Computer Associates subsidiary ACCPAC has bought out its primary Australian/NZ reseller, Smart Business Systems, for an undisclosed amount, effectively clipping Brocker Vendor Services' distribution arm 1World from its distribution chain.
The acquisition of Smart Business Systems is a further blow to Brocker (formerly known as Sealcorp) as it represents a bypass of the distributor which has had some rough months after IBM put its supply agreement under review and Novell severed its relationship completely in August.
While unable to speak at length, Brocker Services CEO Chris Spring, said that "ACCPAC didn't buy Smart Business as a reseller -- they wanted the skills". He added that Sealcorp is "very secure with its position in the market place".
When the then Sealcorp was struck from Novell's supply chain, Spring heralded a new direction for the company in the ASP sector. There are rumours they are still pursuing this line possibly in the hope of securing a deal with ACCPAC to roll out its ASP offering in Australia.
"Nobody likes to lose business," said one industry source. "But they've [Sealcorp] publicly admitted their business must change to retain its edge."
The move has raised concern over the livelihood of mid-tier distributors who cannot add value or services to the product. Spring denies Brocker falls into this category.
"If the second tier is pure distribution, they're actually taking more margin than they're worth," said Paul Dundas, general manager of Blue Planet Online. "The average IT wholesaler is probably working on about 5 per cent margins and on a $50,000 product, that's $250 to pick up a box and move it. That's a very expensive way of doing business."
Meanwhile, ACCPAC stands to buy back a significant chunk of its margin by splitting its profits two ways rather then three and is now rushing down the road to ASP.