The ups and downs of the last ten years have taken the residents of planet Earth on a rather scary rollercoaster ride. While the downs have been many and intense, starting with the global economic meltdown that began in 2008 and continuing with the insanity that is South African politics in late 2017, they’ve been matched – and sometimes exceeded – by significant technological highlights that have taken the business world and the lives of consumers to places previously unknown.
The last decade saw the rise of smartphones, the cloud, artificial intelligence, machine learning, big data, and other technologies that have made possible things previously considered the domain of science fiction. Who’d have thought we’d someday all be carrying around what would have been considered supercomputers back in the 1990s, in our pockets?
On top of those developments, businesses have been able to build some incredible services: today, people can summon lifts, treat a stranger’s couch as a cheap alternative to a hotel, order food, and make payments anywhere there is internet connectivity, all from their smartphones. These are all revolutionary tech-inspired things we take for granted today, that were inconceivable just ten years ago.
Of course, changing technologies means the expectations, ideas, and needs of customers change alongside them, and any business that isn’t actively adapting to these technological changes faces the risk of having their customer base dry up.
The process of outfitting business with the necessary tools to thrive in this new world has been dubbed “digital transformation”, and it’s a task businesses that want to be relevant now and into the future are busy with today.
Re-aligning the business
Anton Herbst, Tarsus Technology Group’s strategist, says that Tarsus Distribution (TD) came to the realisation back in 2013 that the world it had been operating in, was changing in ways that would ultimately undermine TD’s business model if the company didn’t change course. Therefore, it was decided that something needed to be done to re-align the business with those changes, lest the company fade into obsolescence.
The tech advances of the last ten years have made this shift possible. Microsoft, Oracle, Dell, HP, Lenovo, and other big IT companies have poured billions of dollars into their own digital transformations, leveraging everything from cloud-based storage to artificial intelligence to big data to the dynamic provisioning of cloud-hosted infrastructure to develop a smorgasbord of subscription-based products and services, all deliverable via the internet, thanks to the increased bandwidth of internet connections to businesses and homes and the falling prices thereof.
Microsoft’s Azure is the perfect example of this: it offers Microsoft’s customers – and anyone else who wants to sign up – access to a powerful range of cloud-hosted services. These include servers, storage, compute power, virtual machines, SQL databases, Internet of Things infrastructure, security services, productivity software, and much more.
End users pay fees based on their usage or on a monthly basis (depending on the service). The true beauty of this new reality lay in the fact that end-users no longer needed to build or support their own datacentres, a dramatic cost-saving on hardware, power, air conditioning, floor space, and IT staff. The savings on offer, and the thousands of businesses that flocked to Azure, drove ever-more big-name companies to develop their own set of services based on this new model.
And the savings on offer didn’t just come from not needing to pay for IT equipment and its associated support expenses: thanks to the cloud, end users could now provision what they need, when they need it, and all they had to provide is the hardware and internet connectivity with which to access their chosen services. Capex thus became opex, as IT infrastructure was no longer a capital outlay and instead became part of the company’s monthly running costs.
As for the companies that provide those services, they set themselves up to earn annuity revenue in perpetuity, thereby ensuring their future survival and making for themselves fantastic new opportunities to encourage and sustain growth; it’s a scenario in which everybody wins.
Well, not everybody. Companies who relied on more traditional business models to survive found themselves on the back foot as these new service providers rose to prominence. And as that is exactly where Tarsus Distribution found itself back in 2013, a rethink was in order for the whole Group.
It’s easy to think “Digital Transformation” at TTG simply meant the company would convert existing analogue systems into digital ones, and replace ledgers with spreadsheets, filing cabinets with cloud-based storage, manual processes with automated ones, but through its soul-searching and deep examination of its then-current goals, ambitions, processes, and structure, Tarsus came to the conclusion far more than just digitisation was going to be required.
A changing world means changing customer needs, and the Tarsus Technology Group’s management team realised that to make the right steps towards a relevant and meaningful digital transformation required a deep understanding of those new customer needs. It’s from this insight that Tarsus’s new mantra of becoming more “customer-centric” was born.
The TTG DT story, as told by Anton Herbst
“This digital transformation is all about us moving from providing products, to providing services. That’s the journey that we’re on. The fundamental concept underlying that is that we’re moving from a product-centric world, to a customer-centric world”, says Herbst.
