Since reviving the distributor, Workgroup`s directors have taken the company from strength o strength. They must be doing something right

IN ITS YOUTH Workgroup led an itinerate life, passed from parent company to parent company, until its directors decided to take their fate into their own hands and restart the company, transforming it into one of the largest software and hardware distributors in SA.

After launching as a private company and the first distributor in SA in 1991, Workgroup was later owned by the EL Bateman group, then taken over by , then sold to Siltek, which went belly-up in 2001.

But MD Doug Woolly recounts how the real turnaround in its fortunes took place that same year, when the then management, of which he was part, decided to "restart" the company.

was one of the original stakeholders, and has since increased its shareholding to 100%.

"We have grown steadily, consistently and significantly in the last seven years: around 400% in revenue terms from R290 million to this year in excess of a R1 billion. In profit terms we`ve grown 89% in just the last six months," says Woolley.

"We`ve achieved far more than we set out to achieve - our initial objective was to achieve about R500 million in turnover, as we thought that would be the cap for a typical software distributor. But today, we`ve positioned ourselves as a knowledge distributor - it`s all about the intellectual property we use to move product through to the customer base," he explains.

What`s interesting is that at the time of the management buyout, which coincided with the bursting of the dot-com bubble, the distribution market was in turmoil.

"When Siltek went bankrupt, the IT market was in a state of flux, which meant that a lot of smaller distributors were able to set up shop and survive when they probably shouldn`t have, while a number of established distributors went out of business. Today, as we`re faced with an economic downturn, you will see a lot of consolidation in the market, and again a lot of the smaller distributors and even one or two of the big guys, will struggle to survive," he predicts.

"Just like in 2001, things could go either way - it`s either going to be chaos or opportunity for a company," says Woolley.

"We`re in a fortunate position, we`re more diversified in our portfolio than most. But am I concerned? Obviously. There`s been no impact on us as yet, touch wood. We`re storming ahead, but we`ve prepared for every eventuality. We`ve got our costs in hand, and we`ve done a lot of forward planning in case of a downturn in business. We`re still investing, and there`s no headcount freeze or anything, but things could change very quickly," he observes.

Woolley points out that, although he doesn`t like to think about it, 75% of his cost base is in staffing, so if it comes to a crunch situation, he knows where he can cut his costs.

"The business is debt-free, and we`re in a very solid position. But we`re also making sure we drive every opportunity we can, while helping our partners to get through their crunches."

"I would say that our biggest risk factor at the moment is clients not meeting their commitments, but it`s the guys who don`t talk to us that we worry about most," he admits.

Woolley is of the opinion that the local distribution industry is at a crossroads. "The next six months will spell out the future of many companies. A number of vendors may suffer, and will have to opt for a different go-to-market strategy," he maintains.

As for its own go-to-market strategy, which it reorganised from a "broad-based" approach to "market-focused" approach just after the management buyout, prompting "exponential growth", it currently operates from six divisions.

In addition to distributing software from Microsoft, , Citrix, CA, Novell, Symantec, McAfee, Business Objects, Borland and VMware, among others, about five years ago it also diversified into representing select hardware brands: EMC and Sun Microsystems.

Finding the right skills is another ever-present challenge, and Woolley bemoans the fact that although Workgroup is continually investing in training up skilled employees - this year it has 15 learnerships, representing 10% of its headcount - vendors continue to poach its staff. "To be honest, we can`t compete on a salary basis with a big multinational," he says.

Woolley`s also committed to promoting from within - all nine of his divisional managers have worked their way up through the ranks.



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