As the Fourth Industrial Revolution becomes mainstream, businesses are having to take a long, hard look at their products, models and processes to ensure they will thrive in the new world.
There’s a growing realisation that companies that don’t do this could end up on the scrapheap of history.
For a leading IT distributor, which both uses and sells the technology enabling this digital transformation, the potential for either success or failure is multiplied.
Axiz has faced the challenge head-on, strengthened its processes and come up with new business models – and is confident that it’s ready to succeed today and into the future.
How do you ensure your IT distribution business is successful and growing in the current business environment, while positioning it to seize emerging and future opportunities?
What Axiz has done is to follow a bimodal business model.
MD Craig Brunsden explains that Mode One focuses on the traditional distribution business, supplying hardware and software and creating efficiencies around warehousing, credit and logistics.
Mode Two operates in the world of software-defined solutions, bringing cloud-based products and solutions to market.
The Mode One business is still responsible for most of Axiz’s revenue and profitability, but the Mode Two operations are growing.
“These two modes are not two differing entities, though,” Brunsden adds. “They have to work together.”
Over the past year, Axiz has put a lot of effort and investment into formulating its digital transformation strategy and is currently executing on that strategy.
“We are working very hard to digitally transform our business,” Brunsden says. “We want to walk the walk.”
Part of the transformation is the upgrading or replacement of many of the distributor’s aging systems, along with a re-examination of much of the internal workflow.
“We want to reap the benefits of the technology that we sell,” Brunsden says.
For the traditional, Mode One business this is all about removing costs and improving efficiency.
“We have saved about as much as we can – in fact, we are not far off international standards,” Brunsden says. “But you can’t save yourself successful.
“The best way of reducing costs is to make fewer mistakes, so we have to get better at that.
“This means ordering the right products at the right time, and making sure we don’t miss any opportunities.”
The company is already about 18 months into selecting and rolling out a new ERP system and this will be at the core of the new, digital business structure.
Over the last year, the Mode Two part of the business has included the launch of the Axiz Cloud Portal, an aggregation platform to licence cloud services from various vendors.
As the market leader in cloud offerings, Microsoft is a big contributor to the portal, which is growing to include cloud services from other vendors.
“The portal has helped us to get a feeling where the cloud fits into distribution,” Brunsden explains.
Cloud is becoming more mainstream – and in theory it’s now easier for end users to cut out the reseller by sourcing their own software. “But it’s not that easy for the customer to buy cloud,” says Brunsden. “They have to find the right solutions and integrate them, which can be very complicated.
“Places like the Axiz Cloud Portal bring solutions together on one place. The reseller can be confident that we have done the hard work, developing the integration layers and working with the vendors’ own portals.
“For the reseller to do this themselves is well-nigh impossible; unless they are a tier one partner, they still need a distributor.”
Importantly, the Axiz Cloud Portal is not just a vehicle for distributing cloud software, but is being used to dispense other forms of software as well.
“At the moment, it is very much cloud and licencing other software, but we will be putting hardware through the portal soon,” Brunsden says.
“Everything will be linked to an e-procurement process where the reseller can use the same digital interface to buy any products or services, including hardware, and it will link seamlessly into the distribution systems.”
The Microsoft CSP programme is a key player in the move to the Axiz Cloud Portal, Brunsden explains. “This whole programme is digital. So an important element of our Microsoft relationship with resellers is completely digital.
“As more vendors come on board with that kind of product delivery we will be able to accommodate them on the cloud platform.”
Brunsden stresses that the Axiz Cloud Portal is not a cloud service itself, but rather a means of selling vendors’ cloud services.
Setting up the Axiz Cloud Portal has given the company valuable insight into the application of new technologies into the Mode One business operations as well, Brunsden adds.
“For instance, we’ve realised that we have a lot of procurement processes that are currently human interventions which could be digitised. And we are in the process of doing that.”
The company is so serious about digitalisation that it’s acquired an Internet software development company so it’s got direct access to its own development.
Once it’s digitalised its own systems, Axiz will expose APIs to resellers to make it easier for them to integrate their own systems with Axiz’s.
“E-commerce is by no means a new thing, although it hasn’t replaced the need for manual touch yet,” Brunsden says. “But we think a combination of things will give it momentum.”
These include the ability to seamlessly serve up stock availability and pricing. “Right now, these things consume a lot of time and phone calls. We’ve measure it, and we are losing thousands of hours to non-productive work.
“Getting more efficient is what distribution is about.”
This efficiency has also been extended to refining the product strategy. “We have reduced the number of commodity products that we carry, and are focusing on what we think is core to the end user compute market,” Brunsden explains. “You won’t see us adding any more consumer products to our portfolio.”
Although the end user target market is broad-based, rather than focusing solely on the enterprise, the Axiz product line-up is inclining more to a data centre-centric focus.
In fact, Axiz has moved from being a predominantly PC business just a few years ago to the point where about 65% of its sales are now software and infrastructure hardware.
Brunsden is quick to point out, however, that the traditional hardware focus on the data centre is rapidly declining.
“We think the data centre market, from a pure hardware perspective, is in trouble. Analysts tell us it’s in trouble and that consolidation is happening, and its more concentrated in the data centre.”
To make sure it stays relevant in this market, Axiz is focusing on products that lend themselves to this migration and consolidation.
“We are seeing fewer server sales in the ones and twos, but more in terms of cloud production, more management tools and more software as a service.”
Another trend that Axiz has recognised is the move to more “complicated” or higher-end application software.
