Sellers' game

CRN profiled itX in an issue of the magazine last year. Here we discovered the company's history of mergers and how it survived the financial crisis. Avnet recently offered to acquired itX.

Engineering qualifications kicked off his career in IT but the sales and management training Laurie Sellers, chief executive officer for itX, gained early in his career was the start of something a little less technical.

His employer at the time - back in England some three decades ago - encouraged Sellers "to get into management" and subsequently sponsored him to complete a diploma in management studies.

"I took the opportunity and found that I enjoyed it and I was successful at it. Frankly, I was one of those dangerous sales guys who actually knew how a computer works," he says. "Not sure I do anymore . . ."

Sellers joined itX - or GEC Alsthom IT as it was in 1993 - and took over the chief executive reins in 1998. Ten years on, Sellers can't get enough of it.

"Distribution is sales and marketing as opposed to just selling," he explains, and "the marketing certainly is something that appeals strongly to me."

But, he admits, in the CEO position there's a lot more to it. "As I floated towards the top, I also had to be astute in people management and financial management."

This year, in any industry, not much is more important than financial management. ItX's financial philosophy is especially adamant on the point:

"It's just as important to manage costs in the good times as it is in the bad". So, today, with the world in recession, the company happily carries no external debt and keeps a strong eye on cash flow.

"In common with most well-managed distributors, we're financially very astute and constantly keep a careful eye on credit management particularly in these tough times," says Sellers.

"It's something engrained in our business. Cash is so important."

Nine months into the company's financial year itX has yet to feel a significant downturn.

"It's actually been a pretty good year so far," says Sellers. As the distributor enters its fourth and final quarter, its CEO is "cautiously optimistic" about the full year results.

In fact, the company is close to its initial high growth target set when its budget was finalised just two months before world markets crashed.

"The distribution business is up significantly on last year ('07-08); we've had 30 percent growth in our revenue," Sellers says.

"Inevitably some of the bigger deals got put on hold particularly towards the end of the last calendar year and I guess that had an impact on what otherwise would have been a spectacular year. Generally we are going very well in these conditions."

Enough to require more staff and floor space, he adds.

But itX hasn't escaped recessionary pressures and like so many businesses it too decided to tighten spending. Towards the end of last year the distributor held off recruiting until after the Christmas break. "We decided to wait and see what the market is going to do," Sellers explains.

As well, other discretionary costs such as travel are being managed very carefully. For the next financial year Sellers says itX will make adjustments as it sees necessary in order to sustain its growth plans.

"We've been focused on achieving the current year plan and we'll soon be finalising the plans for next year."

For Sellers, the forecast will unequivocally include expansion, regardless of the economy.

"I believe growth is still a sensible approach to take, you can't stand still, so if you're not growing you must be shrinking - and I'd rather get bigger than smaller," he says.

Whether it's through organic growth or acquisitions. Sellers hasn't ruled out acquisitions and explains why by alluding to the successes of itX's $6 million acquisition of Briell Marketing last year, a specialist printing and media distributor.

"This is a very specialised area and to some degree has been recession-proof, but more importantly it leads us to a new area, a new market."

Since the acquisition, itX has taken on a new vendor, DIS, which supplies a different range of ID printers. Overall the move allowed itX to expand its product portfolio.

But, Sellers admits, itX is very selective when taking on new products: "It either has to be very complementary to what the distributor is doing or on the other hand it has to be a good niche distribution business, such as Briell."

But when it comes to the company's existing technologies, Sellers still believes there's a lot of untapped growth.

ItX's biggest hardware partner is Sun Microsystems. The distributor is the sole authorised distribution centre and channel development provider for all Sun products in Australia.

The channel team manages more than 90 percent of Sun's resellers in Australia. According to Sellers, Sun showed steady growth through the year and pulled in large wins, particularly around virtualisation.

Not even Oracle's US$7.4 billion takeover of Sun is dampening Sellers' mood - in fact, he says, "itX welcomes the news with a lot of positive enthusiasm about the future".

"We believe the combination of Oracle and Sun will create a very powerful portfolio of integrated business solutions which ultimately will present tremendous opportunities within the channel."

He adds: "Our relationship with Oracle actually stretches back even further, as we were first appointed as their distributor in 1995.

"We perform similar distribution services for them including managing their resellers, marketing their products, order vetting and processing and credit management. We look forward to working closely with both organisations."

Sun Microsystems aside, most of the distributor's business is software sales and much of that business has been coming from markets that have continued to perform.

Sellers mentions virtualisation, security, thin clients, server-based computing and storage as strong markets.

"People like Citrix and IBM, VMware, Trend Micro and Wise in terms of the terminals that go hand in hand with Citrix are doing very well and they've assisted in really producing our strong year on year growth," he says.

"In addition we picked up a number of other complementary vendors during the year and we've seen some good development, again around virtualisation predominantly."

On future breakthroughs, Sellers thinks there probably won't be great emerging technologies in the short term. "Certainly not in the areas we focus on," he says.

"Extraordinary growth opportunities based on new technologies don't come around very often. A good example was VMware.

I think in the current economic climate most customers are trying to be focused on getting more value out of what they've already got."

To maintain itX's market share the marketing team is working full-tilt. The distributor simply has to make sales, Sellers says.

"The focus is to generate leads and to convert them into sales, because without sales obviously you have no business." For example, the hot campaign at the moment is itX's $1 million cash giveaway.

"We wanted to have a major campaign that would really attract attention. In the first two weeks we've had close to 2000 hits on the website.

"It's certainly creating some attention and feedback. It's easily got to be the biggest campaign that's ever been run and certainly will help a couple of people beat the recession," says Sellers. 

There are a few things the company is developing in regards to reseller programs.

"Apart from providing them with what is effectively the life blood of their business - credit - we've invested in some sales-enablement universities across Australia, which are more focused on education.

"We created the Pipeline Program, a web-based lead-generation tool and that helps resellers create and send out to their customer base some very sleek, tailored marketing," says Sellers.

The distributor has also put considerable effort into training resellers. It is running two-day sales universities for all vendors and has enlisted consultants Channel Dynamics to run sales skills workshops to help resellers enhance their skills in competitive selling.

"We're getting some really good feedback," says Sellers.