Axon eyes future with Quality Direct

With Axon Computertime's e-commerce division, Quality Direct, now offering the sixth release of its site, managing director Matt Kenealy talks about the revamp, the competition and about how he plans to double annual online sales to $23 million.

As IT supplier Axon Computertime beds in version 5.5 of its e-commerce application Quality Direct, it is also looking to make Quality Direct the core of its e-business strategy.

Having switched platforms from IBM to Microsoft last year, Axon has moved beyond simply using the Quality Direct site to allow its customers to procure IT supplies. The software components underpinning the application have been spun off into a suite called SupplyNet, and a services division can help customers make the move to e-business themselves.

Axon managing director Matt Kenealy discussed the company's recent activities with IDGNet's Russell Brown, beginning with an explanation of what the company was looking for in the latest upgrade to Quality Direct:

There were some key things in there, including wanting to extend the capability to hook into other people's businesses and be ready for XML and those sorts of things. A lot of background things have been enhanced but in terms of the front end, we're making it look a bit more like a desktop application rather than somebody else's Web site.

What's the rationale of that last step?

Making it easier to use, in line with customer feedback. We're integrating it a little more with the things that Axon does. There's a lot of extra information too on the Axon site that ties in with Quality Direct. For example from Quality Direct you can get to Axon and look at papers on e-commerce that we've done.

On the business side we've also been explaining to people that now we've got another year's history with Quality Direct then we can also start to talk about some of the numbers. Customers always want to know whether these things actually do anything for the business. So we say, look, we'll put our figures out there, in white papers and presentations.

The message particularly is that if people are looking at doing things like Quality Direct themselves, if they stop at the brochure stage it won't do anything for their business. They won't start to make money until they start to transact. That doesn't mean just selling things on the Web, it actually means exchanging information. They won't get real benefits until they start to integrate it with their business processes.

So they can map the information we provide onto their businesses and see whether it makes sense for them. Our argument is you should only be doing this if actually makes a huge impact on your business. It shouldn't be long-term, strategic, maybe-we'll-make-money-in-three-years, it has to address current business opportunities and issues.

Does that distinguish it from a lot of other current Internet opportunities, where people are being asked to look to the horizon?

You still have to have a long-term strategy but our message is that you don't have to be scared of doing it because there's no way of making a return. You should look at where you're going to get 80% of the benefit from and hone in on those things and develop them.

Development cycles have to be quick - which is different from the old way. We're hitting it on two fronts. One's saying to our customers, if you're using Quality Direct it's now bigger and better.

On the other side we're going to the customers we provide services for and saying here's an example and here's what it's done, now let's translate that into your business and see whether you're doing e-procurement. Which we're encouraging people to do because it's usually an early win for them, as long as they get their processes right. It's not about what the Web site looks like.

We're trying to keep the two things separate. Quality Direct is really important to our customers as an e-procurement tool. It's also important as a business proposition for them to take their business and say, look, we could be doing something like that and for Axon to help them do it.

Did your feedback from customers indicate a desire for something more like a productivity app than a Web site?

It wasn't so much that they said it has to look like Microsoft Word or SAP, it was more that they said there are some parts that are a little difficult to navigate. They wanted searches right up at the front and easier ways of searching. They wanted to be able to see an overall menu structure while they were navigating through it. They wanted multiple company Favourites so it was easier to manage them. People are getting used to using things like the concept of Favourites in an application sense.

What do you make available via Quality Direct as regards procurement?

The IT stuff is there, obviously. We can't make any announcements right now, but we have an increasing number of customers using it regularly and they're asking us to expand.

Expand into what? Office supplies? Liquor?

We haven't gone quite as far as food consumables. We're not about to put coffee on there. But certainly internally we have discussed these things and ultimately that's where it has the potential to go.

In some senses the portal idea has limits, because people in the end will go to wherever they have the most satisfactory buying experience. It may be price, it may be information, whatever. But as you move to the point where individuals in an organisation are purchasing through this type of system then it's logical for them to consider whether there's some advantage to them in buying their coffee supplies, which they have to buy every week, with one click.

Certainly with office supplies and office furniture. and potentially things like travel. the prospect is there, but there are a number of issues in doing that. One is establishing what really makes sense to the customer and we're working with customers on that. And the other thing is when you talk to people who provide those things, they're in varying states of readiness to integrate with this sort of thing.

In some cases it's a matter of commercial readiness - hey, we don't know how our industry's really going to work so we don't want to commit ourselves to a new way of doing things and new margin structures. And the other case is people who are dead keen to do this, but haven't got their own businesses in line such that they can put themselves into a system like ours and guarantee the quality of the information and so forth.

We're talking to a range of other organisations which would help to provide through this pipeline things that our customers want to buy. We believe we can offer them a faster way to market.

Taking the case of travel as an example, what are the pros and cons of you finding someone who wants to do it and who you can bring online - as opposed to doing it with someone like who are up and running and sure of their business model?

I guess there are a couple of answers to that. In some cases there may be advantages in them being exclusive to a particular place. In other cases, there are ways to reach different markets - this can give someone access to a different set of customers. In the end, people will buy where, overall, they're getting the best treatment.

I think the other thing is that while there are pure dot-com players, the majority of business is not going to be pure dot-com. This is another way of satisfying a portion of the customers all the time and the majority of the customers a portion of the time.

So we're simply offering a new business opportunity to some of those people. That's at the bottom end. At the high end this may be their clear strategy to address this part of the market.

How much of a role is your alliance with Microsoft going to play in the way the way you work with potential partners?

I think it will be significant, because Microsoft is certainly pushing this very hard. We're working with them to take on new opportunities. Having pulled the key components of what we've done with Quality Direct into a suite called SupplyNet, we'll be looking to offer that as a toolset to customers to do some of the things we've done. Not everybody wants to work with Microsoft and obviously we have the capability to work with other tools, but Microsoft does have a strong position in this area.

Who's the competition for Quality Direct?

In terms of what we're doing with Quality Direct, where we're providing e-commerce services to others, we're competing with anybody else who sells IT equipment into our market.

It can sound a bit arrogant to say you don't have competition because you always do, but I don't see anybody else in New Zealand who has an action research centre like Quality Direct, who has a focused and dedicated team around what we call e-formation. That's all of that knowledge integration to do with all the things that make up e-commerce. And that has such a strong infrastructure with expertise underneath that.

I don't see anybody who has either got that or is building that. There are people who a very strong in Web design. And some of them are moving over to the database side; saying we've got to go from the Web to e-commerce. You've got people that are very strong in the database side saying, right, we'll become e-commerce people. There are people who are in a variety other businesses, saying, well, whatever we're doing we have to call it e-business, because that's what our customers want to see it as. But I don't see anybody else with that full range of things.

When we began talking in November about where we were looking to expand and acquire, it was in that e-formation area. Adding a few skills and basically just bulking up. By the time we've completed that process I think we'll not only have a three-pronged attack that other people don't have but a very large team to do it.

In November you also talked about raising new capital by various means. Has there been progress on that?

There's been a lot of progress. I still can't put dates on that, and from the outside it's easy to think that four or five months have passed and nothing's happened, but we are progressing very well there. We'll be achieving our objectives this year on that.