Tarsus Technology Group

TA R S U S T E C H N O L O G Y G R O U P

TARSUS TECHNOLOGY GROUP

Cloud Simplified From Tarsus PRODUCTION: David Napier

Tarsus Technology Group CEO Miles Crisp talks to Enterprise Africa about the company’s success delivering effective cloud-based solutions to clients across southern Africa.

Alongside its hugely successful distribution business, and a host of other exciting group divisions, the Tarsus On Demand cloud offering is a quickly growing industry-leader.

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INDUSTRY FOCUS: TECHNOLOGY

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The ICT industry is perhaps one of the fastest changing of all. In the space of just three decades, the internet and advanced computing power has changed the way the world works, and the demand for faster, more efficient, easier to use, and more complex IT hardware and software continues to grow. Staying abreast of all of these changes is almost impossible and those companies operating in the space face a difficult task every day, helping their customers make their investments appropriately.

The whole shift in systems is becoming known as the Fourth Industrial Revolution – where technology is helping to blur the boundaries between the physical, digital, and biological worlds. Things like artificial intelligence (AI), the Internet of Things (IoT), virtual reality (VR), robotics,

3D printing, quantum computing and more are quickly disrupting every business sector and completely reshaping the customer experience.

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, was the first to officially recognise the advent of the Fourth Industrial Revolution and he warned in 2016 that “the changes are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril”. This goes for both individuals and businesses. Just look at the likes of Nokia – a company which failed to keep up with technological advances and ultimately paid the price, giving up its significant market share to rivals very quickly.

In South Africa, one of the country’s leading IT distribution organisations,

Tarsus Technology Group (TTG), is going through a shift which is seeing it incorporate more and more cloudbased services as businesses embrace the IoT, big data and AI. Founded in 1985, TTG has adapted from simple distribution of IT hardware to become an integrated supplier of the highest quality products, solutions and professional services including supply chain optimisation, cloudbased solutions, IT security services, compliant disposal of IT goods and other electronic goods. Made up of five specific divisions, TTG’s expertise is vast and its brand is now among the most trusted in the market.

Tarsus Distribution is the biggest of the Group and surrounds the supply of technology products to wholesalers, retailers, and businesses through the reseller channel.

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TARSUS TECHNOLOGY GROUP

ON DEMAND CEO Miles Crisp, who has been with Tarsus for the past seven years and oversaw the rebrand from MB Technologies in 2015, says that Tarsus On Demand – the cloud services division - is starting to perform extremely well.

“It’s any of our services, or anywhere we sell, on a subscription or consumption basis - it’s not only cloud-specific services,” he says. “We have aligned ourselves very strongly with Microsoft, mainly because there is a large installed base and they are converting from a perpetual licensing basis very aggressively onto a subscription base for 365. We are partnering with them and we have 35% market share in South Africa on that process in our particular customer definition.

“The other part of it is Microsoft have finally brought large data centres online in South Africa. Because of historical data sovereignty issues, there has been a reluctance to move into the big international cloud service providers such as Microsoft. We are now selling their Azure product and we see enormous growth coming from that because end-users have the assurance that their data is being hosted in their geographical region.

“This is a very important and quickly growing area for us which is more than doubling every year. We expect it to more than double this year and then more than double annually, sustainably for the next few years,” details Crisp.

Microsoft in particular is looking to get customers onto subscription packages where they pay a monthly fee for access to software and only have access to the software for as long as they pay the subscription rather than purchasing a perpetual license. At the end of 2018, Microsoft hiked its license pricing by 10% to speed up the switch to a subscription basis. Microsoft’s popular Office 365 software is now only available

through a subscription model and, in most cases, this represents a saving compared to the pricing of a traditional perpetual license.

Microsoft data centres in Cape Town and Johannesburg, officially opened in March 2019, support Azure cloud services. Microsoft expects them to start supporting Office 365 by the third quarter and Dynamics 365 by the fourth quarter. For this reason, Crisp is confident that TTG can benefit.