“I can’t design a service, if I don’t understand what problems the customer is trying to solve, or the job he’s trying to do. That’s what confronted us in 2012, 2011, even before, when our main competitive advantage was that we carried the world’s best brands. It was our go-to-market, what we focused on, and we even had a company that was organised in a very hierarchical structure around specific product-sets.
All the hardware
“So Tarsus Distribution (then Tarsus Technologies), at the time, did hardware; all the hardware we could think of – printers, PCs, servers, storage, networking, that’s what Tarsus did. ACT did consumables, accessories, Platinum Micro did components, and Printacom did printers. And that’s where we came from, we were all organised around product categories, and our strategy was to have the world’s best brands in each of those categories.
“So in the PC category we had HP, Lenovo, Dell, Acer, and ASUS – the top five. Printers we had HP, Samsung, OKI; in consumables we always made sure we covered 95% of the printers in the market through the brands that we carried in consumables. We had HP, Brother, Lexmark, Canon.
“Accessories was a bit more challenging, because there are so many sub-categories. But we tried to carry the best brands in bags, so we had Targus. While that “best” is debatable, our strategy was also about positioning – offering good, better, best. So it’s either the top brands from a market share perspective, or a good-better-best approach.
“That model worked well for a long time, because those brands used either a sole – or near-sole – distributor model. But the market matured, and the products commoditised, which meant more and more distributors entered the market with the same product set.
“In those times, the product was more important than the customer, but when the market commoditised, that reversed. And as our price competitiveness dropped as more disti’s entered the market with a similar product set to ours, we realised that we needed to shift our focus from the product, to the customer.
“So we decided to move to a customer-centric world, where we placed less emphasis on the product, far more emphasis on the customer, in the hope that it would bring our price advantage back. Our world was being driven down, because as the products commoditised, margins dropped.
“Moving to a customer-centric world is a glib statement that’s easy to say, but actually very tough to implement, especially across an organisation as big as ours. We realised that to truly go ahead with it, we would have to provide a unified supply chain. Under the old model, we couldn’t be efficient, because all of our branches around the country had their own suppliers, with their own accounts, and different views of the customer – hardly unified or optimised at all.
“Pulling this off would require us to optimise the supply chain, which is why we built this building – Tarsus Technology Group Headquarters in Buccleuch, Johannesburg, and the massive warehouse that’s attached to it.
“We said, for the unified supply chain let’s bring all of the companies together; that was step one. Step two was optimising the supply chain, and that’s where we put in SCALE – the warehouse management system that has improved our efficiency dramatically. Step three was to improve the customer experience, which has been a major challenge as we’d not focused on it before, and we’re still on that journey.
“We’ve been trying to answer the question of ‘Who is the customer?’, because in our world, that has always been the reseller. But in this
new world, that’s not who has the power – the power belongs to the end user. And it’s that end-user’s experience that we’re trying to build and improve, but we couldn’t even have attempted that without the proper supply chain in place. We have that supply chain now.
“But what happened was that product was being transitioned to “as a service”, and we had to figure out how to move from a transaction-based, product-centric model, to a subscription- or consumption-based model.
“For example, we looked at Microsoft’s boxed products and moved from that to Office 365, a digital-only, subscription-based product that offers the exact same software, but delivered, managed and maintained via the internet. We call this ESD – Electronic Software Delivery.
“Once a customer bought Office 365 online, the next time we’d see him or her was when it was time to upgrade their PC. We’d moved from a perpetual licensing model, which dies with the PC, to one that doesn’t as it’s device-independent, and associated with the customer’s account rather than their hardware. And this is a digital-only journey.
“On our systems side, we’d been digitising our ERP and CRM systems for the purposes of pipeline management, but we put those in mostly for ourselves. That didn’t mean anything to the customer. They don’t care if they’re referred to as a prospect or a lead, they just want to get their desired product or service.
“The world we’ve come from, the one in which tools like ERP and CRM have been important, is what’s referred to as ‘systems of record’, which records transactions. The big dogs here are companies like SAP, Oracle, Microsoft. The new world is one of ‘systems of engagement’, and the kings here are the Googles, Amazons, Netflixes, and Facebooks of the world.
“Tarsus is in the process of moving from systems of record, to systems of engagement, to systems of intelligence. We are using digitisation and automation to take paper out of the business and optimise every move we make by looking at our data. We’re applying new technologies like machine learning and artificial intelligence to that data, and using those insights to make informed decisions. Optimisation is never truly finished, either – there are many ways to improve on it; we’re always learning,” Herbst says.