Find Your Wireless Computing Niche

I recently had a conversation with a VAR who told me that sales opportunities in the warehouse/distribution center (DC) market were gone. “There’s no money for VARs,” were his exact words. Being skeptical, I reached out to a few other VARs to seek their opinions. Of course, the common response was, “Of course there are opportunities; you just need to know where to look.” One VAR, West Technical Resources, has found a fairly unique niche in the warehouse/DC market. There are two primary sales opportunities the VAR has uncovered. The first is replacing old DOS-based handhelds used in the warehouses with new Linux-based devices (yes, Linux). The second opportunity is creating solutions which replace outdated order entry devices (and software running on the devices) being used by the sales force in the field. Because of the niche aspect of West Technical’s solutions, the VAR is clearly differentiated from its competition. As a result, Paul West, owner of the VAR, expects 40% revenue growth in 2009. But to get a full understanding of West’s solutions and the real opportunity, a closer look is needed.

Sell Linux-Based Wireless Mobile Computers
Listening to the description West gives of many DCs out there, it’s clear that this is a market that has been slow to adopt new technology. Indeed, West says most of his prospects still use mainframes and DOS-based (an early operating system limited in processing capabilities) handhelds. The handhelds run terminal emulation software that allows the devices to act as wireless terminals of the mainframe (think of it as a remote control of the mainframe). When these warehouses put in their original DOS-based systems, it was most likely one of the largest capital investments they made other than starting their business. Therefore, they’ve been slow to upgrade. But what happens when that old equipment fails?

“The problem today’s warehouses and DCs face is no one manufactures DOS-based handhelds,” says West. “Therefore, customers are forced to continue to use the old equipment and pay for costly repairs when needed or buy new equipment when the old dies off.” Here’s where one of West’s differentiators comes into play. Warehouses could purchase new Windows-based handhelds, but for the sake of just running terminal emulation software, West says in many cases Windows-based handhelds are overkill. “Why pay for features and processing power that isn’t necessary?” he asks potential customers. Rather, West recommends AML Linux-based handhelds (see sidebar). The difference? Linux is an open source (i.e. free) platform requiring less processing power than Windows-based devices. Therefore, the cost of the AML handhelds is 20% less than the cost of Windows-based handhelds, making the purchasing decision a lot easier for DCs.

If you’re going to take a shot at such solutions, West recommends you have a strong understanding of networking specific to the AS/400 (now the IBM System i), UNIX servers, and mainframes. All are commonly used by DCs. Such knowledge can be gained by attending any of the numerous training courses available (including courses from IBM).

Added Supply Chain Efficiencies Help Win Sales
West says many distribution sales forces out in the field at customer sites (e.g. supermarkets) are using old Telxon (taken over by Symbol, now Motorola, in 2000) order entry devices. This type of handheld terminal relies on acoustic couplers (sound signals sent through a phone) to transmit data to the DC. As you can imagine, relying on 10- to 20-year-old technology can be a gamble. Indeed, West says all of his customers can relate to the pain of spending 3 hours working up a $15,000 sales order and then having the device fail in some way and lose the data.

“Not only are these Telxon units failing and unreliable, they haven’t been made in years,” says West. Hardware upgrades are one opportunity, but every VAR knows better margins are in software. This second opportunity is where West Technical sees the most potential. “They also have software written in a proprietary language. Therefore, the ability to make changes to the software to meet today’s business requirements doesn’t exist.” In short, many distributors are stuck with failing hardware and software that they can’t customize. Until, that is, they meet West and his team.

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West Technical’s goal is to install new handheld mobile computers (often Windows-based for this application) and create software on the handhelds that replicates and improves the software the DC currently uses. Specifically, West requests a customer’s existing Telxon handheld and any documentation for the software currently being used. With those two items, West’s programming team can learn what the software does and how the input screens look.

The programming team, led by co-owner Marty Roberson, then uses modern programming languages (often C++ or VB.NET) to write an application for the new handhelds that mimics the look and functionality of the old system. This process usually takes one week. Once the customer is satisfied that the new system matches the old, West Technical asks the customer what they want tweaked, fixed, improved, added, or deleted. “Even though these tweaks are added late in the programming stage, this is what distributors get most excited about,” says West. “To have functionality that’s been desired for 20 years is a compelling reason to buy a new solution.”

For example, an often-sought enhancement is to add data entry fields to the software being used during the sales order entry process. Many of the old software applications written for the Telxon devices could have seven-digit quantity fields. “How many times does a supermarket place a million unit order?” chuckles West. “Our tweaked version of the software makes quantity a three-digit field, freeing up space on the screen for something else the distributor would like to include."

Another attractive addition to the software can be proof-of-delivery functionality. West Technical has one customer, a window manufacturer, that was having shrink problems. The manufacturer was delivering windows to construction sites and not receiving any receipt of delivery. The windows would sit on the construction sites until they were needed or stolen. In the latter case, the window manufacturer was receiving calls informing it that it didn’t ship enough windows. With an electronic proof-of-delivery system, the window manufacturer now has electronic records of dates, times, and quantities of inventory being received on construction sites.

Who’s Buying Wireless Handheld Solutions?
For both the warehouse terminal emulation hardware sales and the sales order entry applications, West says the person making the purchasing decision varies. In fact, West Technical has customers where the warehouse manager makes the decision and others where a VP makes the decision. The VAR reveals that his pitch does differ depending on the title. “If they’re carrying the title of a manager or director, we talk more about the functionality in our solutions,” he says. “If we’re talking to a VP, we talk numbers, like how long the project will take and how much it will cost. In my experience, if the decision maker is a director or manager, they don’t really care how much the solution costs, they just want to get a job done.

”While that might sound like a simple formula, finding new customers isn’t easy. West doesn’t rely much on direct mail or other traditional forms of marketing. Since, he says, you never know who the right person is, he recommends simple tactics such as driving around the back of your local supermarkets and talking to the guys there. “The local egg delivery driver will get you closer to a sale than a direct mail piece,” West adds. The VAR continues by saying that once you are talking to the right person, expect an average sales cycle of one year.

Luckily, because of the long sales cycle, West says he had enough work in his funnel prior to the economy taking its turn to account for his 40% growth in 2009. What’s great news is that once West Technical performs these implementations, other opportunities are presenting themselves. While not currently a huge part of the VAR’s revenue, West has been able to pick up add-on work in the form of wireless network site surveys, network upgrades, and adding online order entry functionality. What began as an opportunity to replace some equipment for a niche application is turning into much larger opportunities for the VAR.