Recruiting Program Puts Cash in Ingram's Pockets

By Richard McCaffery, Staff WriterIngram Micro Inc. isn't waiting for resellers to discover the $77 billion federal, state and local information technology market on their own.The Santa Ana, Calif., distributor has boosted government sales this year by recruiting commercial companies into the public sector.How has the 10-month-old effort worked so far?"It has exceeded our expectations," Shelly Talbott, vice president and general manager of Ingram Micro's government and education division, told Washington Technology. She declined to disclose Ingram's government revenue or the number of commercial companies it has lured into the government market, but said Ingram's sales from companies new to the public sector have grown more than 200 percent this year, largely because of recruitment efforts."We wanted to prove there was potential there," Talbott said.Under the program, Ingram provides companies with bid support, training, product discounts and other services that help make the government market easier to understand. Though the recruitment initiative started last January, Ingram has been actively helping resellers grow their government business since the company started its Partnership America program in 1995.Consider publicly traded En Pointe Technologies Inc. of El Segundo, Calif., a software company and reseller of computer products to Fortune 1000 companies and state and local governments. The 434-employee company started working with Ingram Micro to grow its state and local government business in 1996.Bob Din, En Pointe's chairman and chief executive officer, said the company is now doing just over $100 million in annual sales to state and local governments. En Pointe's public sector business includes contracts with agencies in states such as Georgia, New York, California and Texas. The state and local market accounts for 15 percent of the company's revenue. Din said Ingram's program has given En Pointe a boost."It absolutely has increased our government business," he said. "Ingram has a specialized program that's helped us respond to large [requests for proposals]."Now, En Pointe plans to use its relationship with Ingram Micro to expand into the federal market by late 1999. Din said he expects the company's federal, state and local revenue to reach $200 million by 2000.In addition to Ingram's recruitment initiative, the company announced Nov. 16 an addition to its Partnership America program to further boost government sales. The new program is aimed at helping resellers that do at least 50 percent of their business with the public sector to do a little bit more. It will provide members with perks such as vendor discounts, bid support services, sales leads and even advertising paid for by Ingram Micro.It's Ingram's biggest push yet into the public sector, Talbott said. The program will be launched formally Jan. 1, but Ingram started recruiting members Nov. 23. Nearly 300 manufacturers are sponsoring the program. Key sponsors include 3Com Corp., Cisco Systems Inc., Compaq Computer Corp., IBM Corp., Iomega Corp. and Microsoft Corp.Ingram Micro is the world's largest distributor of computer products and related equipment. It sells more than 190,000 products to more than 115,000 resellers in 120 countries. Over the last four quarters the firm has had sales of $20.9 billion, up from $4 billion in 1993. The 14,000-employee company has hotly pursued the public sector market since 1994.For its new membership program, Ingram is targeting systems integrators, 8(a) companies and other resellers. Talbott expects the program will have 500 members by the end of 1999. The cost is $2,000 annually.Talbott expects the membership program will strengthen Ingram's relationship with integrators at a critical time - just as integrators are looking to better compete by outsourcing many business functions to distributors. "Everyone is looking for ways to take the costs out of the services they're providing," Talbott said.Maryann Hirsch, senior vice president of consulting at Federal Sources Inc., a McLean, Va., research company, agreed. "I think you see a trend toward outsourcing those distributor functions," Hirsch said. "Everybody is looking to get back to their core competencies."What's happened, Talbott said, is that procurement reform has made it easier for companies to sell products to the federal government. This has increased competition and made it harder for integrators to win contracts because the integrators, long used to dealing with complicated procurement processes, have large infrastructure costs that leaner resellers avoided by entering the market after procurement reform."The rumblings started 18 months ago," Talbott said. "That's when we really started telling integrators they were getting beaten at their own game because they had too much infrastructure. In this market, you've got to be really nimble."