Coming out fighting

Coming out fighting

Com Tech Communications has bounced into profitability only six months after the restructure that saw it dump the value-add part of its distribution arm and sell directly to end users.

Com Tech reports that all three divisions, including Express Data, Com Tech New Zealand and the local integration arm, are all profitable.

Indeed, the Com Tech integration arm is now arguably the strongest Cisco integrator, with Cisco's operations manager Steve Hill believing it to be at the very least firmly entrenched in the top three.

According to Com Tech managing director, David Shein, his company has already sold product into half of Australia's top 150 companies. Staffing has increased by 100 across all groups to cater for the increased business activity.

Shein believes the Com Tech team to be highly motivated, a factor that has assisted its transition from distributor to integrator. "I believe that if you have got a highly motivated team of people you can do almost anything that you want to do. And I think that's probably the reason why we've managed to move from one business model to another," he said.

The Com Tech team is also one of the most highly trained in the industry. "We've always had a massive investment in our people," said Shein, "and we believe that if you seriously want to be in the game you have to build up critical mass. You can't have one CCIE (Cisco Certified Internetwork Expert) and three Novell CNEs (Certified Novell Engineers), you have to have lots, because if you're going to be running a company's networking businesses, you can't have one guy get hit by a bus."

Positioning in the marketplace

Indeed, Cisco now has 10 CCIEs on staff, twice that of any other competitor, as well as a host of professionals certified by Lotus, Microsoft, Novell, SCO and Bay Networks.

Shein says the commitment to training means that a solution proposed by Com Tech may not necessarily be the cheapest one, despite the allegations of a number of its competitors. Industry sources have pointed to sites where Com Tech is thought to have heavily discounted its bids to win business.

Shein flatly refutes these claims. "Clearly the business we want to be in is not box shifting. If we wanted to be just in that business we wouldn't have the same investment that we have in the technical infrastructure, and we think that's clearly where we want to position ourselves," said Shein.

"I always say to the customer, we're not the cheapest organisation to deal with, but we're the best value organisation, because I know we'll never be the cheapest in any response to a proposal."

Shein says he is not as interested in dealing with companies that buy on price alone, as there is little room for Com Tech to add value. "Now when somebody says they want to put in an enterprise-wide network through their organisation, they're looking for a partner. They're obviously looking for value - pricing is important - but it's only one component of a decision the customer's got to make.

"There are clearly two kinds of customers," he said. "There's the price buyer who tells you up front, and then there's the customer that's looking for a relationship."

Shein is also sceptical of accusations that because Com Tech often had dealings with end users as a value-added distributor, that it has an unfair advantage. "If you're doing a really good job in an account you're not going to lose that business," said Shein. "Where an end user was not happy with his current integrator or reseller I believe we've got a bite of the cherry. And if we do a good job I believe that will keep growing."

The Cisco Kid

The effect of that growth on the Cisco channel in particular has been profound. Com Tech originally split with Cisco as a distributor two years ago, but now its decision to integrate the product set of the world's largest networking company has lead to the creation of a new top three player in that area almost overnight.

Shein says he had no doubts about entering into the marketplace in competition with a well-entrenched channel base.

"You have two choices in this game. One is to sell to the market leader, and the negative of that is that you know you're not going to be the only bid selling that product.

"The other option is to take a product that's got 2 or 3 per cent market share, and know that you're probably the only bid there. But it's going to be a lot harder to try and sell it to an end customer."

While Com Tech also integrates the Bay Network product set, by virtue of its market dominance, demand for Cisco product will be disproportionate in areas.

"In 70 per cent of the cases, just by market share, customers are going to say they want a Cisco router. It's then our job to convince the customer why we're the best company to buy the Cisco router from."

Shein is critical of his competitors for letting Com Tech grow to such a strong position in such a short period of time. "There should not have been an opportunity for us to be the number one Cisco player in the country.

"No-one really took the bull by the horns and said we are going to be Cisco's number one player in Australia. So how come we've got twice as many CCIEs as any other integrator in four months? It means that we're not scared to make the investment."

Express avoidance

David shein is sceptical of the criticism that Com Tech buys its products from sister com-pany Express Data at discounted prices. He says that in many instances it purchases its products from other distributors, including those of Microsoft and Novell. In the case of Cisco and PictureTel it buys products directly from the vendors, along with other companies of similar profile. Shein says the focus of the Com Tech sales force is end users, not supporting Express Data.

"And if we are going to let the end customer down because we don't have product in stock, or we can't be competitive based on pricing, they are going to get the product from where they have to get the product."

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