“Our big volume business, which is mainly hardware across all different categories, is Tarsus Distribution and that is the bulk of the group from a turnover and gross margin perspective. By the end of this year, cloud distribution will comprise just 5% of group revenue but it will comprise much more at a gross margin line, doubling every year,” he says.

LOGISTICS Another quickly growing part of TTG is its logistics offering. Given the nature of the distribution division, logistics is a key element of the organisation. Successfully delivering goods to where they need to be has become second nature for Tarsus Distribution, but the company saw the opportunity to expand this area of expertise and this idea has been fruitful.

“Hardware distribution - PCs, printers, screens, peripherals, consumables, anything that requires physical delivery – that is the mothership for us,” says Crisp, commenting on the importance of the division.

“Another very fast-growing part of our business is third party logistics,” he adds. “We use our infrastructure to distribute our customer’s goods as a service - we don’t buy and sell the goods concerned. We handle all of the logistics

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INDUSTRY FOCUS: TECHNOLOGY

Tarsus Technology Group CEO Miles Crisp

// IF YOU LOOK AT WHAT IS CORE TO US, IT IS OUR LOGISTICS CAPABILITY AND OUR IT CAPABILITY // for one of the biggest IT retailers in the country and our warehouse becomes their hub. About half of what we move for them is product that we sell them and half is from elsewhere - for example, TV screens, toasters and microwave ovens that they also sell through their retail outlets. That part of our business is growing really fast and it’s thanks to our ability to work off existing infrastructure without additional cost.”

Tarsus is an approved distribution partner for a number of global brands

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including Acer, OKI, Canon, Dell, Epson, HP, Lenovo, Kaspersky, Samsung and many more. The network and experience that has been built up moving tech products around the region from its portfolio of brands has helped TTG develop a deep understanding of what is required for a successful logistics operation.

“It’s all contracted and accounted for through our distribution business, we own the warehouse from which we operate and we have control over the actual trucks, so it is a nice logistics service.

“We are working closely with the HiFi Corporation and Incredible Connection of the JD Group and we are bringing on many other customers at the same time. For example, we have handled the IT distribution for FNB on behalf of their service provider, Digital Planet, for several years,” says Crisp.

And while logistics is a growing part

of TTG, IT remains at the heart of what it does and the company maintains strong IT expertise so that staff can constantly communicate with clients, always offering the best advice and service.

“We do have technical capabilities.

For example, if things are returned to us, we have the capability to asses those goods and send them back for warranty, repair them, or push them into the second hand market. If you look at what is core to us, it is our logistics capability and our IT capability,” explains Crisp.

STRENGTH IN SA Headquartered in Johannesburg, between Sandton and Midrand, TTG has made its name trading in South Africa.

Its customer base is a largely a South African one, its suppliers (apart from international tech brands) are largely South African, and its knowledge and

INDUSTRY FOCUS: TECHNOLOGY

// BY THE END OF THIS YEAR, CLOUD DISTRIBUTION WILL COMPRISE JUST 5% OF GROUP REVENUE BUT IT WILL COMPRISE MUCH MORE AT A GROSS MARGIN LINE, DOUBLING EVERY YEAR // expertise is South African. But, as many companies do when they reach a certain size, TTG has looked to the continent for growth. The company is now present in Botswana, Namibia, Zimbabwe, Mozambique, Zambia, and East and West Africa.

Growth and strategy in key markets in East and West Africa has been reviewed recently as TTG looks to optimise its presence. Across Africa, each nation has its own rules, regulations, languages, cultures, and business characteristics, and successfully managing operations across multiple countries can be challenging.

“We don’t move physical goods to East and West Africa, it’s only software

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at this stage as the supply chain from South Africa into these regions is very complicated. Constant changes in rules and regulation mean we have to remain constantly vigilant and adjust strategy where necessary,” he says.

