CDW Gears Up For SMB

The move likely will create more competition for solution providers selling into the upper end of the SMB market, said executives from CDW and other solution providers.

CDW piloted a field sales program in Chicago this year and plans to roll it out in other cities in 2003, said Harry Harczak, CDW's executive vice president of sales.

"There is high potential for us because we have the infrastructure on the back end and the support of the inside sales force for further penetration into larger accounts," Harczak said.

CDW declined to detail which cities it is targeting, but last week it posted help-wanted ads for field sales representatives in Boston and New York. Other cities are expected to be included in the program, some solution providers said.

"We will go slowly to make sure it works. We can't always communicate our value over the phone. When you have a customer sitting in front of you, there's a better opportunity to explain the value we provide," Harczak said.

CDW built itself into a $4 billion company by selling products directly to small businesses but more recently has sought larger customers, which buy more complex and higher-margin products. For example, CDW struck a relationship with Sun Microsystems to sell low-end servers, while hinting it would like to move up to higher-margin Unix servers.

Solution providers said they will be ready for increased competition in their regional markets.

"Obviously, we have concerns because of their sheer size. We've been hitting them head-on in a lot of bid opportunities already. We've lost some, we've beat them on some," said Brady Graham, senior account rep at GovStreet USA, Clearwater, Fla. "If they're more product-focused, it's not as big a deal. But if they start selling services, it may be more of an issue."

Indeed, CDW plans to leverage its 11 national service provider partners at the field sales level, providing customers with a wide range of presale, post-sale and on-site services, Harczak said.

Winning over solution providers' existing customers will be CDW's biggest challenge at the local level, solution providers said.

"We position ourselves to our clients that a national organization doesn't offer the advantage we deliver locally," said Brian Okun, director of marketing at CHIPS Computer Consulting, Lake Success, N.Y. "CDW can have as many field salespeople as they want, but unless they duplicate the identity of your local solution provider, they're not going to be able to compete at that level. To me, CDW is a fulfiller of product, not a deliverer of services. Until they can position themselves as a deliverer of solutions instead of as an order taker, they're not going to find much success."

Added Graham: "Most of our customers complain that the CDWs and Insights don't have a physical presence. People like seeing people once in a while. [CDW has name recognition; now if they have a physical presence to touch accounts, it's in their favor. But if you're entrenched and treating someone right, it doesn't matter. The biggest challenge will be for new accounts."

Aside from adding field sales representatives, CDW said it plans to hire more inside sales staff in 2003. The company has 1,200 inside sales reps now.