Growing Like Gangbusters

The team at CDW-G must be doing something right: After incorporating in 1998, CDW-G was given an "Industry Excellence Award" for outstanding customer service from the Federal Technology Service and General Services Administration (GSA) for two years straight (2000 and 2001). In 2001, the year Shanks took the helm, CDW-G enjoyed the second-largest annual gain in GSA IT sales. The GSA ranks CDW-G as the second-largest VAR on its schedule sales, with more than $84.7 million so far this year. Overall, CDW-G's annual sales increased 63 percent from $418.3 million in 2000 to $680.9 million in 2001.

In a recent conversation with GovernmentVAR, Shanks discusses the value-added appeal of services amid quickly changing configuration needs and the differences among his local, state and federal customers.

GV: How exactly did you transition from customer to the head of CDW's government sales operations?
Shanks: I started dealing with CDW when I was with American Hotel Register, in the late 1980s. I was really impressed with my account manager there. He was so excited and passionate about technology. [At the time, I was helping to develop property-management systems for hotels, such as a PC with a server and multiple work stations. We did this for a lot of top chains,from Alaska to the Virgin Islands and everywhere in between. I was really impressed with the energy of CDW. I was notorious for calling at the end of the day and saying, "I need X, Y and Z tomorrow." [CDW would make sure I got the product, no matter what. They knew all about my configuration needs. They'd doublecheck to make sure I understood the characteristics of what I was purchasing.

Eventually, I came aboard and worked my way up to CIO. I was named to head CDW-G last year. It's important for us to have this government subsidiary. We historically had a thriving, government customer base, but establishing CDW-G in 1998 demonstrated how committed we were to this customer.
Shanks: What you see on the commercial side is that it's often an organizational structure that's geared around technology. They'll have a LAN administrator or a PC specialist or an IT administrator that has an extensive technology background around technology products. That may not be the case in the public sector. On the education side, for example, the person dealing with tech may be the librarian, or the person who runs the music department. They get their education-specific, technology expertise from the outside, especially with the pace of technology innovation today, with how quickly all the products come to market. We help them create an infrastructure that provides a core, as well as the ability to build on it as technology and their needs evolve.
Shanks: What we found, by bringing in government customers as part of focus groups, is that they want to streamline the purchase process, too. We learned how to suit their needs, whether they were purchasing in a decentralized environment or a centralized one. Every government customer can be different in that respect. A misconception is that they're all the same. In higher education, for example, they're trying to set consistent standards for all departments and students. Some universities are going completely wireless. Instead of having to jack up the computer in the library or some study hall, the students have to have notebook computers with wireless cards, and that's how they're doing their homework assignments. We help the universities establish that framework.

The education customer needs lots of on-site installation, which leverages into our services offerings. But the actual procurement process is pretty straightforward. Federal, state and local are unique sectors, each with different ways of doing business and different expectations. The state/local customer is very decentralized. There are municipalities, county commissions and state government agencies spread throughout, each dealing with its own tech budget and needs. It's a huge market, but you have to target the various constituencies and really market yourself with your catalogs and establish contacts. We've developed a great base of case studies that speak to their needs. You can't always focus on making a sale every time out. You have to demonstrate first that you're there to help them.

Then, with the federal customer, about one-half of the business is focused in the D.C. Beltway. The strategy is entirely different. They're the heaviest on the contract side. It's very regimented. You have to understand all the various contract vehicles,the blanket purchase agreements, IDIQ contracts, the GSA schedule and the procurement cards. Now, they've definitely streamlined the process in recent years. They want to take command and complete a mission task. But it's still a large, institutional customer. What helps is leveraging the vendor product relationships we maintain throughout all of CDW,with the HPs and Microsofts out there. Because as process-driven as it can get, the government customer is still very good at navigating the tech space out there. They're very savvy and up on the latest. They ask straightforward and smart questions. They have very well-defined expectations, and that works out just great with us.

GV: You've developed a system for all government customers to enhance their database tracking of customer needs?
Shanks: Yes. We've been doing what we call asset tagging for a few years now. It's just what it sounds like,a way to track their assets. Before a product shipment leaves our facility, we put a tag on it and scan it for the databases. If you are a government customer with 20 people procuring for 170 different locations, we can provide a summary level for the entire procurement process, and the government-customer manager can find out exactly where something is supposed to go and what need it will serve. As it moves from one location to another, they can track it. If they need to replace a product, they can find either an exact or very similar one. We may have a government customer who can't figure out what he's doing wrong with a product. He may not be able to describe from looking at the product what exact make and model it is to our support staff. But this doesn't matter. With asset tagging, the support person on the help line just types in the asset tag number and it provides the exact information on the product, including the troubleshooting details. They fix the problem right there and close out the call.

This helps us leverage the customer data. We can go through the asset-tag information and talk to the customer about their purchase history. We can show the head of purchasing what their unique needs are. We allow them to download this data themselves, too, because their data is their data.

GV: You've gotten some impressive contracts since launching in 1998, including a blanket purchase agreement with the Air Force and Department of Defense to buy brand-name systems and products from manufacturers such as Hewlett-Packard and Toshiba. How key are such high-profile contracts and sales arrangements when it comes to establishing the CDW-G name?
Shanks: Well, people think that those big contracts are massive opportunities, which they are. But you still have to execute. What contracts like this do is reduce the number of people who can compete for business. But it doesn't eliminate competition entirely. They're multireseller award contracts. It's not like the old days with a single-source contract, where you get the award and get all of the business. Now, it's a more competitive landscape. You have to price competitively and provide the level of service that gets you the business.