CIO Asia secured an email interview with Scott Frew, Executive Chairman of Distribution Central recently. Read on to find out what he had to say about his business and why the choice to locate their regional office in Singapore.
How would you describe Distribution Central's unique business strategy and how does it address key customer challenges in the fragmented Asia Pacific market?
Our business strategy aims to address key gaps in the channel that are posing challenges for our customers.
In a fragmented Asia Pacific market, it’s common to see IT channel products getting shipped around the world to end customers. However, the problems usually occur as the product moves through the channel and different parties lose control of the location of the product, its relevant configurations, contract details, serial numbers and product owners at each point in the process.
At Distribution Central, we use proprietary technologies that help address these issues by tracking everything at different points within the channel. For example, customers can use location-tracking technologies to trace all products laid across the globe, with colour representations that indicate its maintenance status and data pegged to these products.
We also help manufacturers build configurators that allow quotes and configurations to be built quickly. This helps IT manufacturers, who are great with manufacturing, but never consider the effects of the supply chain, or the fact that customers may need to trace and build configurations for large numbers of line items.
What are the key business plans for Distribution Central in Singapore and the Asia Pacific, and what sort of revenues do you expect? Why Singapore for the HQ and not Hong Kong or Malaysia?
We selected Singapore over Hong Kong and Malaysia as it was closest to our head offices in Sydney, Australia. Given the distributor level gaps that we currently see in ASEAN, we anticipate revenues to exceed current Australian revenues (USD160 million) over the next two to three years.
With customer demand to manage ASEAN-based delivery and specific requirements for data tracking and systems configuration to be delivered as one service, we believe we will be able to achieve our goal to reach into ASEAN countries from Singapore quickly with our own locations, a strategy that will help drive profitability for Distribution Central.
To what do you attribute Distribution Central’s 40 percent growth year-on-year? What’s the secret and what are the key industry verticals where your clients work?
Our growth has been driven by the obvious gap in the Asian market for what our business model addresses – a simple sourcing model that brings vendors and resellers closer together in a new and structured alliance that focuses purely on delivering in line with our customers’ growth commitments.
The nature of our business in the channel means that we serve a host of companies in various verticals that use IT. These include IT product distribution channels for vertical industries like banking, government, manufacturing and transport.
With systems and tools that allow us to simply on-board, train and certify, configure and quote, then track both physical asset and human assets life-cycle on our SaaS tool, we have seen great success in taking the pain factor out of the channel, and anticipate extensive growth in future.
What do you see as the key benefits for CIOs from disrupting the existing and traditional distribution models currently provided by companies?
Firstly, we saw a need for automation in the business layer. While manufacturers were usually left to inform customers when products were up for renewal, they were unable to reach out to customers due to the lack of knowledge of players within the channel. Automation of these renewals enabled better maintenance pipelines, ensuring that CIOs did not miss out on maintenance, or be at risk of services or security protocols going down unnecessarily without the right back up in place.
Second was the issue of operating expenditures on end of line products. CIOs could easily purchase hundreds or thousands of box products every quarter. In most distribution models, these products get deleted and new products are put up for sale. We enable the CIO to cut unnecessary expenditures by telling our engines the old and new part numbers and send the right trade up information to the business decision maker. This negates the need to keep buying new products to ensure that IT systems are kept operable for their business.
Third was the lack of visibility to the CIO when making a new purchase decision. We realised that existing systems did not provide enough information about their IT product transactions, and addressed this issue by providing immediate login to purchase systems on the web with a read-only version. This allowed CIOs to view purchases, configurations and relevant details in a timely manner, rather than accessing a financial asset management system that would be more complex. This provided added visibility required for CIOs to make the purchase decisions for their businesses that were most critical to the sustainability of IT operations.
The above, combined with our capabilities to identify platinum level resellers while tracking, training and certifying partners, provides the CIO with a host of new ways to ensure unnecessary revenue attrition through operating expenditures, while touching base with the right partners within the channel for products required.
What do you regard as the major problems with existing and traditional distribution models and why do they need to change?
The biggest problem with existing and traditional distribution models is that they are all about stock and credit. In comparison, our business model is interactive, and backed with channel partner expertise and services that most other distributors cannot afford to carry. With our track record of partner expertise, our customers are armed with the capability to go to market with a strong and proven solution, rather than just hoping that it’s the best solution for their business.
What inspired you to come up with the idea for Distribution Central?
I’ve had extensive experience in building distributor models, having created two previous companies before this, one of which is the largest Cisco distributor in the region today.
I noticed a large problem with maintenance attached rates, renewals, and personnel and training and decided to address the problem with Distribution Central.
By putting all my businesses together, I’ve managed to create a end-to-end distribution model that takes care of physical distribution, management of data flow and asset tracking technology. This provides an added value to the overall distribution lifecycle for IT hardware that exists in the market today.
What do you believe are the major business and technological trends driving the success of the Distribution Central business model?
While globalisation and cloud technologies continue to be delivered to the customer, companies today continue to face maintenance model issues and have not been able to leverage added value and a high level of service to achieve their business goals.
As part of creating a successful and increasingly complex business model, our success proves that CIOs need to consider transforming their access to distributors through the channel with reseller level intelligence in order to bring about positive change to take their business to the next level.
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