By Jenalyn Rubio
Computerworld Philippines
April 1, 2008

Forging strategic partnerships with resellers and principal IT vendors and nurturing its employees are the secrets behind the success of MSI-ECS Philippines Inc.—an IT distribution company that has rapidly grown to be one of the country’s biggest and most successful distributors.

What we now know as MSI-ECS began its operations in 1998 as MSI-Digiland, with less than 10 people and almost no place in the already very competitive and saturated IT distribution business in the country. According to company president, Jimmy Go, the competition in the IT distribution business was already tough when the company started. He admits it was hard for a small player like them to penetrate the market, but the challenge was nothing that hard work and perseverance could not overcome.

“When we started with Digiland, we were the smallest country market but we were growing very fast that, after four years, we were able to grow bigger than Indonesia, Malaysia, and Thailand—in the latter years we even grew bigger than Australia,” recalls Go.

Digiland International Ltd. is a Singapore-based company engaged in the promotion and marketing of electronic and IT products around the region.

In 2004, MSI split with Digiland after the latter went through some major changes in terms of business directions and shareholders. “However, we realized that we needed an ally and a partner to grow fast so in 2006 we partnered with ECS,” shares Go.

One of the top three IT providers in Asia Pacific, Singapore-listed ECS Holdings Ltd., is headquartered in Singapore and has branches in Thailand, Malaysia, Indonesia, China, and the Philippines. “The growth has been very good so far. Again, when we started with ECS, we were the smallest country but by the latter part of last year, we have already overtaken Indonesia and we expect to grow further, but of course we want to manage our growth also,” says Go.

Now on its 10th year, MSI-ECS has over 300 employees in its Cebu and Manila offices and an extensive network of over 2000 resellers across the country. Through the years, the company has been able to forge strong partnerships not only with its resellers but also with recognized vendor brands like HP, Oracle, EMC, Samsung, Genius, IBM, Lenovo, Acer, Apple, NEC, Trend Micro, Veritas, APC, and Fortinet, among others.

Growth with IT
As it grew together with the local IT industry, MSI-ECS saw trends come and go and tried its best to keep up with developments. “There have been some convergence in the IT space; like in the vendor side, the big vendors are getting bigger and are buying the small ones; in IT distribution, some of the smaller companies are going because this business is largely about size and, like I said, margins are very small,” explains Go.

“When we started, the pace of IT was fast but it is faster now; the pressure from principals was huge then, but now, it’s even greater. You will also be surprised because people seem to assume that because we deal with computers, the margins are huge but our margin is really only about 2% or even less,” Go says.

According to the MSI president, in the ’80s, computer dealers had better profit margins than appliance dealers, but now it is the other way around. “If you talk to appliance resellers right now, they would always say they make more money on appliance than computer resellers. But take note that the appliance and IT and computer resellers are converging—actually the appliance, computers, and mobile phones are all converging,” he says, adding that his company has to be ready for this trend.

According to Go, even though the company has already earned its place in the market, there will always be challenges, only at a different level compared to the challenges they faced when they were just starting. The challenges right now would be more of about competition on brands and with other IT distributors, how to guarantee your margin, how to make your customer happy, how to shorten your supply chain, and how to be profitable, he elaborates.

Growth through IT
As the competition remains tight and the pressures from vendors and customers grow stronger than ever, MSI-ECS understands there is a need to be very efficient in everything that it does. “We have to manage inventory such that the inventory is less than 30 days, we have to manage our AR (accounts receivable) such that it is less than 45 days. Our (principal) vendors are very strict, they want us to pay on time or before it is due, and they want us to make sure that we hit our quota while maintaining a good inventory level. So, you have to be very efficient—in purchasing, forecasting, managing inventory and AR; you have to be very efficient in managing the whole supply chain as well as in managing your customers and vendors,” Go explains.

To achieve all these, Go says they continue to live by their company slogan—“Great products, great services, great people”—emphasizing the latter because he believes that, at the end of the day, everything boils down to the people. “I think the biggest difference with MSI is we are a very professional organization. I believe the people make the difference—that’s why we value our people, we motivate them, train them, and give them a lot of benefits,” he says.

In order to fully equip its people, MSI-ECS also continuously invests on a robust IT infrastructure to support the needs of its employees. “We always strengthen our infrastructure, we invest on technology and we make sure that we have great products,” says Go. The company president adds that, when it comes to choosing what products to invest on for internal use, they go by the same principles they use in choosing the brands they carry—they have to believe in the product and trust in its vendor.

According to Go, a significant bulk of their budget goes to training of employees, investments on testing equipment to make sure that they carry only the best products, and deployment of robust IT infrastructure internally to make sure the company is in the best position to provide great service. Just recently, the company invested on an Oracle enterprise resource planning system to manage every detail of their business processes. Go says they continuously make such investments to make sure they remain efficient and productive.

“We want to be a leader in this business and be the best in everything that we do—we want to give the best product and the best service to our customers. We want to make our vendors, employees, and shareholders happy,” he adds.

MSI-ECS is also continuously expanding its channel base and, at the moment, is looking at the mobile phone channel, the appliance channel, and other non-traditional channels like supermarkets and bookstores. “I think IT is getting to be very common that it can be sold almost anywhere,” Go says, adding that they are already doing business through non-traditional channels, but only on a small scale.

The company also has a business-to-business order processing system in place, but it has not been successful yet, partly because of the Philippine mentality where people still prefer to haggle, to call, or to interact in person. “I think throughout Asia that is still the attitude; maybe they go to the Web site to get information about products but not very willingly to buy anything. It may take a few more years, three to five maybe, before this changes,” Go says. This does not mean, however, that the company will not invest on the online model as, he says, they are constantly looking at the best avenues to provide better service to their customers.

MSI-ECS has received a good share of awards over the years; among the most recent were from HP for Outstanding Supplies Wholesaler, Outstanding CIP (inkjet printers) Wholesaler, Outstanding ISS Wholesaler (for servers), Outstanding PSG (desktops and notebooks) Wholesaler, and Wholesaler of the Year award. “We’re very happy about the awards that we have been getting but I believe what’s more important is that we are able to grow the market, grow profitably, and serve our customers happily,” Go stresses.

At the end of the day, MSI-ECS’ greatest treasure and the secret to its success are still its people, Go says. “I believe the people make the difference and that’s why we invest on and empower our people. Our product managers and sales people are able to make strategic decisions, they are very professional and responsible and I think that makes for a huge difference between MSI and competitors,” he says.

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