No-one is under any illusions that the Covid-19 pandemic and subsequent global lockdowns will change the face of business as we know it – and the local distribution channel is no exception.
One of the country’s leading distributors, Tarsus Technology Group, has become the first major player to announce a restructure of its business and the subsequent retrenchment of around 10% of its employees.
Gary Pickford, chief commercial officer of Tarsus Distribution, says the restructuring of the organisation was on the cards long before Covid-19 was discovered, but that the pandemic had accelerated the process.
“We have been busy with a strategy of digital transformation within the group for the past 18 months,” Pickford says. “We were nervous about making the final transition – the company has operated pretty much unchanged for 30 years – but then along came Covid-19 and we realised that in the short-term, we were more ready than we thought.”
In an official statement, the group says it is restructuring its business to put itself on a sustainable financial footing in the wake of the Covid-19 outbreak and the national lockdown. The move will consolidate the Tarsus business around two independent operating companies: cloud enablement company, Tarsus On Demand, and value-added ICT distribution group, Tarsus Distribution.
A separate company will oversee the management of the group’s commercial property, while the existing roles and capabilities at the shared services centre and Printacom (sole distributor of OKI in Southern Africa), will be folded into the operating companies. This new structure will enable Tarsus On Demand to accelerate its growth as a cloud enablement partner for the reseller channel, while allowing Tarsus Distribution to elevate efficiencies and hone focus in the commodity distribution market.
“This new structure will allow Tarsus On Demand to accelerate as a cloud enablement partner, while Tarsus Distribution will focus more on distribution and streamlining processes,” says Pickford.
Tarsus On Demand will still be headed up by Anton Herbst, with Pickford chief commercial officer of Tarsus Distribution. Miles Crisp will continue in his role as group CEO and become CEO of Tarsus Distribution.
Pickford says that, unfortunately, the restructuring will mean some job losses as certain positions become redundant.
“Retrenchments will affect between 10% and 12% of the workforce,” Pickford says. “That’s between 80 to 95 people. Unfortunately, that is what restructuring entails, but we will accommodate as many employees as we can in new, upskilled roles.
In the official statement, group CEO Crisp says: “The Tarsus group has been reinventing itself over the past three years to compete in a changing ICT distribution market, where the shift to the cloud, shrinking margins and continued economic weakness have put significant pressure on our traditional commodity distribution business.
“The Covid-19 outbreak and the national lockdown however, demand that we pick up the pace in the execution of our strategy to realign the business for the digital era. Despite the excellent support we have received from our vendors and customers ,we have taken a severe hit to trading and cashflow during the lockdown. We need to urgently re-evaluate our cost base to navigate this difficult time.”
Crisp says the restructuring programme will enable Tarsus to reduce borrowings from its bank and reduce costs, ensuring a leaner and healthier business able to survive an expected contraction in IT spending and GDP.