Channel Surfing

FRAMINGHAM (07/06/2000) - Company: SBM (a subsidiary of Gates/Arrow Co.) location: Duluth, Georgiaa. PURPOSE: Order inventory and account status tracking EMPLOYEES: 120 REVENUES: Privately held EXTRANET SITE: VAR Central site staff: 4 CUSTOMERS: 350 resellers of Hewlett-Packard Co. 9000 products JUDGE'S COMMENT: "For a business whose success depends on partner success, this is a sharp site that offers great value to customers."

When a purchasing agent from premier systems integrator, a computer reseller in Charlotte, North Carolina, needs to buy a dozen Hewlett-Packard 9000 servers for a customer, he logs on to VAR Central's interactive website. No longer does the agent have to call an 800 number and then wait in the phone queue only to find that a service rep will need to call back with the appropriate order information. n Premier Systems Integrators is one of about 350 resellers doing business more efficiently thanks to VAR Central, an extranet devoted to resellers of HP server products that SBM, a distributor in Duluth, Georgia, offers. VAR Central and the features it provides are prime examples of how selling goods and services through a computer-reseller channel has changed in recent years. No longer can a distributor be a nameless, faceless warehouse, providing products on demand to its resellers. In today's interactive world of rampant competition, distributors must work hard to keep their resellers loyal.

SBM has been able to do that by developing an interactive website that not only allows resellers to check on the status of their orders but functions as a virtual back office for them as well.

VAR Central, which debuted in February 1998, was quite a departure for SBM, which has distributed HP products since 1978. During the past 20 years, many processes--such as requests for duplicate invoices and payment inquiries--were handled over the phone, while return merchandise authorizations were faxed. SBM president Eric Thornton and his marketing staff had come to realize that communicating with its resellers by phone and fax was no longer working in the fast-paced world of the Internet. Because of the high volume of phone calls, "it could take several hours for us to get back to one of our resellers," Thornton notes.

The site's major objective was to provide as much information as possible to its resellers, 24 hours a day, seven days a week. Currently, resellers' sales, accounting and executive staff can access a host of account- and product-related information that previously required the intervention of an SBM service representative.

The site has also streamlined the work of the staff at SBM's headquarters, something that the site's developers didn't anticipate. "We didn't realize the degree of efficiency they would enjoy," Thornton says. In 1998, the first year VAR Central was available, "we essentially doubled our revenue without adding additional employees," he says. Employees are no longer barraged by phone calls that often required them to track down information. SBM's inside sales staffers now spend more time configuring new system orders and less time answering questions about order status. In addition, SBM's field staff can access customer order and account information without calling a sales representative.

Thornton says the site also has allowed the company's resellers to change their business models and become more efficient. Soon after the site was built, resellers quickly figured out that if they printed their invoices from the Internet, they could bill customers sooner and thus collect payment sooner. And that change in the resellers' business model provided SBM with another unexpected benefit--the ability to receive payment faster from its resellers.

CUSTOMER BENEFITS Under the old system, determining the status of an order could take hours, says Lynn Merignac, purchasing manager of Premier Systems Integrators. "Sometimes you were searching for an order that somebody entered incorrectly. But this new system offers so many different ways to search that we can always find what we're looking for," she says.

Each morning, Premier purchasing agents log onto the VAR Central website and view orders that are in progress or have been completed. If necessary, agents can sort orders by purchase order number, by shipping location or by date. The site also provides information on everything being ordered, including part numbers, cost, cost of freight and the freight carrier being used.

"The biggest benefits to the sales staff are being able to track orders, check serial numbers on shipped products and check stock," says Holly Dexter, a technical sales support coordinator at Premier. In addition, the site has a variety of searchable databases that allow resellers' purchasing agents to track invoices and orders and search inventory for availability--in essence, they can follow an order from the moment it's been placed to the time it's been shipped.

The benefits of the automated system extend beyond purchasing. VAR Central offers a host of sales tools that can aid the salespeople who are working for resellers. "Salespeople can see where their orders are minute by minute instead of having to call us for that information," Merignac notes. Salespeople can use the inventory-status feature to determine how many of a particular product are in stock, which reduces the likelihood of encountering depleted inventory, Dexter says. The system also provides salespeople with a list of available training courses and online tests, as well as a roster of technical capabilities other site users have. This feature lets users post their technical qualifications and certifications. Other users can then access that information when looking for partners to team up with on deals that require additional qualifications.

SBM also gives some of its major customers access to a portion of VAR Central, called VIP Central. That's where qualified customers can search the product database and track their orders. Customers, however, only have access to information that resellers designate. For example, customers can't see the price a reseller pays SBM for products.

By allowing its resellers' customers access to some portions of the system, SBM can better retain its resellers, says Joe Burke, SBM's vice president of sales.

"Resellers choose whether to do business with SBM, and having these kinds of capabilities ties the reseller more closely to us."

TECHNICAL SPECS SBM made sure that resellers would find VAR Central useful by getting their input on its development. Analysts created a prototype from the customer suggestions collected by SBM's field sales staff. Once the site was up and running, SBM Webmaster Carole Mazzei signed on several resellers, including Premier Systems Integrators, as beta testers, to get their feedback on the nascent site. "They had the right attitude and really wanted honest feedback," Merignac recalls.

For about six months, SBM worked closely with OneWeb Systems, an Internet development company in Atlanta, to determine the functional requirements and to make sure the site would work as SBM had envisioned. Part of the research involved surveying successful websites, including that of previous 50/50 winner Cisco Systems, which is widely regarded as one of the best engineered sites on the Web.

But Web design and functionality were the least of the hurdles that SBM had to clear. After 20 years in business, the company had a host of legacy equipment that OneWeb Systems had to incorporate into the site, central to which was its HP 9000 server. That server was a real challenge to incorporate into a Web-based environment, says Chip Dukes, CTO of OneWeb Systems.

"We had to take a legacy system that was not truly prepared for Internet activity and make it so," Dukes says. What the Internet development company used as the system's backbone was OneWeb Advantage, an application development environment that's managed through a Web server. A half-dozen Unix boxes, a smattering of Windows NT, XML, HTML, Java and a series of SQL Server databases were also part of the system.

The proprietary nature of the information on VAR Central makes security a top priority. To prevent unauthorized users from viewing source code or making changes to the site, OneWeb Systems designed the system not only to verify whether a user is allowed to enter a particular area but also to make sure that the information users enter is correct.

Like many 50/50 winners, SBM is not content to rest on its laurels. Later this year, VAR Central will extend its functionality into HP's new Channel 2000 initiative. The goal of Channel 2000 is to provide its entire supply chain with as much information as possible on its products and services. In conjunction with that goal, OneWeb Systems and SBM analysts will use RosettaNet standards and protocols to transmit information about SBM's order status from HP.

"That's our ultimate vision--to provide a single source of information to an end-user customer on anything that resides at the reseller level, the distributor level and the vendor level," SBM's Thornton says.

Based in Potomac, Maryland, freelance writer Karen D. Schwartz can be reached at

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