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EDITORIAL: From geeks to suits

EDITORIAL: From geeks to suits

With many of the riddles of IT solved and commoditised, the industry is not always the weird science it once was, and therefore the route to success is shifting from technological expertise to corporate expertise.

A channel observer I rate as a good judge recently described it as the need for businesses and individuals to undertake a shift from being "students of industry" to being "students of business".

Where once it was okay to be good at just being geeks, it is now time to be suits as well.

In the high-demand environment enjoyed until six months ago, many channel enterprises have managed to survive without having to be prudent in their administrative systems and methodologies. Overdue accounts were okay, overhead blowouts were abundant, customer service was shoddy, and the need to diversify was negligible, thanks to fat margins and bullish demand.

Many businesses grew faster than the administrative and managerial skills of their captains. Similarly, a lot of the formerly high-flying operations had never experienced a downturn in business, and therefore had no idea how to deal with it when it happened.

Now, with economic factors being less conducive to making a killing, it is no longer a sufficient credo that success comes from just being good at IT. You have to also be good at managing the vagaries of running a business.

The absolute necessity of meticulous account-keeping, careful customer management and shrewd cost control is combined with the need to engage in proactive sales and market-development programs.

It is interesting therefore to watch the different methods by which major players - old hands at business - undertake this metamorphosis, and perhaps there is something for the rest of us to learn.

One option has been to abandon, or impose fees, on unprofitable sales or customers. This is more an attempt to persuade customers to change their buying habits than it is to actually disregard them altogether. But, either way, the overall message is clear - it's "my way or the highway".

As evidenced by our page one story this week, on the channel's reaction to Tech Pacific's imposition of fees on small orders, it is not always a popular call. However, nor can it be truly criticised as being irrational for an operation of Tech Pac's size. It may peeve a lot of resellers, but it will also save Tech Pac a lot of money.

Another option has been to abandon unprofitable lines of business and focus on the supply relationships that deliver acceptable margins. Siltek is a good example of this approach. It no longer has some of the big revenue-earning name brands whose boxes it once shuffled in and out in large numbers, but it doesn't carry the massive staff, logistics and infrastructure costs that came with it either.

By focusing on building the markets of its better-performing supply alliances, Siltek is achieving a similar, if not healthier, bottom line.

Of course, these aren't the only ways to embrace change. Another group of channel players has by necessity or foresight attempted to strengthen operations through mergers, acquisitions or sales, which introduce new skills, markets, capital and/or methodologies.

Then there is also the option of taking a more active role in the development of customers. Value-added services that actually solve the problems being faced by customers, which includes helping fill some of the business skill voids.

By developing a distribution business model built around growing the skills and market opportunities of its reseller base, LAN Systems has prospered also, and was swooped on by the global Westcon Group for the model.

Even in times of rapid change, there're many ways to skin a cat.

Gerard Norsa is editor of Australian Reseller News.

Reach him at gerard_norsa@idg.com.au


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