Commander considers introducing franchises
- 12 May, 2004 15:50
Commander Communications is considering a franchise model as it seeks to move 40 per cent of its business through indirect channels by 2006.
The announcement is the latest development in seven months of restructuring and cost cutting under new managing director, Adrian Coote.
The telecoms provider has made several structural cuts during that time, shedding 80 staff in the process.
It has also halved its number of major offices to seven, centralised its finance department and realigned sales staff into enterprise and SME units.
The changes come as Commander integrates recent acquisitions, including voice and data networking services company, Panaseer, which it acquired in February.
The next phase of its business retooling would be to beef up its indirect channel, Coote said.
Commander’s plan to increase its channel was reasonably well-developed, he said. Discussions were already underway with several potential partners.
“The other thing we’re looking at is the franchise model, to extend the reach of the company,” he said. “My hope is that within three years, 40 per cent of our business will be through indirect channels.”
Commander was currently evaluating the economic viability of the franchise model as one way of increasing its regional reach.
With a similar dealer structure to that employed by Panasonic, franchising appealed as it would allow dealers to effectively manager their customer relationships and gain access to Commander’s centralised back-end, which included services such as billing.
But the cons needed to be weighed up as well, Coote said.
“The franchise model would demand an extra level of integration and responsibility,” he said. “As a company we’re focused on the sales and support processes and ensuring we get the model right.”
Coote said there were no franchise operations in Australia offering competing services to Commander because no other companies had the product portfolio or the field service force to support it.
While existing partners had largely been voice resellers, Commander was now looking towards partners in convergence.
“Data is now much more plug and play,” Coote said. “There are players capable of doing voice and data.”
Commander’s approach to channel partners would mirror its approach to acquisitions, he said. It needed to fit with its strategy of offering a total business solution.
For Commander, this would encompass hardware, voice, data and finance packages.
While recent acquisitions RSL COM and Panaseer bolstered Commander’s presence in voice and data network services, it would now seek partners to ramp up its hardware channel as well as its ‘office in a box’ solution for SMEs.
“We haven’t [packaged] it for the small end of town but we will, that’s an obvious thing to do,” Coote said.
A move into office machines might be warranted to enable the company to offer complete solutions. But Coote did not see Commander trying to move into traditional IT or office reselling.
Low margin items such as PCs would round out an offering with higher level services such as network provision, restoration services and software licensing, he said.
In its statement to the market issued in February, Commander declared revenue of $232 million in the first half of 2003, with a net loss after tax of $1.9 million.
The company has forecast revenues of more than $500 million for the year to June 30.
It is making a big play for a slice of the SMB pie with its newly-unveiled IT management and support solution, Commander 3600 Office. It hopes the offer of hardware, software, networking and management for a set monthly fee will win over SMBs.
The service is aimed at businesses of 20 to 100 staff, with pricing of around $200 per seat per month for businesses under 60 seats.
Commander general manager of data, Steve Evans, said the price would drop to $150 per head per month for businesses over 60 seats. It could scale as low as 10 seats, he said.
The service includes Internet and network access, help desk support and services.
Optional automatic hardware updates are also available.
It would be available wherever DSL was available, said Evans.
Commander has signed IBM, Cisco and Microsoft as vendor partners for the service, which it claims is the first large-scale offering of IP-based services including converged networking and WLAN for small business.