When Shoden was conceived, the Persetel folk familiar with Hitachi`s product were ready to start the company on their own – hence the Shoden brand rather than the parent`s name.
Is Hitachi giving up?
Shoden`s MD Fanie van Rensburg explains the situation at the time: “There was a concern in most people`s minds that if a large company with a well-known strategy that had been around for many years had given up the Hitachi brand, under the presumption that Hitachi will stop manufacturing IT products altogether, why would they want to invest in more Hitachi product through another supplier?”
Added to this was the concern that corporate clients would not want to deal with a new kid on the block – especially for high-end data centre equipment. It was not an unfounded fear that a new company could open its doors, and close them just as quickly.
“So Hitachi had to make the commitment – and this had to go to the board of Hitachi – to give the customer the security that they are dealing with Hitachi, almost directly, and that Hitachi is committed in the long term in South Africa.”
With the security of a strong brand behind it comes responsibility. Shoden Data Systems made a commitment to support all Hitachi product in South Africa, whether it was sold by Shoden or not.
“Hitachi has a view that every product they manufacture, wherever it goes in the world, is a child and they will look after that child until it`s matured.”
Van Rensburg says Shoden made the commitment to Hitachi before the parent took a stake in the company. “I think it was one of the reasons they said we were the right people to go into the market.”
Less is more
The service is built into the price of the box. “Services is not a revenue generator – it`s included in the price,” says Van Rensburg, who earns 98 percent of his revenue on the sale price of the storage systems.
Selling about 20 boxes a year is hardly volume sales – they`re certainly not selling printers. But it`s enough to claim about R100 million a year from its 32 people, of whom about a third are sales, a third support, and a third general staff.
Not being a wholly owned subsidiary has given Shoden a little more room for its product offering, and it also cross-sells
While the local brand has achieved good growth over the last three years, Van Rensburg says it hasn`t all been roses. One thorn in the company`s side has been black empowerment, and it has had to go back to the drawing board in terms of finding a black equity partner. The company deals directly with its customers, which means it hasn`t had much room to leverage black partnerships. It is going to start shipping in a lower-end product, which it will ship through the channel.
“We`re going to start to use that as an opportunity to develop our black economic empowerment model.” Once a black partner is established, Shoden hopes to grow that partner to be able to handle the rest of the Hitachi product set.
It`s a case of once bitten, twice shy. Hitachi was in the process of transferring skills to a black reseller last year, when the company suddenly declared it was bankrupt. After going back to the drawing board, the next attempt at black economic empowerment [BEE] will be to establish and build a partner from the ground up.
“It`s an exercise we want to go through very cautiously with the intent to make sure we do the right thing,” he says. “We want to establish a BEE partner, make sure we do the transfer of skills; and if we do that carefully, and make sure we do it in a methodical way, we should be successful.”
Secondly, Shoden does not hire on race. “We will employ who we need in terms of their skill. And it has happened that we have employed people of colour, so we`re not a pure white company. We`re happy with that because we have the right skills on board,” says Van Rensburg, who adds that Shoden is involved in various social programmes and upliftment of scholars.
Through the slump
Shoden also had a tough time thanks to the economic climate and the IT slump of the last two years, which coincided with its formative years. “I just think the IT industry in South Africa has been a tough environment in general. And we have found that, with the currency volatility, customers have delayed their decision to purchase IT equipment.”
Despite this, Van Rensburg is upbeat about the coming year. He feels that the extended sales cycles over the last year helped flush the data centre of the overspend in the Y2K period.
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