a complete, out-of-the-box package to weld corporate databases with, say, front-end sales and marketing software, and all accessible via the Net.

Commence products are already widely used by the likes of BT and Shell, while for Vars the beauty is that once its products are accepted by a customer, it inevitably leads to further sales and consultancy work - all of which suits Jackson's own aims as a distributor just fine.

Referring to the early days when he was just starting to cement his relationship with Commence Corporation, Jackson recalls: 'We thought it was vital to find products that Vars and dealers could sell, rather than look for those we happened to like. Just as important was that, after the initial sale, the product gave Vars the opportunity to generate substantial further income through ongoing support. The Net was the chance we were looking for.'

Today, the focus of Now's activities is relatively small companies with anything between 50 to 250 employees, providing its own Vars with lead products that stimulate a continuing relationship, rather than just leading to a cul-de-sac of single box sales.

As the internet has blossomed, so too has the distributor's portfolio of products, particularly on the email side, where intranet software can compete as a cost-effective alternative to older, proprietary email networks.

'When our dealers pitch for an account, the customer is immediately interested because the product doesn't cost a lot of money,' says Jackson. 'In the process of forming that relationship, Vars are dealing with a customer who, in all probability, will be developing his Net infrastructure for at least the next five years.'

But as competition in internet-related software intensifies, he admits there is a danger that margins could start to tumble. Which is why Jackson hit on the idea of running a virtual organisation.

Now retains a physical head office presence at a modern-day business centre that was once Croydon Airport, but the real strength of its operations is in its cyber muscle. A single press of a phone button transfers calls between virtual staff as if they were in the same office, while the cable network similarly links up disparate PCs - letting Now's support people, for instance, check on the availability of upgrades.

PC video conferencing facilities are, literally, on the cards, while Jackson even has a cyber business bank account.

Yet another of Now's Web-enabled products, Commence, provides an overview of the distributor's diary appointments, contact numbers, product support and issued software licence numbers. Online training of dealers and Vars is also available.

Jackson, who took his first steps in IT as a Fortran programmer, is adamant that the Net is not only a new technological paradigm, but is heralding a new era in how people work. He believes internet dealers should lead by example.

'Profiles that I've seen so far of internet dealers suggest they are still quite small concerns, but they've sussed out that there's this demand for email and Web access." says Jackson. 'On the back of that they've started to sell Web design and so on, but that's only the first wave.

'Others realise that this is now big business, as companies start to demand their own intranets or seek general consultancy help,' he adds.

'In fact, some of our resellers are concentrating only on the more lucrative areas now.'

So much so, suggests Jackson, that some internet dealers are actively boycotting any involvement in the hardware side of selling. 'They are actually shunning tin,' he says, 'and if they get trapped into selling hardware, they wish there was an escape route. Configuring and installing PCs takes up a hell of a lot of energy.'

There is also the crucial question of margins. A profit of 10 per cent on a PC sale doesn't compare well against the much more typical 40 per cent which can be made on software. Moreover, PCs are a sight more awkward to haul about.

Selling software also lends itself better to follow-on consultancy trade.

'There's a real dichotomy between the regular PC dealer and smaller resellers,' Jackson believes. 'The latter guy is becoming more light of foot and involved with the internet, while the traditional PC dealer is getting bogged down in selling products.'

It's this lightness of foot that also underpins Now's approach to its own infrastructure, with the organisation employing only a dozen or so permanent cyber staff.

Telemarketing employees, for instance, use Commence's workgroup software hooked in live to Now's central system, so they get their sales leads as instantly as the head office itself receives them.

Most of the company's virtual staff are based in a short radius of its offices, although that's because it uses a Croydon cable phone company whose tariff for local calls is free, a not inconsiderable factor given that literally everything is done by phone.

Once cable companies form alliances with the same cheap cost options across the UK, Jackson anticipates his own employee network will expand accordingly.

He will not discuss Now's exact revenues, but claims that, within just a few years of its cyber rebirth, its turnover is well into six figures and is moving upwards. The way forward, Jackson says, is through dispensing with traditional notions of how companies like his operate and instead restructuring around the online work model.

And he insists he's ahead of the game, saying he hasn't noticed any of his rivals following suit yet. 'We went the whole hog last Christmas when we decided that we weren't going to employ huge numbers of in-house staff any more,' Jackson recalls. 'It was prompted by the need to move to larger offices.

'But then we sat back and thought, well, we're not enjoying this anyway.

You get all the problems of trying to build a tight team, and then when it gets too big in number, you end up with even more problems trying to manage the operation.'

It was a Damascene moment from which there has been no looking back.

Now's overheads, Jackson claims, have been dramatically reduced, along with many of the everyday pressures, such as finding somewhere to park near the office. Even debts are factored out to an online debt collection agency, while Now's accountants are similarly a mouse click away.

At home, Jackson can stay informed since his computer there is hooked up to Now's network. 'At the house I can log on as if I were still in the office,' he explains. 'And if a sales call comes in at midnight, I could still transfer it to the home of one of our sales staff at the touch of a button, although I'm not sure they'd appreciate getting out of bed to take it.'

Another plan is to set up an extranet, which would allow dealers to log on and get the latest information on pricing, promotions and lead allocations.

It's a general facility that will also expedite the download of Now software, although that in turn raises the question of why the company's US suppliers shouldn't go down the same route - and cut out middlemen distributors.

But, counters Jackson: 'Software distribution via the internet is OK if it doesn't require support or lend itself to consultancy work. But our stuff does - just try getting technical support from the US at 10 in the morning.

'We run roadshows to make sure our dealers understand the technical issues.

But there are some things that can't be done completely over the internet,' he concedes.

What Jackson has also noticed since setting up the cyber empire is that, ironically, he is actually working harder than ever.

'In the past, I'd work from 8am to 10pm and then bring home the office luggable to work on at weekends,' he says. 'Thank God, I don't have to do that now - I just pop into the study, switch on the PC, and I'm immediately hooked into the central office server.

'The trouble is, it's so easy that I spend more time than ever diving into the system. I don't know what the solution is, but I do know that I could never go back to the old ways of working. I've seen the future, as they say, and it works.'