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CEOCFO CEOCFO Monthly Analyst |
"To print this page go to file and left click on print" En
Pointe Technologies - providing the first true global delivery model on one platform,
designed to lower acquisition costs and significantly enhance return on investment (ROI) Company
Profile: En Pointe was
the first national reseller to develop and lead with a “virtual business model, which
was extremely successful. It set the pathway
for them to become one of the nation’s leading resellers. By developing partnerships with some of the
nation’s largest manufacturers and distributors such as IBM, Hewlett-Packard, Tech
Data, Sony and Microsoft, En Pointe could substantially reduce the costs associated with
procurement, product integration and supplier management for their customers. Recently En
Pointe released AccessPointe™, a hosted
online procurement system and supply chain network that helps end users quickly and cost
effectively obtain technology and office products.
Some of AccessPointe’s™
features include to-the-second real-time availability, pinpointe search, direct
access, intelligent purchasing, favorites list, advanced workflow and request for quote.
Rather than being just your standard IT Marketplace, En Pointe offers enterprise customers
a Private Trading Exchange to enable the purchase of IT and other products either direct
from En Pointe or from any other supplier. What makes En
Pointe stand out against other Value Added Resellers (VARs) is they were recently
certified as the first and so far only publicly held company to receive MBE (Minority
Business Enterprise) certification from the National Minority Supplier Development Council
(NMSDC). With this new status, En Pointe is
now able to tap into a whole new selling arena, a multi-billion dollar diversity
marketplace. En Pointe recently released
their Diversity Supplier Exchange technology, which is powered by their robust
business-to-business procurement application and can be integrated into any
customer’s existing Enterprise Resource Planning (ERP) system. En Pointe’s customized Diversity Supplier
Exchange can consolidate all of your suppliers (including diversity suppliers) under one
purchasing portal. Once implemented, it will
allow you to make the most effective business decisions by accessing product information,
pricing and availability from multiple suppliers simultaneously, as well as track your
diversity spend to ensure supplier diversity purchasing goals are attained. Their powerful e-commerce solutions allow users to view and break inventories down by warehouse location, thereby allowing customers to make more effective purchasing decisions across their organization. Users can generate one Requisition for Quote (RFQ) to several vendors with their automated bid process and allow purchase orders to be automatically awarded to the vendor of choice. En Pointe’s solid partner relationships, strong infrastructure, powerful tools, and access to their valuable resources provides a robust one-stop solution for their customers. En Pointe can provide their customers with order tracking, detailed reports on all purchases, and serial and asset information. As a computer reseller, En Pointe Technologies avoids physical inventories, relying instead on allied distributors (such as Tech Data, Synnex and Ingram Micro) to fill orders through its AccessPointe™ catalogue of more than 700,000 technology products from over 2,000 manufacturers. Some of En Pointe's customers include Abbott Laboratories, the cities of New York and Los Angeles and Stanford University. The company is also expanding its professional services arm, which specializes in network design and software implementation. CEOCFOinterviews: Mr. Schatzle,
please give us a brief history of En Pointe Technologies. Mr. Schatzle:
“En Pointe was founded by Bob Din, myself and a couple other individuals in 1993.
Prior to En Pointe’s inception, Bob and I ran one of the largest computer houses in
the country, Computer Land Information Systems. In
1993, we created a pilot program with Intelligent Electronics, which was the largest
distributor during that time. We developed a system where we would load their inventory
into our system, place our mark-up, and ship straight from the distributor directly to the
customer with our name on the packing slip. We were able to grow to an unprecedented rate
in the history of our industry by organic growth and customer acquisition. At the time,
that process was nonexistent across the rest of the industry; everyone was in the
franchise model or the company-owned model and were distributing through local warehouses.
It could be argued that we invented the virtual distribution model that is in use by
approximately 90% of the industry today. The company grew dramatically and in
1999, we achieved a run rate of close to $700 million in sales. Bob left the company to
explore venture capital interests, and I was successful in raising $36 million in venture capital from SAP AG (NYSE:
SAP), Peregrine Systems, Tech Data Corporation (NASD: TECD) and a number of other private
and venture investors. I then became CEO of a spin-off called SupplyAccess, which focused
on B2B exchange software. In early 2002, En Pointe acquired some of SupplyAccess’
assets. The acquisition included its intellectual property, assets network and many key
individuals were hired by En Pointe. We are very excited to have the software and
experience in addition to intellectual capital that we developed with great partners like
SAP, Peregrine Systems and Tech Data. We are now using those tools as a primary vehicle to
drive sales and customer relationships in the U.S. market today.” CEOCFOinterviews:
Can you describe your revenue model for us? Mr. Schatzle:
“We buy from distributors and manufacturers, and then sell to large enterprise
customers, typically in the top 2000 corporations in the United States. Additionally, we
have about 275 people in our professional services organization, where we do enterprise
helpdesk, migration, wide area networking and a number of other high technology solutions,
which have higher margins than typical product sales. Finally, we are selling the software
that we developed, called AccessPointe™ to companies so that they may streamline
their buying processes via our eCatalog, buy-side application or create a Private Exchange
to buy IT goods from En Pointe and other suppliers.” CEOCFOinterviews: What is your greatest revenue
driver? Mr. Schatzle:
“AccessPointe™. It is free of
charge to our customers who buy from us. Currently,
approximately 90% of our revenue is derived from our hardware and software sales and the
rest from services.” CEOCFOinterviews: How have you grown your pipeline of
customers? Mr. Schatzle:
“ We grew our company primarily through organic growth, very little through
acquisitions. The pipeline of our customer base often comes from hiring regional reps
across the country. Our new sales representatives are experienced, seasoned individuals,
and we are able to give them a better tool set and a greater value proposition for their
customer base.” CEOCFOinterviews: Can you give us a picture of the
size of the marketplace for PC products? Mr. Schatzle: “The market for PC products and services is a multi-billion dollar marketplace." CEOCFOinterviews: That must put you in a good position
to offer more value to a customer rather than buying direct from a manufacturer. Mr. Schatzle:
“That is correct. We offer a lot of value where customers clearly want to buy from us
rather than buy direct from an IBM. One major advantage for our customer is that we can
blend multiple manufacturer’s products into one single platform; we do integration,
rollout and many of the services required for the customer to effectively manage and
achieve ROI on the complex assets that run their business. CEOCFOinterviews: Would you say that one of your most
important contributions to the market place is that you enable an end user to see greater
return on investment? Mr. Schatzle:
“We strive to distribute equipment into an organization faster and cheaper than
anyone else. We also wrap a lot of value around our products like point-of sale rollouts,
integration, and server builds and configuration. And with our AccessPointe™
software, we can streamline out the inefficiencies of procurement processes within
organizations by giving our customers a big ROI on many of their B2B initiatives as well
as offering them the capability for total lifecycle management of their IT assets.” CEOCFOinterviews: Where do you see the future of your
company? Mr. Schatzle:
“The future of En Pointe resides in a number of areas.
