Special report: Back on the front foot
Speedy processes may be the key to unleashing the full potential of your sales force as the economy returns to form, finds Doug Woodburn
Benjamin Disraeli once declared that the secret of success is to be ready when an opportunity arrives.
Quite suddenly and unexpectedly, the UK has gone from being a laggard to one of the world's fastest-growing rich economies, with annualised growth last quarter soaring to over three per cent.
But judging from a recent CRN survey, the creaking back-office systems and time-consuming manual processes still employed by many resellers could prevent them moving back on to the front foot in tandem with the economy.
For an industry that prides itself on speed and customer responsiveness, some of the findings of the research - which quizzed 189 VARs last month and was commissioned by Onetrail and Nolan Business Solutions - may prove surprising. Click here for the full PDF of this Special Report.
Just 37 per cent of those questioned had integrated their systems with distribution for electronic ordering, compared with 51 per cent who had not.
More than a fifth (23 per cent) confessed their business uses more than six back-office systems, while only 50 per cent had back-office systems accessible to field staff from mobile devices. Meanwhile, some 37 per cent said it is difficult to make changes to their back-office systems, for instance when adding new fields or workflows, or to modify forms and reports.
All this paints a picture of an industry that - at least in some quarters - is surprisingly behind the curve in terms of the sophistication of the systems and processes employed to serve the customer.
After years spent battening down the hatches, many resellers are looking to move back into growth mode as the UK economy speeds ahead. But those lacking silky processes may be forced to watch helplessly from the sidelines as their sales floors remain embroiled in processing orders manually, warned Mark Hennessy, sales manager at Nolan Business Solutions.
"With the economy starting to move, resellers should be looking to take advantage and invest in a solution that enables their top sales guys to get back to selling," he said.
Hennessy said he had recently visited a sizeable reseller who still did everything on paper. The resulting administrative burden on sales staff left each of them able to manage just 15 accounts.
"With a really slick system, you can manage significantly more, which means you can grow very quickly without adding headcount," he added.
Tellingly, while 87 per cent of the survey's respondents said they are actively planning to grow their business, significantly fewer - 67 per cent - believed their business systems are effectively supporting their growth plans.
The survey encompassed both small and large VARs, with 37 per cent of those polled turning over less than £5m, 26.5 per cent between £5m and £50m and 27.5 per cent more than £50m.
Streamlined systems
Business applications integrator Nolan Business Solutions counts IT resellers as one of its key target markets. It recently developed a packaged solution combining NetSuite's cloud-based business software suite with Onetrail, whose middleware links into the back end of most of the big distributors.
Dubbed eInteract, the solution - which also comes in a Microsoft Dynamics GP flavour - is designed to simplify the entire transaction process from quotation to cash receipt.
The Onetrail module means resellers are synced with their distribution partners' systems around everything from product information to sales orders, order status updates and invoices.
"Our overall intention is to reduce the transactional cost between the IT reseller and their supply chain," explained Adam Stanier, UK business development manager at Onetrail.
"There is very little margin in [selling] hardware so transacting business as efficiently and cheaply as possible is a key driver for a lot of resellers. We have also found that the technical capabilities within resellers can be quite limited. Very little technical expertise is required with our system, especially when using very capable partners such as Nolan."
Nearly half (47 per cent) of the survey respondents described managing product data on their internal systems as either somewhat, quite or very frustrating and time-consuming.
"A huge quantity of data is being passed through the channel and a lot of the business systems in which resellers have invested struggle to handle the volume of data that is required," said Stanier. "That's why we have seen a couple of sites move from Sage; their Sage environments couldn't cater for that volume of data.
"The industry is wasting a lot of time on manual processes. When margins are diminishing, the administration and energy on those things has to be as low as possible."
Some 40 per cent of those polled find keying in data, such as supplier invoices and product data, at least somewhat frustrating. Nearly half (46 per cent) felt the same about managing the administration of quotes, sales orders and purchase orders.
But the impetus to improve processes also comes from customers, with recent research from IDC indicating that buyers are looking to shave 40 per cent off the time they take to make purchases.
Nolan and Onetrail estimate their solution can slash total order times compared with manual processes by almost four fifths, from 48 to 10 minutes. That's no small saving, given that half of the resellers in our survey said they place more than 50 purchase orders a month, with 13 per cent placing over 500.
Kieran O'Connor, sales director of Total Computer Networks (TCN) said the VAR upgraded from Sage to eInteract in January to support its ambitious growth plans.
