An automatic revolution

Vendors and distributors are trying to introduce e-business to automate processes within the channel, but are resellers quite as keen to embrace this belated Internet revolution?

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By  Mark Sutton Published  May 29, 2001

Introduction|~||~||~|As the dust settles on the dot-com collapse it seems that there are a lot of voices that want to dismiss e-business as merely a passing fad or a failed revolution. Others suggest that the Middle East, by lagging behind the United States, can side-step the problems of North America and create an e-business boom of its own. Whichever version you believe, the impact of the Internet on channel business, especially at street level, seems to be negligible—even those selling e-business solutions don’t always use the Internet for business themselves.

But the channel has changed. Slowly, quietly, and without the fuss of the dot-com boom, business processes are going online, sales, distribution and marketing tools are appearing on Web sites, and communications along the supply chain are taking on new forms.

||**||Online offerings|~||~||~|For the most part it is the vendors that are driving the changes, often with dramatic results. Storage software vendor Veritas provides one of the best examples of the speed with which change can occur. At the start of 2000 the company had a simple corporate Web site, but wanted to do more. “We invested well over $10 million last year to take us from basically nothing, just ‘veritas.com’, with a little partner section, it was just another pointer to the same information that was available anywhere else, to really offering a true portal,” explained Paul Sallaberry, executive vice president for Veritas Worldwide Field Operations.

The portal allows partners to order online and to trace that order all the way through the chain with total transparency. It links directly into Veritas’ ERP system to provide the vendor with greater control, and allows sales staff to focus on their job. “We still have a very robust channel organisation,” said Sallaberry, “except the only thing they do is support our channel. We still answer phone calls etc, that doesn’t go away, but on the back office we have streamlined the ability for that partner to do business with us.”

The results are compelling. The system has been rolled out to Veritas’ operations in the UK and Germany, with Middle East deployment planned for the end of 2001. Veritas’ biggest partners are now placing an average of 92% of their business through the portal, said Sallaberry, accounting for several hundred million dollars.

Distributors in the region are already making good use of their vendor’s online ordering systems. Tim Martin, general manager of distributor Mindware said that his company already does 95-100% of its ordering with Microsoft, Cisco and Intel online, and will do more as the option becomes available. Intel has one of the best online services for partners, according to Martin, with highly functional Web sites for both distributors and resellers.

The distributor site, Intel Business Link, boasts 128-bit encryption, full password controls so that managers can allow staff only to enter appropriate areas of the site and a wealth of information and functions for all parts of the operation. “I am able to order via the Web, get training information, get collateral, create advertising, check product news and promotions,” said Anees Rehman, Mindware components unit manager. “Everything is on the Web.”

The site also has a facility for distributors to request warranty replacements for faulty items, FAQs and technical escalation through the Web. “It means we don’t have to rely on anyone else in the channel—we go straight to Intel,” said Rehman.

||**||Reseller reluctance|~||~||~|The reseller site, Intel Premier Provider, offers a similar service but without online ordering—resellers are directed to their local distributor instead. Resellers can check how much rebate they have earned on Intel products, order tracking and account information.
Samer Bayrakdar, general manager of DCS in Dubai, an Intel Premier Partner reseller, uses the site on a regular basis, but would like more functionality. “The rebate section is definitely useful, you can see what to expect each month, plus there is product information, but it is just information, I would like to be able to order via the Web,” he said.

Bayrakdar also doesn’t expect other local resellers to be making much use of the site. It is an opinion backed up by Ashok Harpalani of Computronic Trading. He is sceptical of the usefulness of online trading: “e-commerce has not really taken off in Dubai. You can’t negotiate the price online, but price is not the only problem. It takes too much time to manage online ordering—I email the distributor, he emails me back, you cannot sit in front of the computer all day when you have a shop to manage,” Harpalani said.

The price issue is one that takes some solving. In a trader culture such as exists in the Middle East, many businesses are reluctant to operate in an environment where you cannot bargain. Customers print prices off of Web sites and then use that price as a starting point for negotiations. Overcoming the pricing problem was one of the main sticking points for Tech Data, which has just finished deployment of an online ordering system, Oracle-based Orion from Insyst. “Price has taken a long time, it is the first stage in allowing us to do e-business.” said Steve Lockie, managing director. “This system is really about trying to get our sales team back to supporting customers, not just spending all day sending out price quotes.”

The challenge has been to provide customers each with their own individual pricing—although prices aren’t negotiable over the Web site, it has to take into account existing agreements with each customer that Tech Data is selling to. Even though the company has been able to achieve this, and is promising its best prices are available on the Web, the system is still not able to take into account the urgency of an order, or other factors such as delivering bulk orders for export, or handling consignments. Lockie said there is a long way to go yet: “What you get is simplifying the core business processes, it is not the same as what you have in the US, it is just not happening like that in this part of the world.”

The Orion system has a number of features such as automated payment reminders and automatic stock re-ordering that create a number of smaller benefits to customers, but encouraging Tech Data’s customers to use the system will also require incentives. Guaranteed best price and rebates on Web-orders but not on other orders look to be likely methods.

Some resellers will certainly require an effort to get them online, according to Harpalani. In this market, despite exceptionally low margins, it is still the distributors who need access to the resellers more than the other way around. “There are too many distributors,” he said. Take IBM—there are five distributors for IBM in Dubai, all of them calling us with offers. Distributors send us any promotion by mail, and then call us to discuss it, and then we do business. We don’t go to them, we are giving business to them.”

Harpalani also points out that e-business works well in countries where reseller and distributors are widely dispersed. In the close knit markets within the Middle East, resellers like the personal touch of face to face visits with distributors.

Regardless of whether the channel wants to trade online, there are other services that are making it to the Internet. Valuevad recently added an online order tracking system to its Website, for partners to trace orders. Lars Jeppesen, managing director, explained that Valuevad realised that customers did not want online ordering, but could still benefit from e-business. “We have tried to see how we can add value to our resellers by providing them with the information they need in their business, A lot of our added value is that we talk to our resellers, try and understand what they need, and we found that it would be very, very difficult to do that with an online ordering system,” he said.

The order tracking system should cut the number of customer calls to Valuevad, and provide resellers with greater transparency into the dispatch system, and speed processes by letting them know when payments are due. With orders typically over $10,000, partners like to know that their distributor is getting that order shipped. “I think it will give the resellers confidence, that we are doing our best. If they have to ask us for information, it is not a very proactive way of doing business,” Jeppesen said.

There are even Internet services that are coming close to filling the resellers role—Compaq’s Active Answers system can provide a complete, if not completely accurate, bill of materials for configuring e-business solutions. The customer simply goes to the site, answers a series of questions about requirements and then creates a configuration. The system is aimed equally at end users and customers, said Andy Nehme, sales specialist, ISSG, Compaq. “If you want to size an Exchange server, for example, you put in all the information that it asks you, how many users, how much inbox storage for each user, how quickly incremental growth will take place, and it gives you a bill of materials as a guideline, as a customer to take to the reseller, or for the reseller to determine the solution to approach the customer with,” he said.||**||

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