Centari to abandon single-vendor model
- 14 April, 1999 09:53
Centari Systems, one of Hewlett-Packard's most loyal and successful resellers, has outgrown the single-vendor model. Last week the Melbourne-based national organisation announced it would be introducing Xerox lasers into the hard copy print solutions which represent 25 per cent of its turnover.
Up until this announcement, Centari has claimed 85 per cent of its revenues, on target to achieve $70 million this fiscal year, were based around supplying and servicing HP solutions. In what is hinted to be the first of several announcements, Centari Systems feels it needs to reduce its risk exposure in being so intrinsically linked to just one supplier.
Jon Johnston, Centari's managing director, said the decision to reduce the company's exposure to selling HP-only solutions was basically risk mitigation for its expanding operations. He was full of praise for the Xerox product and said it is important to offer customers alternatives.
"Centari Systems has grown to a level where we are too dependent on one brand," Johnston said. "If you look at the company from an investment banker's point of view, it would be valued downwards because of our exposure to the one vendor.
"As we expand into the high end of the corporate market, we also limit our access to some customers if we only offer one brand of products. We needed to add new vendors to attain the company's growth targets."
Single-vendor is rare
It's no great drama for HP either. Lindsay Lyon, corporate reseller sales manager at HP, said the single-vendor model is rare in Australia but has worked well for resellers in the "mid-market". When they get bigger and start chasing the likes of top-200 accounts, they need to offer multiple products to their customers, he said.
"We are not disappointed," Lyon said. "Our experience in Europe and the US is that when these resellers expand to this level, their volume of HP business expands along with them.
"While it is a little disappointing to us, it is not all bad. We expect to see our sales through Centari to continue growing and our relationship with them remains very strong."
Naturally, Xerox was thrilled to snare such a strongly performing channel partner. Forest McGregor, national channels manager at Xerox, said Centari was "exactly the type of organisation we have been looking to secure a relationship with" as its network printer division executes plans to build laser market share with the help of the channel.
"We don't expect to get 100 per cent of their business but, over time, we believe we will get significant revenue from the partnership," McGregor said.
"The best resellers are the ones that don't try to sell everything and which have developed expertise in specific products or areas," he added. "You can't be an expert in a hundred things but you can be in about three or four."
There is a lot to be said for building relationships in the channel, McGregor said, and Centari has been successful because of the commitment it shows to the products it sells.
Johnston confirmed there are other vendors Centari is finalising supply arrangements with and that this has nothing to do with any disharmony with HP.
"One-vendor distribution models can be very successful, but only up until a certain size of your operation and a certain size of customer that you are catering to. We have grown to, and want to continue growing past, that point," Johnston said.