AN INTERVIEW WITH ECi’s NEW PRESIDENT RON BOOKS

On January 1 of this year, in what was described as “a move reflecting the continued effort to enhance competitive positioning and focus on customer needs in a challenging economic environment,” ECi, a developer of business management and e-commerce systems for the independent dealer community, named Ron Books president.

Books, who has been with ECi for nine years, has spent much of that time working directly with the independent dealers and distributors trying to understand the business and software needs across their highly specialized markets. He has chaired many of ECi’s dealer advisory conferences and during his tenure with ECi has spoken to and met with thousands of independent dealers and distributors. Books’ promotion follows the departure of former CEO Dan Pritchard.

Books joined ECi while working with its then subsidiary Online Office Supplies Company (“OOSC”) in 1999. He was promoted to President of OOSC in 2000, before selling off that business unit in 2001. He continued on as vice president of sales for ECi and was promoted to senior vice president of operations in 2003 and COO in 2006. Prior to working with ECi, Ron was as a senior member of Lucent Technologies New Business Development team.

... The ECi vision is about looking at the industries we serve and providing end-to-end solutions. It’s not core ERP systems, or warehousing or accounting, or general ledgering; it’s expanding into every area of a dealer’s business...

Ron Books, ECi’s President

How’s business?

Books: It’s good. We’re all doing the same stuff, which is keeping an eye out on the economy in general. I think our dealerships seem to be holding up fairly well. Every business is tightening up a little bit and we as well as others need to fight the temptation not to tighten too much, particularly as it pertains to technology. This will rebound. We’re doing the same thing internally and we just have to be prepared for when it does.

You’ve been in the industry for a number of years. What are the two or three qualities that you’ll be bringing to ECi in this new position that are essential for the company’s success in the future?

Books: I’ve had a hands-on approach for the past nine years as it pertains to the industries we serve in. I talk to a lot of the dealers on a regular basis. I ran Online Office Supplies so I understand the challenges that our customers have. The key when talking to them is that I hear the good, the bad, and the ugly, and I try to make sure that we are taking that information, particularly from successful dealers who share with me how they’ve been successful and what they continue to do to evolve their business to compete in what is a tough marketplace. I’m going to carry it out through the company. I’m very, very customer focused. You can talk to any customer that knows me. I always take time for the customer. I’m always open and I believe that the success of our dealerships and our customers will be the success of ECi.

What do you see as the biggest challenge facing you in this new position?

Books: The obvious answer right now is taking over in what is one of the worst economies in the past 40 years. The challenge is making sure that people continue on the track of making their businesses stronger at the same time they’re trying to survive a downturn in the economy. That is the biggest challenge.

There were some decisions made over the past several years. Sometimes they have been aggressive decisions, so I think in those areas where ECi does not have confidence with certain dealers, I have to win that confidence back. And I’m going to do that. I’m going to do it one dealer at a time and prove to them that we are the best solution for the customers in the industries we serve. I think our visibility and what we see in the future and what we can bring to the table is going to give them tremendous flexibility and tremendous scalability and we’ll prove that.

Now that you’re president, what do you think will be the biggest difference between today’s ECi under Ron Books and last year’s ECi?

Books: A tighter partnership and alliance with our customers.

What are some of the issues you hear again and again from the independent dealer community?

Books: It varies a little bit by vertical, but really it’s the same thing; it seems like they’re constantly getting squeezed from a price perspective. In a competitive landscape, even as it pertains to office products as one of the industries we serve in, they’re up against the ‘Big Boxes’ and the power channels who have tremendous resources and have tremendous abilities to make investments. As smaller businesses, their ability to grow customer by customer is a tedious, intense, and competitive process. They have to look for different ways to expand their revenue from the customer to win more business and align themselves so they have greater retention, and some of that is using technology.

There’s been a lot of concern surrounding price increases, primarily from DDMS dealers. How has the company addressed those issues and do you get the sense that DDMS dealers are calming down a bit?

