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By William Van Winkle |
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NEW SEASONS IS ONE of a slowly growing number of specialized grocery chains focused on whole foods, green living, and sizable sales margins. A couple of years ago, dessert was pretty much all my wife and I bought at New Seasons. But in an effort to bring some sanity to our lives and maximize our return on resource outlays, we started buying more groceries there—organic milk, pesticide-free produce, homeopathic child medicines, and so on. Eventually, we were getting most of our groceries from New Seasons, although I still think nitrate-free meat tastes freakishly bland. The point is that I started out at New Seasons buying one "component," and that's all I bought there because I didn't open my eyes enough to consider anything else. But what I came in time to recognize and utilize was the complete "solution". Sure, I might pay 10% or 20% more for groceries—say, $40 or $50 each week—but we saved on gas and time up front because the store was most conveniently placed. The staff was the friendliest and most knowledgeable if we had questions. Because we weren't dividing up our grocery purchases, we were more liable to have stock in the fridge and not resort to restaurants. And because the food is healthier, I'm betting that we'll save on additional "support costs" down the road. As purchasers, we seem inexplicably drawn to compartmentalizing. To save a few bucks, I used to buy memory from one distributor, CPUs from another, cases and motherboards from a third, on and on. And back when I was a small distributor and a reseller, specialization was more the norm. Now, times have changed. The object today is to specialize in broad solutions, to take a whole platform, such as healthy food or networking, and become the one-stop resource for everything associated with it. The solution-based, one-stop resource concept has been a main staple of the VAR world for decades. For major distributors, though, it's a much newer model, and some are making the transition better than others. I would suggest that in keeping sync with the industry's changes, you consider your current buying model. And if you're still working under the compartmentalized buying modes of yesteryear, give some thought to seeking out distributors whose areas of specialization mesh with your own customers' needs or can help guide you into newer, more lucrative markets. Sometimes, it's just a matter of stepping back from the dessert counter and looking around the store. Case in point: SYNNEX. Many years ago, I used to buy hard drives from SYNNEX but little else. That was SYNNEX's specialty at the time and a bias that apparently still exists today. (A little Googling on SYNNEX turned up a HotJobs posting for a SYNNEX inside sales rep position in which the only preferred characteristic is "previous experience with component and storage manufacturers.") Fortunately, about six years ago the distributor decided to fill in several of the holes in its product lines. The company was moving plenty of drives, OS discs, and processors but not the motherboards on which they could all run. Thus was founded SYNNEX's Systems Integration Division. This dovetailed well with SYNNEX's 1992 partnering with MiTAC, a union that gave the prominent PC ODM distribution-level access into the U.S. channel while giving SYNNEX world-class design and manufacturing assets. In effect, the Systems Integration Division embodies a lateral sweep, a move to span the breadth of computing components (an effort perhaps aided by the 1997 acquisition of former heavyweight distributor Merisel), while the MiTAC/SYNNEX connection delivers a vertical chain spanning from design and manufacturing at the top all the way down to the solution provider and end-user. Taken together, it's hard to imagine a more thorough or resourceful arrangement. "The problem we are solving is that we are a one-stop shop for the products resellers need," says Steve Ichinaga, senior VP and general manager for SYNNEX's systems integration division, who has been with the company since 1984. "Ninety percent of the time, system builders buy product for sales that have already been made. This means they need aggressively priced product immediately, so our efficient multi-warehouse setup—we have 11 facilities in the U.S.—is a key enabler to their success. But one-stop doesn't mean end-to-end. Products today are more complicated, so you usually can't buy a complete solution. At some point, hardware stops and know-how needs to take over. This is why our expertise in the form of dedicated sales reps and integration tools—our configurators for server, optical, hard drive, motherboard, etc.—are key. Manufacturers and resellers alike need a financially sound, focused, knowledgeable, and efficient partner to help pull everything together." If They Build It, Will You Come? As a general policy, I disklike using the word "synergy" in business writing. It's on my list of 20 Worst Industry Clichés. However, the MiTAC/SYNNEX bond is genuinely synergistic, and here's an example of why: One of the aforementioned manufacturing centers is also a 45,000-square foot data center, complete with sub-floor cabling and pressure-controlled air cooling. SYNNEX recently threw another $1 million into the facility just to upgrade its power. But without this sort of facility, SYNNEX wouldn't have a suitable and accurate environment for the design of rack and cluster systems that resellers with data center clients need to develop. SYNNEX can get the systems up and running in a bona fide data center environment, then transfer