Alliances, practical plans to deal with a dynamic industry and a sound financial strategy are all good business practices, according to Ian Harding, managing director of value-added reseller CES Computers. But CES got where it is today by sheer will power. "Our success is based on focus, focus, focus. We focus on what we want to do, who we want to do it with and finally on that often forgotten figure, the customer."
Established in 1977, CES Computers serviced electronic equipment. Still in its infancy, the company hit dire straits in 1985, which proved to be the unlikely catalyst for its, and Harding's, future success. Only one year into his tenure at the company, Harding and five other employees bought it out and attempted to adjust to the market's direction by metamorphosing into a reseller with service tendencies. It has emerged from a small 10-person operation into a dynamic solution provider that has national leverage and a strong history with super vendor Hewlett- Packard.
Underlining all of CES' operations is a methodology that prioritises channel relationships as integral to the company's future. This attitude stems from Harding's opinion that long-term strategic connections create opportunities for resellers to become involved in a wider diversity of projects that allow for greater stability."We can never be all things to all people so developing long-term strategic relationships is a significant challenge that needs to be met. Alliances allow CES to offer total solutions where it is not essential to have one business under one umbrella."
CES lived up to Harding's expectations in this regard when in 1986 a persistent Hewlett-Packard representative sold him on the notion of becoming a HP reseller. HP were predominantly involved in UNIX but needed to infiltrate the smaller end of business and CES were impressed by HP's high integrity rating. Harding still has faith in the HP range of products and together they have made a successful team that neither has been inclined to abandon."CES has learnt a lot from Hewlett-Packard. We model ourselves on its strategy and organisational structure and that creates a certain relationship synergy."
Harding did his own recruitment in 1995 when its first symbiotic, "best-of-breed" alliance, dubbed "Networkers", was formed."It came about by talking to people in the industry and realising that 'Hey we all do the same thing'."
The group involves Kasys, Leading Solution and CES Computers in a long-term strategic alliance that hopes to provide the"national solutions that many organisations require. A single branch is only as good as the people who run it and the Networkers allow us and other companies a greater choice." This model allows the best of several companies to be offered as a single and all-encompassing solution, which according to Harding, can only be beneficial to everyone involved. Harding believes that this relationship is symbolic of the IT industry's unique composition, where competitors and partners are often one and the same and the ability to diversify yet remain specific is tantamount to a business' success.
CES continues to focus on partnerships as a key business strategy but Harding admits that CES had to find its own niche in a complex and diverse industry that is constantly changing.
"The distribution channel is fairly uncertain terrain. The current market has to deal with the fallout from Dell's direct model, the Digital/Compaq merger, which - according to analysts - played a key role in Compaq's decision to rationalise its channel, and overseas predators on the move, all of which affect the local market significantly. Outsourcing hasn't lived up to expectations but will ultimately be a good thing, though it has difficult times ahead. I think that IBM is re-emerging as a powerful vendor and the current government will definitely bring in change."
Harding understands that the present market is indicative of the IT industry since its inception and has in place a strategic plan to deal with its ambiguity, the bottom line of which is an ability to comprehend and deal with the rate of technological innovation.
"You need to manage growth and the consequences of growth, to recognise and react to changes in the organisation and make sure that people understand what is going on. The pace of technology soon becomes second nature but you still need to be agile enough to change course when you need to."
Ultimately this attitude has driven Harding and CES to grow with the industry instead of perishing along with many of its counterparts.
"End users are getting a lot smarter and are recognising that product cost is just the tip of the iceberg."CES has reacted to this by attempting to provide total solutions and in the last three years has been undergoing the transition into high value-added services and low-end outsourcing."In the last two years the Professional Services Group has tripled in size and now performs special configurations and high-level support. It has people on customer sites to help them manage desktop rollouts and the networking process."More recently the company has taken to remote network installations, capitalising on its existing infrastructure."What we are doing is a nationwide deployment of network solutions. We bring the system here to our Canberra centre where we can configure and assemble the whole system. It is then placed on a dedicated truck and taken to remote locations and installed. It makes the whole process easier,"Harding said.
One of Harding's major motivators is making the customer's experience easier by offering a complete solution that meets specific needs. This involves extending the traditional boundaries imposed on a reseller's product offerings, services and deployment mechanisms. Harding suggested that even though he still considers CES a reseller, as opposed to an integrator, the function of a reseller had evolved and now incorporates a lot more than sheer volume moving. According to Harding, the industry has taken on a more service-oriented focus, and IDC data backs him up. The service sector is the fastest growing in the industry and if resellers want to keep their heads above water they need to diversify.
With the evolution of a resellers function comes the necessity of adopting often untested business methods. Harding is planning on following this trend by investigating the merits of e-commerce.
"This is still uncharted waters for everyone and a lot of it is still just hype. However, somewhere down the track it will evolve and we will have to be ready even though we don't know what shape and form it will take."As is indicative of Harding's philosophy, this entails completely immersing CES in new ventures. So rather than simply offering a Web site dedicated to information, CES has taken the next step and developed transactional capabilities."We have had a Web site for a while now but in the last couple of weeks it has stepped up a notch so that customers can now purchase things over the Web. I suspect this will make things easier because instead of customers having to order when we want them to they can do it any time, from anywhere."
Harding attributes CES' ability to tackle e-commerce so aggressively to its strong relationship with Hewlett-Packard and the consequent access the reseller has to the vendor's e-business expertise. He believes that companies like CES can create opportunities for themselves by having the right structures in place, structures assembled by good channel relationships and an understanding of the dynamics of the industry."Companies like Dell are not going to be able to replicate the building blocks that the IT industry has previously relied upon, namely the resellers." Harding believes Hewlett-Packard understands this interdependence between industry players.
Measuring CES' performance and milestones according to its bottom-line profit, Harding doesn't appear to have any romantic illusions as to the services it is performing and has no qualms in redirecting business focus in more profitable directions."CES has always made a profit but we inevitably put it back into the business. You need the right investment mix of products and marketing and the right business mix between investing and keeping the business going. I don't get hung up on turnovers."This attitude seems to be working with CES in constant positive growth mode. Focusing on making money may seem like common sense to most but the IT industry is renowned for working from non-profit models.
Yet Harding is not without pride in the feats his company has performed and once more it was his relationship with Hewlett-Packard that assured him that CES was heading in the right direction."We were awarded HP's corporate reseller of the year and it was nice to be recognised. We've worked with HP for a long time and I think this is the proof that we finally understand how HP operates and what we have to do to be successful with them. This is more than just a sales award. It covers all elements of our business,"Harding asserted.
Harding is confident that CES will continue to find the balance between market trends and innovative products and services, directed by the underlying assumption that the industry is too big to conquer on one's own and will never be tamed.
"It all comes back to focus. We are a single vendor dealer which involves a lot of risks but the benefits far outweigh them. We can afford to get close to our partners because we have mutual interests, so it is a matter of becoming an extension of HP's sales arm. Yet we still need to be aware of the industry outside of this partnership and rely on our relationship with our other partners and our own innovation."