CRN Shifting to the issue of cloud, what do people see as best practice?
Ian Poole We like to work with the business, not just technology people. We try and steer away from CIOs where we can, because the deeper you can understand what the business outcome is, the better chance you’ve got of engaging with a solution.
Chris Young For the smaller customers, it is about making all of this ‘weird technical’ stuff simple.
It’s the simplification and automation of technology. We spend a lot of effort and investment in automating simple tasks, so you can go on the website, press a button put in your credit card details and get your server up and running.
I’m not suggesting the trusted advisor role will go; I think it will become even more important and that’s why we have decided to invest very heavily in the reseller side.
CRN Bringing the conversation back to the Fast 50, what are the differences as companies grows from small to medium to large?
Nick Verykios When you are a smaller company, you know who your customers are and you build a skillset that is appropriate. When you are a medium company, that skillset is also appropriate to many more companies beyond your customer base, so you have to start to become a more marketing-driven company rather than just a technically superior company.
Craig Somerville There are glass ceilings and there are a different set of challenges as you break through each glass ceiling. First you’re four guys doing $800,000 a year and business is really good and then suddenly you are highly geared and you’ve got rent and leases and you hit tough times and revenue goes down and you need funding, so there’s a funding challenge.
Then you get more staff and then you have to manage more people. It’s really easy to manage 10 people. Try managing 400 in four states. It’s a whole different metric.
Then along will come your first million-dollar deal. You will ring up your distie and say, “We’ve got an order for you – a million bucks”.
The distie goes, “But your account is $200,000.”
And you go, “Oh, then just give me some more credit.”’
And the distie says, “Why am I going to give you more credit?”
There are all these glass ceilings when you grow a business. Then there’s the CFO. Until 1999, we had contracted accountant who worked for us. We could have gone broke any time. As a business, financial management is very important.
We now have a management accountant. At the end of every month, we get a 30-page report that tells us every moving piece of our business. If I had anything to say to those growing resellers out there, it’s go get yourself a great financial guy. But don’t let him run your business.
Ian Poole The biggest challenge moving through those glass ceilings is you can lose the flexibility and speed and adaptability and innovation if you’re not careful. The bigger you get, you start to become more material. You have governance processes. You’ve got external auditors watching over you every minute of the day.
The governance process becomes so strict you automatically refocus on the wrong things. You can lose touch with customers and lose touch with your market. You’ve got to grow without losing that great stuff about being a small company.
Andrew McHenry, Bridge Point
One of positive things about being smaller is selling by stealth. Because you are unknown, you can actually come in through the back door. You’re not on the radar. Competitors don’t know who you are.
CRN Many channel partners are facing the question of harnessing cloud services. Gary, how is Bulletproof responding?
Gary Marshall Over the past 12 months, we have gone through a massive shift. Since 2006, we have been doing managed cloud services on a VMware-based cloud entirely based on our infrastructure. As of less than 12 months ago, we are now providing that same level of service on a managed Amazon service.
For us, there has been a massive shift. We’ve been assessing the market. Where is it going? How do you access finance?
Craig Somerville We’re going through a process right now, looking at a technology where the vendors have got it from an opex model.
As a business, it’s really attractive, because I can put it in my data centres and I can deliver it and I’ve got no cost until I turn it on. Problem is, if I was to pool a couple of hundred thousand dollars and amortise it and take the risk, I could do it for 40 percent cheaper.
So do I man up and take the risk?
CRN How can suppliers help partners navigate these challenges?
Paul Hendry There are a lot of resellers who are struggling. They used to sell hardware and now there’s no margin. They want to do something else. We try and produce products for them, but is it the right product? We need a feedback loop, and we don’t seem to have that. Everybody says, “Oh the vendors just want more revenue” – but it’s not true. What we want to know is, what does the channel want from us as a vendor?
Craig Nielsen We’ve spoken a bit about the challenge between vendors and the channel, but we are responsible for innovations. The channel is responsible for innovation and creating value-added services. One of the good things about being in the channel is that you can swap us out. We vendors live or die by our success. We’ve got nowhere else to go.
Syd Borg If the question is, “What does a reseller expect from vendors”, it’s being loyal and being honest. Stick with the partner and don’t stab him in the back. It’s as simple as that.
The dangerous thing that I’ve seen vendors do is judge a partner organisation’s ability to sell your product based on the amount of money they’re spending with you now. If they were doing five million with you last year and then all of a sudden they’re doing half a million, it’s not because they’ve shrunk or their business is going bad. It’s about having a look at yourself in the mirror and finding out what went wrong.
Andrew McHenry What I’m looking for from you as a vendor is to help sell my brand. We sell your products, we sell your technology, but we don’t sell your brand – we sell our brand. That’s the business card I give. So how do you as a vendor help me take my name to the market and represent me correctly? Don’t bring in deal registration programs and rebate programs because they kill the market.
Mark Rook That’s incredibly refreshing because that’s not what we want to do.
Andrew McHenry I actually tell vendors, bring in a rebate program and I won’t look at your product. Because then the competition goes out and says, “I’ll sell those negative three points as margin.
Paul Hendry So what then?
Andrew McHenry I would say the vendors around the table spend a shitload of money on deal registration and rebate programs. I would kill those and instead put your money into business generation programs for the resellers.
CRN Let’s bring this back to the Fast50. What advice can the people around the table offer to small, fast-growing resellers?
Nick Verykios Pick the right person who’s backing you. I challenge anyone to audit my accounts. We’re in the 10th year of our business and our bad debts are a rounding error. Why? Because we back our resellers.
Syd Borg For us, diversification was the key to it. When NEC was around in those days, we had best-of-breed products in the ’80s, and we were with them for 26 years. But I saw the writing on the wall and made a move fairly quickly. It’s about being able to read the market.
I was able to read it – luckily. But I suppose luck comes with hard work. We were able to survive those hard times, but if we didn’t diversify and we didn’t have a broad range of products that was outside of IT, I don’t think we would have survived. And remain debt free, I might add – that’s critical.
Ian Poole It’s the school of hard knocks. The best way to learn is to stuff up. When you really stuff up and you lose money, you focus on it the next time around.
The second point is, you’ve got to have a good CFO. It’s essential. Good entrepreneurs are not the best with numbers. I often talk about the accelerator-brake effect. You need someone with an accelerator and somebody with a brake. If you run your business with an accelerator and no brake, you’ll get into trouble.
The third thing is to manage your risk. You’ve always got to be saying, ‘What if?’
Syd Borg I’ve never taken a risk that I couldn’t survive if it went bad. I’ve never borrowed so much I wouldn’t be able to pay it back. The trick was, “If I’ve got this wrong and it falls over, is it going to bring me down? Will it bring PCS down? Will it bring my family down?”
If it won’t and if I could sustain that bit of pain, it’s worth doing.
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