We will continue to grow our professional services organization by adding
more highly qualified people and expanding the types of services that we offer. We will continue to grow in the e-commerce arena
where we have been a market leader since 1993 and continue enhancing our Access
Pointe™ software solution, where we are creating private exchanges for companies to
buy, track, and manage their MRO (maintenance, repair and operating) goods from and
through us. In addition, we will provide content tools to enable our customers to take
multiple commodities across multiple suppliers and bring these catalogs into their
existing buy-side applications. I see our company growing into the SMB (small-to-medium
business) spaces. Our tools can also
compliment and enhance small business needs and initiatives. Furthermore, we will delve further into the minority business arena and promote our Diversity Supplier Exchange tool, which as mentioned, is a subset of our AccessPointe™ offering. There are major benefits in being able to support a multitude of suppliers and help them make their targets. The number of minority owned businesses is increasing exponentially, and with our certification and our technology, minority-owned businesses now have access to major suppliers, including diversity suppliers." CEOCFOinterviews: To me it sounds like you might have
a clean balance sheet without a lot of warehousing expense and other assets. Mr. Schatzle:
“Yes, we have an extremely clean balance sheet with very few fixed assets, and no
good-will anywhere on our books. We have one warehouse that we lease and use for
configurations and returns; these are two areas where we physically have to touch the
product. In addition, our warehouse is small in relation to the size of distribution that
we do. This is because we leverage our distribution and manufacturing partners to
drop-ship for us.” CEOCFOinterviews: Can you tell us about your trading
exchange? Mr. Schatzle:
“What we developed is a true to many exchange that processes transactions
through multiple suppliers in one central place and can provide them access to numerous
buyers. Our Diversity Supplier Exchange
allows companies with diversity spending goals to buy IT assets through us, house all of
their suppliers (minority and non-minority) onto one central purchasing platform, while seamlessly tracking and managing all levels of
their minority vs. non-minority spending. This ensures that their spending goals are
efficiently met. En Pointe will be exhibiting
at NMSDC’s Annual Conference at the Los
Angeles Convention Center, October 27th – 30th of this year. We are very excited about our MBE status and look
forward to exhibiting and introducing our Diversity Supplier Exchange to all attendees. The purpose of this exchange is to help minority
companies accelerate their e-business processes so they can do business with large
enterprise customers that have advanced systems and diverse requirements.” CEOCFOinterviews: Is most of your business website
driven? Mr. Schatzle:
“A lot of our business is done by local account managers; the web is just another
resource for us. We have always held this
philosophy with large customers, and we will continue to be flexible with our customers
and do business the way they want us to do business. I do not see large organizations
using the Internet as a purchasing source in the future.
I think the next generation beyond the web is where large enterprise
customers come to us through their own ERP systems. We are currently focusing on linking
our goods and services dynamically into a customer’s existing ERP system, such as
Oracle Corporation (NASD:ORCL) and PeopleSoft Inc. (NASD:PSFT).” CEOCFOinterviews: So the Web is good for small
businesses but has some limitations for larger Fortune companies? Mr. Schatzle:
“Correct. Web buying is a great tool for small businesses because there are not a lot
of requirements and it is easier for purchasing, but a large Fortune 500 to 1,000 customer
is not going to put 75,000 users on multiple websites to buy from multiple suppliers.
Instead, they are going to roll great products like SAP or Peregrine Systems out to their
base of employees. These applications will then have to figure out how to integrate their
systems, which is an area where we are industry leaders with a wealth of experience. CEOCFOinterviews: What would you say is the most
recent and positive trend that you have seen from customers in this industry? Mr. Schatzle:
“What we are seeing is a lot of customers coming back to buy from a local value-added
partner like En Pointe, instead of engaging solely in direct business. We are re-engaging
our manufacturing partners, and we see there is a very viable business model for both
two-tier distribution through distributors like Tech Data, and also cultivating
relationships with major manufacturers like with IBM (NYSE: IBM) and Hewlett Packard
(NYSE: HPQ).” CEOCFOinterviews: In closing, what would you like to
say to your current shareholders and potential investors? Mr. Schatzle: “With our Access PointeTM technology, we stand to change the face of e-procurement into the future. We have a strong management team in place and the founders who were an integral part of En Pointe’s past success are back. We are getting back to the basics, those that once made this company great and very successful.” disclaimers |
