Tarsus is redefining tech distribution industry

There is nothing that trumps the ease-of-doing-business in an “overcrowded” and “hyper-competitive” technology distribution industry such as the one in South Africa, which is characterised by price wars.

That’s the word of Miles Crisp, the chief executive officer of Tarsus Technology Group (Tarsus), formerly known as MB Technologies – which delisted on the JSE in 2002 when a management consortium paid more than half a billion rand to buy out minorities.

Crisp says Tarsus has not discounted winning market share.

“If you measure performance in terms of rand value, you are in an industry where costs of items are coming down. So just to stay still you have to sell more stuff. We are very happy with our market share, particularly with our main business,” Crisp told TechFinancials.co.za in an exclusive interview at the company’s new glitzy office park in Waterfall Commercial District in the north of Johannesburg.

“We are eager to embark on market share targets without sacrificing price,” explained Crisp.

“This is not absolutely going to be done on price basis. It has to be done on basis that we are easier to deal with. That’s our focus on ease-of-doing-business with us.”

Crisp said such a move comes with empowering Tarsus employees to push decision-making capability closer to the customer.

He says this entails installing proper systems, information, data and flexible reporting lines, which results “hopefully” in improved ease of doing business.

Clearly, Tarsus isn’t taking part in a price war, but is targeting customers from rivals, including Mustek, Rectron, EOH and Pinnacle Africa.

Tarsus’ focus on ease-of-doing-business comes as competition intensifies in the technology distribution market, and as consumers shift from traditional technology solutions such as personal computers to smartphones and tablets.

Tarsus learns to be flexible

It has been three years since the company – owned by Investec – started to evolve from being product-centric to focusing on supply chain optimization and services and solutions. It also places the customer at the heart of everything.

“The business is in transition. It’s not finished yet. I don’t  think we will be finished because the market keeps on being in transition,” says Anton Herbst, the CEO of Tarsus Distribution. He is also tasked with driving Tarsus’ strategy.

Tarsus has 30 years in the IT distribution industry.

Surviving for so long is an achievement. Many rivals went under during the dotcom bubble and more recently others are embroiled in a price war.

Herbst believes that the experienced gained over three decades has prepared Tarsus for the future.

“The overriding view is that if you don’t have the cash flow of the legacy business, it would be difficult,” says Herbst.

Luckily Tarsus still relies – heavily for cash flows and revenues – on its legacy business, Tarsus Supply Chain.

However, the heritage business brings with it an amount of inflexibility.

“Over the 30 years, we built systems, processes, people and various skills and competencies,” says Crisp.

 

“So, it’s like a human being that’s driving a right-hand car and you get on a left-hand drive car, and the lane is on the other side.

 

“So, the operations are the same, but you’ve got to learn to do things differently.

 

“Our challenge is to run both (traditional channel distribution business and new business that provides far greater mix of services) and make sure is efficient as possible.”

As part of its strategy to move into service-driven solutions, Tarsus wants to drive skills development in the industry by bringing in the youth into the tech distribution space and helping to modernise its staff demographics.

The company has plans to develop a self-funding academy. “We taking responsibility now for building skills, not only inside our own company, but in the industry as a whole. It has to be in partnership with resellers and in some instances with vendors,” explained Crisp.

Tarsus has also made a few acquisitions as part of its growth strategy and to bring additional capabilities into the business.

Last year in May, Tarsus acquired a majority stake in Cloud On Demand for an undisclosed amount. It also bought JSE-listed SecureData for R85 million and then delisted the firm from the stock exchange. SecureData is enabling the firm to diversify its solutions into security.

While this points to Tarsus growing its EBITDA by acquisitions, Crisp said the company wants to grow its EBITDA through a combination of things.

“We are satisfied that our acquisitions for now are complete. We still need some more depth around the mobility space, maybe some action in that area. Generally speaking, we are looking at building for a period, just settling down and building.

“If you look at EBITDA from our shareholders, it is going to come out of efficiency, automation, changing in the roles of personnel.”

To grow with its vendors such as Dell

Herbst readily admits that Tarsus is betting on customisation and scale to grow the business.

“The idea would be to maintain our scale and make it efficient and grow our customisation category,” says Herbst.

Asked what the new management has achieved so far, Crisp says: “We have laid the foundation for readiness for change in the business. So, for example, our ability to bring diverse products has improved immensely.”

The company is also banking on providing its customers with new product sets.

“There will be new products sets. There is going to be a little shake-up in terms of the distribution landscape,” Crisps declares.

“A lot of excitement is coming from our vendors. Take for example a company like Dell, historically built personal computers, and now diversifying into services like storage and networking space.

“I think what you will see coming from us is a lot of growth with our vendors, a lot of capability to help them with their own diversification. We do expect great things to deliver our services to the channel.”

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