everything straight into the final deployment site. That said, it's a given that most reseller wins are non-multi-million dollar data center contracts. Small business purchases break about even with enterprises on dollars sold, but the volume with small business machines is obviously much higher. You have to move more product to make the same living, so success in part comes down to having an efficient enough use of man-hours. If you have $50 to spend on an employee's time, is that money better spent putting a screwdriver in a tech's hand or a pen in a sales rep's hand? "When you're a small system builder, you're out there pushing a solution," says Ichinaga. "If you want to and are able to keep building that solution yourself, that's fine—go ahead and keep doing it. But if you don't want that type of infrastructure or you're trying to move off of that type of infrastructure, then it makes a lot of sense to use us. We have the experience and all of the products. And the advantage is that because everything gets done under our roof, you don't actually see a bill until the finished product ships out, and in most cases we'll direct ship to the end-user. So do you value your time more doing the build portion or putting your focus more in another area?" This is no small thing. It's hard enough to take a fresh look at your distributors and see them from a platform rather than a product perspective. It's harder yet to reexamine your own operation and objectivity tell if you should keep on building systems or outsource them. Many small resellers started out as home-based operations where tech work was the company's foundation. But again, times change, and old preconceptions should always be questioned. Yes, one of the benefits of Intel's VBI notebook initiative is that a system builder can go from barebones to finished build in 10 minutes, but what if you come out ahead in the time-is-money equation by having a third party build up your barebones and drop ship them straight to the customer? Or what about non-VBI, proprietary notebooks that can take two or three times as long to configure? SYNNEX is one of the top VBI and non-VBI notebook distributors in the world, and a lot of those units go out the door pre-configured. Building Takes Tools Of course, a distributor with top-shelf building capability would be crippled if it didn't also have an efficient way for customers to settle on final configurations, and this is where we cross over into sales tools. SYNNEX has some of the best online configurators in the business. The one for Intel servers is particularly strong, and another for AMD should be ready soon. In fact, according to Ichinaga, Intel field teams use SYNNEX's configurator instead of their own because SYNNEX's is more comprehensive, including not only Intel parts but all the other components that are required for a complete server, such as drives and various types of RAID controllers. Knowing what options to select in a configurator requires product knowledge, especially knowledge of the distributor's vendor partners and their respective SKUs. This is why smart disties go to great lengths to educate their sales staff and arrange for that staff to pass their knowledge on to reseller customers. Passing out free collateral is no answer. SYNNEX has put on several build-your-own notebook and build-your-own Viiv seminars toward this end, and first-unit discounts are common in new platform pushes so that resellers can better afford to dig in and learn. Without adequate education, resellers might be unprepared for key technology changes, such as virtualization technology. In all likelihood, as VT gains in popularity, there will be a corresponding drop in the number of physical servers sold. Conversely, there will be a rise in the average power and complexity of servers being sold so that they can handle all of those virtual machines. The higher-end the system, the more knowledge is required to design and build it properly. Other distributor tools should be on your watch list, as well. One of these is strong promotions. Some distributors just throw around one-off SPIFF deals, but a smarter approach is to link promotions to ecosystems centered on new platforms. A CPU discount is fine. A deeper discount for a CPU plus motherboard with trusted platform module plus biometric scanner is a wiser play. Another must-have is strong financing assistance, which is not something you're likely to get from a smaller company. "A lot of times we're able to set up a special program where the end-user is solid financially, but they just don't have the financial wherewithal to do the business," says Ichinaga. "They would work with us, we would set up an escrow type of arrangement, and it would allow the end-user to pay us. Then we would do the disbursement of the funds to the reseller. Some resellers have the expertise and savvy, but they just don't have the money yet. So our financing is pretty painless for everyone because there's very little cost for the reseller or risk for us." SYNNEX isn't perfect. One thing the company is working on improving is its communication skills. In fact, a talk with Ichinaga was what originally spurred this column. "Did you know we did this?" he asked. No. "Well, did you know we have that?" No. And that's because SYNNEX has historically been a rather humble, tight-lipped company, which is refreshing in a way but not terribly helpful to resellers who could benefit from its many services and areas of expertise. So take a step back from business as usual and really check out your distributors. There may be a lot more there than you expect. |
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