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Com Tech: value add dumped, integration embraced

Com Tech: value add dumped, integration embraced

Com Tech Communications has unveiled a master plan that will see it abandon its value added distribution model in favour of a network integration business.

In a presentation made to the press two weeks ago Com Tech managing director David Shein revealed details of a restructured company comprising four divisions: Express Data (broadline distribution), Network Integration, Training and On-Line Services.

Shein says the changes follow a realisation that the company could not survive in its old model. "I believe that our model of value added distribution is not going to be sustainable in the medium to long term And I really believe it was important that we changed that before the market changed it for us." Shein said that conflict within Com Tech's own vendor portfolio looked certain to drive some of those vendors to broadline distribution, a move Com Tech would not be able to compete with in the old model. He added that the tight margins incurred by adding value to distribution were also squeezing the company's profitability.

Also speaking at the relaunch, Com Tech non-executive chairman Bob Mansfield said had the company not changed it would have been incapable of playing a significant role in the future. "We've had an unbelievable performance over the last eight or nine years. But if we'd have kept this model we would have been cut out from participating in servicing the largest growth industry in the world."

Already, Com Tech has moved all pre- and post-sales support staff from its value added distribution business into its direct integration business and online services businesses. From now on resellers will have to look either to other distributors or vendors for technical support.

The new broadline distribution division, called Express Data, will focus on time and place distribution of products, bringing Com Tech into competition with Tech Pacific. Shein says his company will differentiate itself in three areas. "I think it's going to be in competitive pricing, innovative systems, and thirdly and importantly it's going to be on excellent customer service."

Shein says the success of the broadline distribution division will hinge on it winning new business from market leaders. Already Novell, Lotus and Bay Networks have appointed alternate distribution arms. "We don't expect that distribution business to grow if we don't sign up with any other vendors," said Shein. "We expect it would shrink - that's a logical assumption." A likely but unconfirmed addition is Microsoft, but any chances of securing the Compaq line look to have been scuttled by that company signing with Prion. Other reports state that Com Tech's close involvement with Cisco Systems will see the distributor carrying the Cisco Pro line of products.

Com Tech's other new division, On-Line Services, will take advantage of new business opportunities, and specialise in integrating back- end systems to the Web.

Com Tech's Training division will continue unchanged.


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