Cisco fall-out sees ilion sue Ciscom

Staff lay-offs too

ilion is seeking "substantial damages for losses... in connection with an irregular transaction" from its customer, Ciscom, a Cisco reseller At the same time it is making 15 people -- ten per cent of its UK workforce -- redundant, following the loss of its Cisco contract earlier this month. The new executive management team led by Rob Johnson remains in place. Cisco represented 18 per cent of ilion's UK turnover, but a much smaller percentage of profits. ilion UK was stripped of its Cisco franchise, after the irregular transaction was uncovered by the networking vendor. The UK sub has been the weak link in the group for some time -- last year it issued three profit warnings. Serge Van Gorkum, ilion group CEO, said the UK subsidiary had been well supported by other networking vendors -- which see the loss of Cisco as a major opportunity to drive more sales through the company. But he noted aggressive competition. "When you are sick, all the guys try to kill you," he said. ilion UK is a turnaround company, under its new management, he said. ilion UK had lost focus, following the departure of managing director Roger Paul in 1997, according to van Gorkum. Weak management, poor organisation and too much emphasis on low-margin box-shifting were at the root of the company's problems. ilion UK had tried to win market share with "prices, not with value-added solutions," van Gorkum said. "When you give away profit margin, you can never get it back." Back to basics Now, ilion UK has reined in stock levels (down from £18 million in January to £8 million this month and fast moving items up from 30 per cent to 80 per cent over the same period). ilion uk has now come to grips with its Tolas ERP system, following its original poor implementation which resulted in many expensive mistakes. The company has restructured its sales teams to ensure better account-handling with customers and to promote better co-ordination, internally. And it is returning to its roots as a "value-added" distributor. Mature product lines will be abandoned, once they reach cost plus one or two per cent status. In other words, ilion UK will become more like the rest of group. High ticket van Gorkum is keen to see ilion UK take on more high ticket, high margin Unix and DBMS lines. And he is seeking to bring new early lifecycle franchises on board. ilion UK has not won a single new franchise for two years, a symptom of previous lack of focus, he said. Currently, the company is negotiating with Landesk. ilion subsidiaries in France, Benelux, Austria and Spain are all profitable and performing well, according to van Gorkum.The company's majority-owned joint venture with Garmhausen GmbH in Germany, is also profitable, he said. The company had solved its "Swiss problem", by shutting it down. ®

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