Sitting face-to-face with regional resellers in Queensland lets you catch a glimpse of the ‘smaller town’ mentality, where customer loyalty and old-fashioned service are paramount.
In conjunction with Fujitsu, ARN travelled up to Cairns and joined the last leg of the Fujitsu-inspired reseller road trip, which started in Brisbane and travelled 2300 kilometres to the Far North of Queensland, meeting and greeting regional resellers, hearing their daily struggles, challenges and what’s important in the day in the life of a regional reseller.
MMT solutions sales specialist, Adam MacLennan, the man who drove the micro-bus (and endured a bus breakdown in the middle of the trip), met with a handful of resellers up along the coast, hearing a range of issues, wants and needs, and heated discussion about the promise of the NBN, and even the lack of interest in Cloud computing.
ARN in concert with Fujitsu channel development manager, Daniel Campbell, got involved at the last stop of the tour, in tropical Cairns, chatting with a handful of regional resellers, hearing about how tropical weather, the constant threat and fallout from natural disasters, the undesirable “hillbilly IT” attitudes that often runs rampant in ‘smaller towns’ and other challenges and market hindrances affecting regional resellers.
Here is a snapshot – and some of the issues - in the day in the life of a regional reseller.
CAIRNS OFFICE MACHINES
Husband and wife team, Kevin and Debbie Drovandi, who started the business back in 1989 (albeit in a different form and initially selling cash registers and accounting-based software) have seen it all – and dealt with many challenges over the years.
Today the company provides complete computer solutions, network design, network monitoring, and end user support.
Over the years, the duo have seen many changes in technology and have gone from selling and servicing the entire range of Sanyo Office Equipment including photocopiers, computers, monitors, terminals, printers, cash registers, dictation systems, paper shredders and calculators, to specialising in computers and computer related products.
Getting access to spare parts and dealing with tropical weather are two top challenges for resellers like Cairns Office Machines, servicing and responding to SMB customer needs in the Far North of Queensland.
“What we find is components, capacitors in particular, just explode after five years. They start to swell and you can see them. Sometimes they go kaboom, but quite often they just fizzle,” Kevin Drovandi said. “Flooding was also an issue recently and affected our freight because roads were closed. All you can do is sit and have a drink while you wait.”
On the whole, freight is always an issue, he said, explaining getting spare parts from Brisbane is often not quick enough to respond to the immediate needs and daily challenges faced by local customers.
A way to combat the weather and freight problems is to provide customers with more remote monitoring and management in order to stop issues from happening in the first place, he said – a move away from the traditional break-fix income model.
“We are moving more and more to income through remote monitoring management [RMM]. Fixed cost is the logical step from the break-fix model,” he said, adding it is often a challenge explaining the benefits of a fix model to customers.
“I usually get hot and cold type responses. It is very hard to get the negative person moving into a mindset to get it monitored. It is a great concept because we’re stopping a lot of problems from developing.” Asked whether the company is caught up in the Cloud computing frenzy, he said there isn’t much interest at the moment. “When it suits someone I will go Cloud, but it doesn’t really suit any of our clients at this stage.”
Meanwhile, ask Drovandi about the NBN and he looks puzzled, while belting out a good chuckle. “What is the story with the NBN?” he asks. “We were supposed to have it last year. Nobody in authority is saying we will have it anytime soon. I would like to think we will be one of the first cabs off the rank being off the Cairns Exchange. It would be nice. I am hoping the NBN is going to offer us better speeds, better usage, so we can back up data more effectively. I am hoping we get better data flow.”
Another big challenge, added Debbie, is the lack of access to training. “If we lived in a major city, we would have constant access to training. Most morning and nights, Kevin will be at the computer doing training. The fact we are so far away from a major centre means it is very hard to keep up to date. It is a constant challenge.”
And while there are lots of challenges, Kevin said the benefits of being a regional reseller far outweigh the negatives.
Both Debbie and Kevin said the best thing about operating a business in a regional area is the loyalty of the customers and the long-term relationships that larger centres don’t often foster. “The customer loyalty is very high. You won’t find it in the capital cities. We offer a service and we don’t just sell a box,” Debbie said. “The relationship is more personal, which is what you’ll find in a lot of the smaller places. It takes a long time to build a reputation and it doesn’t take very long to ruin it, so you have to look after your clients.”
With a souped up shop front, and a steady move towards professional service automation and managed services, Thomas Janusz, the founder of TJ Microsystems, who started his business back in 1996, said his top challenge in living and operating in a regional area is the lack of staffing and access to skilled talent.
“Getting skilled staff is probably the same challenge that people have down South, but up here it is ten times worse,” Janusz said, explaining he attracts international workers and people from out of town that have the appropriate and desired skills set. And once staff is on board, ongoing training and professional development is also a challenge as it requires employee travel and associated high costs. Additionally, a big challenge in regional areas is getting the appropriate compensation – or hourly rate - for the value of work.
“The real issue is the rates that people pay up here for IT support and the value they put on IT support – customers are often in a different world. And that’s where you struggle because your margins shrink. We are 10 years behind. The rates here are different than down South. The rate here could be $100/$120 an hour, whereas down South it could be $120/$140 or even $180.”
“The rate issue is a challenge and the cost of living up here isn’t any cheaper – in fact, it is probably dearer in some cases because you have freight and other things, so there is lots of margin pressure on the service side of things. And we are mainly in services now. We used to sell a lot of PCs in the old days, and make good margins and turnover. But now we’re IT services – 80-90 per cent IT services,” he said.
Another challenge for regional resellers is ensuring volume levels, which isn’t always a challenge for larger competitors down South who have deeper pockets and the ability to commit higher volumes. “When we deal with certain vendors, they want a minimum commitment, but it is difficult for us to commit to volume,” he said.
And while he is keen to see the rollout of the NBN, he isn’t holding out much hope. “NBN here is a bit of a joke,” he said, adding he has heard from local meetings that the NBN is a ten-year process. “The reality is they will have pipes down the road, line markings within the next 12 months, but it won’t be accessible to everyone. It will be in the central district in the next two to three years, but not here; it will be 10 years.”
Meanwhile, the dream of Cloud computing is also a pipe dream, he said. “In terms of Cloud computing, there is a big barrier in terms of regional speeds and the Internet and reliability. Just about every conversation I have ends up in an on-premise solution for us up here – and it probably will for another few years. Cloud is not an easy sell. It is not a reality up here. If there is an outage, we can be out for a long time. With the recent floods, we didn’t have mobile phones, no Internet, we didn’t have Telstra.”
Janusz said service and support is another issue – and local resellers want the ability to control the service work in order to ensure a good level of standards. Traditionally, local resellers like to have control over the warranty process and want to be able to guarantee quality service levels for their customers. “It is a comfort thing. You know you will be the only face coming to their premises.”