Morse reappraises value of IT hardware, says chief exec


Morse reappraises value of IT hardware, says chief exec

Microscope contributor

As the margin has decreased over the years resellers have become quite snotty about selling hardware even though it is an integral part of a solution, and the term 'box-shifter' has become common parlance to describe the supplier of yesteryear.

So it is with some surprise that Morse - one of those guilty of downgrading the importance of hardware after developing services sales in the late 1990s - is no longer publicly ashamed to sell kit, as part of a solution or otherwise.

When Mike Phillips, chief executive at the technology business was considering joining the firm last summer, he read the 2007 Annual Report with interest but did not find any reference to hardware before page 90.

"We talked about the One Morse approach and how we are a consultancy firm, a professional services firm. The one question I had was how much hardware do we sell?"

The answer is that it accounts for around 50% of group revenues.

He asked Morse non-exec chairman Kevin Loosemore why "we only sell hardware as part of a solution", when around 93% of sales in Ireland are based on hardware and 70% in the UK.

The company has put a renewed focus on selling hardware, he said, "We don't say now that we only sell hardware as part of a solution, we talk about our three infrastructure services and technology businesses separately."

As part of this "back to basics" strategy across the group, Morse last year killed off the One Morse approach set up in 2007 that integrated CSTIM, Diagonal and Morse services into one portfolio. Those brands have also resurfaced.

One of the criticisms levelled at Morse is the disparate nature of its services acquisitions - security and an investment management consultancy (IMC) - that made it near impossible for sales staff to cross-sell.

"The nature of the businesses were very distinct so we separated them out, they have their own sales teams who concentrate on the specific areas, they do what they are good at," added Phillips.

Part of the IMC operation has since been sold and other elements are under review.

Rather ironically, while Morse looks to bring its product business to the fore again, one-time arch rival Computacenter is forecasting that the contributions from services will for the first time at group level exceed product margin in 2009.

However Mike Norris, chief executive at Computacenter, said the product businesses remained part of the company DNA and it still wants to "win every piece of product business we can".

That said, he reckoned very few customers buy product only without some services element and over time he expected "that to diminish".

Peter Stroud, Kelway director of solutions and services - previously managing director at Panacea Services before it was bought by hardware reseller last month - agreed there was a "real snobbery about selling hardware".

He added, "There is money to be made in hardware and services and as a reseller you want both revenue streams."

Resellers would do well to learn from the mistakes made by Morse and Fujitsu Services earlier this decade, going too far down the integration route too quickly and it will be a long walk back into product sales after you realise the trick you are missing.

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