“So we are exposing more of this type of software – business intelligence, analytics, customer relationship management and more – to the market,” Brunsden says.
“We are even working with IBM on artificial intelligence (AI) and looking for ways to bring more services like Watson to the market.”
There is also a lot of interest in Internet of Things (IoT) at the moment, and Axiz is working on solutions that will add digital intelligence to the IoT environment.
While Axiz Advanced Technology is moving forward with these and other Mode Two projects, Brunsden is quick to point out that this cannot be at the expense of the traditional Mode One part of the business.
“In our experience, the bimodal model is not about transitioning from Mode One to Mode Two.
“The reality is that there are two modes, and they have to keep going together, and develop together.
“There can be no Mode Two without Mode One. And Mode Two is not necessarily the saviour of the business.
“But to let it succeed, we have to separate it, give it some space and allow people to experiment with new things that don’t work in a Mode One environment.”
In fact, Brunsden says, many of the products available through Advanced Technology could be considered to be Mode One products – the likes of servers, storage, networking products.
“What we are trying to do is to serve those products and services up in a Mode Two way – to become a truly bimodal operation.”
The move to streamline and digitalise Axiz isn’t a new project by any means, Brunsden adds.
“This is an evolution that started way back when Axiz and Workgroup joined together. In fact, a lot of the Advanced Technologies business is a refinement of the Workgroup products.
“This has been a long evolution.
“You don’t wake up one morning and reshape the business. We have had a lot of these resources for a while, but never quite cracked the processes. However, once we got the ecosystems working together under the Advanced Technologies umbrella, a lot of those processes clicked.”
Into the future
However, this isn’t the end of the journey by any means.
The trick to remaining successful in a dynamic and ever-changing market is to be focused, but also agile enough to deliver new solutions as the need arises.
“Going forward, we will invest more in software development skills,” Brunsden says. “This is not so much for off-the-shelf applications, but specific skills that we need.
“We things the value-add distributor of the future will be able to provide skills that partners can leverage to succeed.”
He believes this will include quickly developing APIs into the cloud for third-party software vendors. “I see our role as ensuring that things all fit together.”
This means carefully selecting the vendors that can work together in an ecosystem, Brunsden adds.
“It’s all about ecosystems. Essentailly what we do is sell to a reseller ecosystem, and the trick is to offer the right brand ecosystem.”
One example includes VMware, which has pulled together what used to be a fragmented environment into an ecosystem where all the vendors work together seamlessly. In fact, VMware has spawned a whole sub-industry where big names like Tintri and Veeam exists solely because of the VMware ecosystem.
Other software leaders like Microsoft, Red Hat and Oracle are also developing partner-centric brands that will form an ecosystem that is easy to deploy and use.
“In the client/server era it was every man for himself, and may the best man win.” Brunsden explains. “Now it is all about working together, about collaboration.
“If you want to sell one of these brands on its own, you probably won’t be very successful. But if you bundle them together to bring a solution to market, you will win.”
As technologies like AI become mainstream, Axiz is working with Wits University and IBM on AI and IoT. “We are working with them to see whether we can partner on skills development,” Brunsden says.
Skills development is a subject that is always a concern in the IT industry. For distributors and resellers, simply staying up to date on the products they sell can take up an inordinate amount of time and effort.
“So we are rolling out a digital training tool that will let our sales agents understand the products they sell without having to learn everything about them.
“The reality is that there are too many products and it’s too costly to have everyone trained in every product.
“The new tool will let agents search for the product they need to know about today, and find all the information they require. So they won’t have to know everything, as long as they know how to use the tool.
“It is a way of empowering our people, and making them more efficient.”
Overall, Axiz is working towards a digital future, where staff and partners alike are able to reduce the processes required to do business.
“We are trying to walk the walk,” Brunsden says. “We are investing a lot of money is this. It’s not cheap, but we are looking down the line to where it will be necessary to have if we want to be successful.
“If we don’t make these investments we don’t think we will have a digital future.”
While many other IT vendors and distributors are cutting back in the face of economic headwinds, Axiz and its holding company Alviva are increasing investment.
“We are putting our own money into our business,” Brunsden says. “We think that now is the time to get cracking, to improve operations and develop new business models.
“There is a lot of doom and gloom in the market, and a lot of consolidation going on, but we are still growing.”
In fact, Alviva Holdings CEO Pierre Spies is on record as saying that the group is actively on the acquisition trail.
“We have a lot of positive energy, and an appetite for investment,” Brunsden adds.
Empowering the channel
The company is also working hard in enabling its channel partners, not only bringing solutions and skills to the market, but also offering a lot more project-based finance.
Axiz has accounts with more than 5 000 resellers, with about 4 000 of them active on a regular basis.
It currently has geographic coverage in the Southern African Development Community (SADC) countries, but is looking to expand throughout sub-Saharan Africa.
It has entered the East African market for the first time with a Kenya office, as part of this expansion.
“We are putting a lot more focus on the whole East African area, including Mauritius, and are seeing a lot more business coming from that side,” Brunsden says.
Much of the business is project-based, he adds, so there is less requirement for warehousing and more for logistics.
“It’s interesting that in some of these markets – for instance Kenya – we are doing no PC business at all; only enterprise and value-add products.
“We think we are going to lead with Advanced Technologies in many African markets.
“Although we established our roots in South Africa on the back of the PC business, we will be leading with value-add offerings in places like Kenya, Mauritius and Zimbabwe.”