While managed services might be the flavour of the year, one reseller has seen the proportion of its business in this sector fall, and is turning away from offering it to very small businesses. This is because it keeps winning project business, with the help of Dell.
Roger Harry, MD of Cardiff based Circle IT has some clear ideas on how resellers make progress in competitive times and is quite open about how his company fills in where the giant cannot play.
“We formed the business 12 years ago and joined the Dell partner program when it started seven years ago. We grew it to a couple of million turnover early on but there is not room in South Wales to grow a big business. So we grew organically – working out how to reach the next level,” he says.
He does a lot of managed services still – probably 30%, but it used to be 70% of the business. “As the project side grew, we've reached £11m turnover and you can't grow managed services at that rate. You can't take on more than two or three managed services deals a month, with staffing up whereas you can do a project that could be £100k very quickly, so turnover jumps.”
“Our relationship with Dell is key to all of this, we have one of the best partner profiles with the company, and this represents a lot of hard work. We focus on the areas where Dell Direct doesn't work so well: they focus on client server and storage. When asked about networks – there are cabling issues, convergence, installation – that Dell can't do, so they like to work with partners.”
“We understand the market and have people with experience, especially in further education. We want to sell a solution, which is consultative – whereas Dell has traditionally sold boxes. If you want PCs – we don't do that – go to Softcat, Computacenter or Kelway,” he advises.
“We've let a lot of our smaller managed services business go as it is a distraction; it is a difficult dynamic, but we have to work out the best use of our resources –is it delivering multi-million pound projects or fixing small business servers in Cardiff? Office 365 is guzzling up the business at the low end so why would any small business want to pay for a server? We have to ask some IT managers why they want to spend thousands on storage and employing people to run it,” he says.
Dell Networking has helped Circle IT compete well against the likes of Cisco – “it's faster, cheaper and the Dell direct salespeople lead us into the business. When we started, there were very few people selling it; the education sector [where the company has a particular emphasis] works well with referencing sites,” he explains.
And it leads onto areas such as security: “We are a massive SonicWALL partner – and the beauty of the network is when it is upgraded – the bottleneck moves to the firewall – so it brings in the next piece of business. We have a big focus on network and security which are intrinsically linked.
Dell is a lot better than it was with the channel six years ago, he thinks. “We don't have the battles over whose account it is. We only sell Dell – so we can tell them 'when you give us a lead, you are safe'; it removes the barriers.” He gets a few approaches from other vendors and distributors, but there is not much appetite to change given the “end-to-end offering”, he admits.
It seems to work for him: “The main core of what Dell offers – with superb support, is servers, storage and networking and there isn't anyone else who does this well. And the pricing seems to work in our favour – we've not seen a single college or university refresh Cisco – they are being strangled for resources and so look at the budgets every year. Dell is half the price and I expect the rest of the public space will follow education.”
“We work with the account directors at Dell, and they really get the channel idea, and they help their own salespeople to bring us in to accounts that want to talk networking and security. So we are working that model very well and getting some good wins. When they see tenders coming up, we are invited to help.”
“There are a few specific networking companies [as competition], but we see a lot of the same people, and we are on different radars from two years ago – some tenders are multimillion pound contracts and while the tendering process is arduous, you can adopt a cookie-cutter approach. In big managed services, there are a lot of tender consultants who ask us to break down the pricing more and more, but you get used to it. It is the game that we play – we have a good run rate – about 50%.”
“And there has not been that much change in Dell since it went private. We have become even more involved – attending Innovation Days and similar and more involved in storage and I am always impressed with what they can tell us about what is coming. I like the way that we, as a small company, can get involved and play a part in how things develop in such a big company.”
Dell is a changing and evolving animal and the channel has tipped the scales – now coming in at around 50% of total sales. For them it is a cheaper option, he suggests. “It is important that they keep the direct side going well, as well. They are so good at monitoring customers, and the channel can't match that. When we go into a bid, we will take Dell with us, even if all they do is sit at the back – the fact that they are there with a small Welsh company gives us credibility. From a customer perspective there is a significant comfort factor,” he concludes.