"Before we started to go crazy on growth, we made the decision that we needed a better foundation on which to do it," he said.
"We had customised Sage to within an inch of its life and it was costing us ￡900 just to add new users. If you are going to grow, you have to have the right foundations, otherwise you will pay for it."
Sleek back-office systems also mean fewer delivery errors and therefore happier customers, O'Connor added.
"Whenever you put human and manual processes together, you get errors. When you put electronic systems in place it takes out the human error. We now have few - if any - delivery errors. If we're sitting in front of an angry customer, it's now never about our logistics," he said.
"It's a big investment for companies when they are starting up but we have 37 in sales now. Can you imagine if they were trying to do things manually?
"If the order goes straight on [the distributor's] system, we know there will be no mistakes, whereas if you do it over the phone the order might be mistyped or it might not be put on the system at all."
Another VAR hungry to grow as the UK emerges from the recession is Trams, which is currently in the process of transitioning to Nolan and Onetrail's eInteract offering. Trams previously ran three separate back-office systems for ERP, CRM and helpdesk, the latter of which was developed internally.
Trams managing director Warren Peel said implementing eInteract would support Trams' bullish goal of achieving £5m to £10m organic growth next year after the system goes live on 1 January.
"It is absolutely key that we have the systems in place to let us grow," he said. "If we were still working on pads, we would have no chance. We had a level of integration with distribution already, but we are looking to take that to the next level."
An advantage of integrating with distribution is the reseller need only input a sales order and leave the system to do the rest, Peel said. "The delivery takes place in the background and the only thing we check is that the payment is correct before it goes out to the supplier," he explained.
According to IDC, 62 per cent of B2B IT firms now need more leads in order to generate the same amount of sales.
Peel said his firm's investment in systems would allow staff to get back to the business of generating leads and closing deals.
"We are trying to reduce the level of manual inputs we do each day," he said. "It's not about reducing headcount; we want to free up people to do other jobs in the organisation rather than having them manually inputting purchase orders and invoices. Whether it saves us £20 or £30 per invoice, I can't say, but as we grow, we won't necessarily have to employ more people to do [manual] tasks, as the systems will take care of that automatically."
Some 51 per cent of resellers in our survey said they use between one and three back-office systems, with 26 per cent using between four and six and 23 per cent using more than six.
Some of these systems may not talk to each other, leading to costly integration expenses, said Hennessy at Nolan.
With systems such as eInteract, everything is integrated in one place, Hennessy said, meaning resellers can view every interaction with a customer, from expenses to CRM, credit control and e-commerce on one record.
Peel said: "We are trying to consolidate all our systems under the eInteract banner. All our current systems integrate to a degree, but we are trying to give more of a 360-degree view internally, as well as to the customer. Right now, we are focusing on beefing up our systems, rather than M&A, so we can hit the ground running next year."
Since linking arms, Nolan and Onetrail have worked with several other VARs, including Northampton reseller ACS and London outfit Autodata.
Hennessy stressed that the duo updates its systems quarterly, which allows VAR partners to supply enhancement requests.
Easy win
O'Connor at TCN said: "We have had a few teething problems, but to [Nolan and Onetrail's] credit they have sorted it out. When dealing with technology, occasionally you get glitches but on the whole they are a good bunch to work with."
EInteract typically delivers a return on investment within nine months, based only on direct savings relating to salaries, Hennessy said. This figure ignores the opportunity for growth gained by the reseller as a result of their increased efficiency, he stressed.
But syncing systems with distribution may also net the reseller savings from the distributor themselves. No longer having to key in the reseller's order saves the wholesaler money, and they will sometimes pass this on to the reseller in the form of a discount.
Alex Tatham, sales and marketing director at distributor Westcoast, said resellers that have not invested in this area will fall behind.
"Those resellers that do integrate have a competitive advantage in terms of speed, pricing and the number of heads both they and we need to employ," he said.
"Those that are integrated tend to send their orders as and when the orders are placed on their systems, whereas those that aren't tend to wait until the end of the day and tend not to get the best stock."
Westcoast is one of about 17 UK distributors whose systems integrate with Onetrail, alongside the likes of Tech Data, Ingram Micro, Avnet and Exertis Micro-P and Westcon.
Tatham said: "I think integration with distribution will be a core capability of resellers that will do better in an upturn. The best processes always win in this game."
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