Books: Reliance on technology is growing exponentially. If people are not budgeting for a 10 percent or 5 percent increase, they’re being unrealistic from a technology perspective. Let me give you an example: I don’t have exact numbers, but Staples, who they compete with daily, invested somewhere between $15-$20 million in 2007 on their e-commerce solution. In 2008, they say they have exceeded an investment of $40 million. I don’t know if those are exact numbers, but the essence is that they are tripling their investments. They’re spending tens of millions dollars and that’s what [independent dealers] are competing with. So if they expect their technology provider, or they expect themselves to scale back from a technology investment, they won’t be able to compete long term. Our job is to balance the fact that obviously these are direct costs for our business and as costs go up, they’re trying to manage their business on slim margins. At the same time they’re not going to be able to win and retain business if we’re not, as an industry leader from a technology perspective, thinking ahead and making sure that they’re well positioned to compete with their competition.

Do you think you can win back some of those dealers who may have left because of those price increases, and what will it take to win them back?

Books: We’re doing it. There was a big deal about SAP and some Microsoft products coming down market, and many of them have made no impact. We had customers who left who came back to us. People realized how much we offered and how many moving parts there are in their industries, and I think there was a greater respect for the job we do. If we continue on the path as it pertains to DDMS and office supplies, I think it is going to triple over machines. E-commerce is becoming wildly, wildly important. The adoption rate from a user perspective and a dealer perspective is growing at considerable rates year after year. We continue to enhance our core product, ECinteractive, and have spent about $4-$5 million to date. We’ll continue to invest in that product and if we deliver on those fronts, it gives independent dealers the ability to compete, so I think we are winning back customers from a DDMS perspective.

Tell me about ECi’s vision for the future.

Books: The ECi vision is about looking at the industries we serve and providing end-to-end solutions. It’s not core ERP systems, or warehousing or accounting, or general ledgering; it’s expanding into every area of a dealer’s business. I believe that those businesses trying to provide software solutions that do not have the capabilities to look beyond the core ERP and the e-commerce and the ability to accommodate punch out capability for those large customers that want the functionality, who are not communicating via the Internet with suppliers and sending P.O.’s and electronic invoices and who don’t have relationships with credit card processors or are not offering mobile applications and sales analytics, won’t be in a position to compete. If you’re not looking at providing a complete suite of products, then you won’t be positioned well for the future. And dealers who aren’t on those platforms won’t be positioned well to compete either. That’s what we’re focusing on. We’re making incredible investments in those areas. The scope of each of those areas is growing year over year and the expectations are growing year over year and we will help customers expand into those areas.

Lastly, the biggest upcoming wave we see is for these independent dealers to branch out into other verticals and get more revenue per customer. We’ve watched this happen on the DDMS and the office supply side where people were serving their customers’ office supply needs and are now expanding into contract furniture and servicing machines. They’re doing these things because it’s so much harder to go out there and win a new customer. When you’re able to go into an existing customer who you have a great relationship with and offer more services, it does two things—you grow revenue per customer and you make it harder for competitors to penetrate that customer base because they’re going to have to service many more areas of the business to do what you do.
What can we expect to see from ECi during the next 12 months?

Books: We believe that the equipment, contract furniture, and supply industry has some very bright and successful entrepreneurs. They’re going to survive and they’re going to do well, but we have to position them to flourish. We’re going to do a lot of consultative things. We’re going to make sure that we educate them on how to grow their business and how to grow their revenue per customer. You’re going to see that in many ways. You’re going to see that at shows. We’re going to do education seminars. We’re going to do more advisory meetings. We have regional conferences. Coming out of this year, the economy will rebound and we want to make sure that our customers are positioned well for that rebound.

If I were to speak with you 5 years from now, what do you hope you’ll be able to tell me about your first five years as president?

Books: I think you’ll see less of a “there’s a dealership, there’s a software provider, there’s my supplier” attitude. I want to look back and say this is a group of partners working together. There’s no lines dividing them, everybody is working together to make sure this industry, the customers, and the verticals that we serve not just survive but flourish and succeed. Also, machine dealers better not just be selling machines. They better be looking for ways to expand, to offer office supplies, to partner with people like MWAi for their electronic meter reading, and I think you’ll see a lot of that happening over the next year. A software provider needs to be prepared for that and we are.

Scott Cullen has been covering the office equipment industry since 1986. If you have questions or ideas for future interviews or topics, e-mail him at scott_cullen@verizon.net.