At the end of 2018, a study compiled

by World Wide Worx and Syspro found that South African companies are keen on adopting new technologies and, although slower than some developedcountry counterparts, as speed of advancement continues to increase, more than half of the companies surveyed in the study suggest that they would be interested in adopting new tech (big data, machine learning and blockchain for example) in the future.

Albeit at a slower pace, southern African companies based in neighbouring countries will likely follow suit. This is good news for TTG which, according to Crisp, will continue to look for growth opportunities in southern Africa.

“We are looking at the SADC region for growth,” he says. “Each country has different fortunes and they change quickly. We have seen a lot of growth in Botswana whereas we have seen severe constraints in Namibia because of a slow economy. Mozambique has just had the terrible cyclone which has impacted the country severely and that will result in a slowdown there for some time. Interestingly, we have seen a lot of

growth coming out of Zimbabwe. There is a lot of price control there and they have just had big increases in prices, but the availability of cash comes and goes so we remain cautious there.”

Outside of South Africa, Tarsus’ On Demand division, where software purchases on a subscription basis are sold, provides big opportunities for growth. TTG’s GAAP Point of Sale division, which caters for the hospitality industry, also provides big opportunities and is already active in Zimbabwe, Lesotho, Swaziland, Namibia, Zambia, Malawi, Uganda, Tanzania, and Kenya.

FLAT FUTURE? South Africa’s economic conditions have not encouraged strong growth in recent years, yet TTG has consistently delivered positivity. While the macro economic climate remains depressed and business leaders hunt for certainty, Crisp admits that the market might not be growing. The solution here is to grow market share.

“We’re not seeing growth in the industry as a whole but we have seen growth in market share. What is benefitting us at Tarsus is a change in the business model from actual transactional hardware purchases through to the cloud. We had the big investment recently from Microsoft and no other competitors have effectively matched it. The growth we are seeing comes from that kind of niche. In the actual distribution business growth has been fairly flat and we don’t expect that to change in a big way in the short-term future. There is still a latency around government policy and momentum with the changes that have been promised,” he says.

Tarsus Distribution is already an industry leader; GAAP is the undisputed leader in its sector; Tarsus On Demand is rapidly growing its share; Printacom and Tarsus Dispose-IT are all smaller contributors to overall revenue but both are looking to claim further market share.

To achieve this, Crisp says that customer service has to be the best it can be.

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“We pride ourselves on our customer service but we know our competitors also have impressive offerings,” he says.

“We are confident that we are doing a better job in the On Demand-cloud space and the migration of customers and their end users. The assistance we can give to resellers to move their customers on to a cloud basis instead of buying their own licensing is an area where we have invested heavily in expertise.

“We are confident that we are also the leaders in third party logistics and retail specifically. We supply retailers and retail is around a quarter of our business. Our customer service is the best because we have the ability to integrate quickly and efficiently into our customer’s existing systems. The supply chain systems are integrated with the systems of our customer

and that is seamless, without heavy documentation. In those categories, we are confident that our service levels are better and we are on top of our competition,” he adds.

This confidence positions TTG perfectly to help guide clients through the country’s migration into the Fourth Industrial Revolution. TTG has the hardware, it has the software, it has the expertise, it has the logistics, it has the presence, and it has the reputation.

“The world must embrace the Fourth Industrial Revolution because it is a new way of doing business that will be with us for a foreseeable future, and as government and society we should collaborate in creating the enabling environment for entrepreneurs to adapt and adopt the 4IR technologies for the creation of a better life for all,” said the Department of Trade and

Industry’s Deputy Director-General of Special Economic Transformation, Sipho Zikode at the opening of the South African Innovation Summit (SAIS) in Cape Town last year.

Entrepreneurs and business leaders will be forced to choose a technology partner, and TTG sits atop the industry with a positive outlook.

“We are happy that we are running efficiently. We will be watching our costs closely and trying to grow our top line quickly. Business success is all about efficiency, cost management, and managing the market, and that is what we do well,” Crisp concludes.

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