NOC, NOC, who’s there?

Customers are starting to ask for the environmental option. Although the upfront cost is higher, the electricity savings can be as high as 30 percent, said Abouhaidar.

The new fronts in managed services and Green IT are a welcome addition as decreases in hardware pricing make traditional infrastructure and networking provisioning less profitable. Klikon has managed to maintain its margins in its infrastructure business, largely due to its higher levels of service,
said Abouhaidar.

“If we are two or three points more expensive than somebody on a desktop, [customers] are not going to bother [going elsewhere]. There’s just no point. If they’re going to deal with us, they’re going to get what they need, when they need it.”

Vendor tactics aren’t helping, however. The ITS 2007 contract with Lenovo and HP sets low, non-negotiable margins which forces the hand of resellers.

“I wouldn’t say it exactly works for us, but it serves a purpose. We’ve obviously got revenue targets that are set by these vendors and sometimes it helps get you across the line, which can lead to other things like marketing dollars, and whatever else.”

More damaging is the practice of new entrants attracting business by selling hardware with as little as two or three percent margin.

“I think people need to win customers on merit as opposed to price. Obviously there has to be cost savings in there for the customer, but there is no point throwing away hardware at zero or one or two percent margin. I think it cheapens the industry.”

Abouhaidar said he would prefer set margins “on pretty much everything”. A single RRP guarantees the reseller the margin on the backend, and organisations which are required to get several quotes would receive the same price and could then deal on merit rather than being forced to choose the cheapest bid.

Vendors dumping product at the end of the month to meet their sales targets may give resellers a good deal once in a while, but the overall effect is negative.

“It cheapens the product. If someone is going to offer you a 40 percent discount at the end of the month, people are going to expect that every day of the month. Those prices filter out into the market and it just ruins things for the first week of the next month.

“There should be a certain price point that they shouldn’t really go past. Unfortunately, it’s survival of the fittest - whoever buys the most stock gets the best price.”

Despite the recent expansion, Klikon follows a very cautious approach to gaining size. The company has passed up acquisition offers and focused instead on organic growth.

Abouhaidar said some oversized resellers run into trouble finding enough work to pay salaries. In an industry facing yet another round of consolidation, Klikon’s priority is to make sure that it survives to see the next day.

”We would rather grow at our own pace. At least that way we know we’ve got a job to come to tomorrow and we can pay the bills at home. We’ve got 37 families here that we have to feed, and they come before anything.”

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