Ingram revamps accounting system
Ingram Micro has introduced a new global accounting system after admitting that up to 20 per cent of its UK business is unprofitable.
Ingram Micro has introduced a new global accounting system after admitting that up to 20 per cent of its UK business is unprofitable.
In a move that mirrors rival Tech Data, Ingram has introduced an activity-based pricing model known as the Segmented Accounting System (SAS).
Kent Foster, Ingram's chairman, said that SAS would make Ingram a much leaner company. "Profitability is nowhere near where it should be. SAS will give us a clearer idea of just how profitable each customer is, independent of size. We can then adjust prices individually," he said.
SAS was introduced to the US at the end of last year. Foster said the scheme was ready to take off in Europe and that its introduction would mark a change of focus for Ingram. "We have set a laser-like focus on the SME [small to medium sized enterprise] market. Corporate enterprise is in a period of consolidation and it has not been profitable for some time," he said.
Meinie Oldersma, managing director at Ingram UK, said the changes were a necessary part of updating the company. "It would be fair to say that the distribution market is soft in Europe but we have the infrastructure to capitalise on it. SAS and Ingram's focus on SMEs will take us forward," he said.
Oldersma also said the company hopes to get up to 50 per cent of its channel partners ordering electronically by the end of next year. "This would help reduce overheads and make us more efficient to market," he added.
Seamus Twohig, director of vendor relations at Ideal Hardware, said Ingram's changes came from a lack of foresight when it first entered the UK. "Ingram aimed to create market share, not a profitable business. I've seen it sell products at a loss just to win customers," he said.
Chris Jones, a distribution analyst at Canalys, said: "Distributors have worked off the same business models for years but many are now out of date. Increased competition has rendered them unprofitable."
Jones agreed that Ingram was right to move its attention away from the corporate market. "SMEs are where the money is," he said.
First published in Computer Reseller News