VARs vs. SMBs

For small and midsize businesses, a productive partnership with a VAR or integrator can confer a competitive advantage. We look at how to choose a VAR partner and how to

October 21, 2005

10 Min Read
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The trick is finding a VAR that's a good ally, sees your success as its business and can hook you up with a skilled IT practitioner who'll function as a trusted adviser ... but we're here to help. In addition to tapping the usual Network Computing brain trust, we asked industry experts who specialize in creating healthy IT-VAR relationships for strategies to transform your dealings with VARs from time sinks to productive exercises. Here's a recipe to find happiness, and then keep the love going.

Trusted Advisers

Let's define what you want from your local VAR. The days of calling and asking for PC quotes are over--Pricewatch and its ilk have seen to that. With commodity products off the table, two main sales opportunities remain to the local reseller.

The first is integration of specialty gear distributed only through "the channel." Of course, many of these products move at the speed of light from "channel-only" sources to Internet sales. That leaves professional services--dependable implementation of or advice about technology. This expertise is an incredible thing when you find it locally--no travel expense and relatively flexible timing. But it can be frustrating to look for skill and discover that not only does the sales consultant know nothing about networking, but the "systems engineer" is a retread PC technician whose only knowledge of server troubleshooting is the reboot shuffle.

VARs & SMBs By The Numbers

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IT managers fear this letdown. But savvy VARs know that and are countering with substantial investments in personnel and process. The "pure salesperson" is going the way of the dinosaur--these days wasting an IT manager's time is a nonstarter. By 2008, those VARs that can't or won't change their sales models will be out of business, says Michael Haines, who covers business strategies in the sales and channel for Gartner. Haines' research suggests that at least 40 percent will not be able to evolve.

"Sales is not trusted, and even if they were, they have no advice to give," says David Stelzl, founder of Stelzl Visionary Learning Concepts, which provides professional coaching classes to channel partners. You need a solid strategy to find the right players, says Stelzl, who points out that even world leaders surround themselves with trusted advisers--nobody has all the right answers. And smaller businesses need to pay extra attention. Most large enterprise IT shops can pick up the phone and get any one of dozens of experts on the line. For SMBs, those resources are harder to come by, so nurturing expert relationships outside of your business makes sense.

If you're thinking, "Well, at what point does a customer become a leech?" just know that a certain amount of any VAR's business is centered around pre-sales. Don't worry, they'll tell you when it's time to start charging. In the new VAR model, the sales investment goes to hiring folks with substantial industry experience, building practice models and being responsive to customers, rather than being spent on free lunches to make up for a lack of knowledge.

Wanted: Smart People

The first step in finding an adviser, according to Haines? Figure out whether you really want one. "Be honest with yourself," he says. "Are you looking for someone to beat up over price?"If so, you're behind the times. VARs aren't (or shouldn't be) in that business anymore. The CDWs and Insights of the world will beat a path to your door to compete on hardware margin. If you're looking for love in the low-rent commodity district, stop, because trusted advisers don't live there. They hang out in the mid-to-high-rent strategic advantage part of town.

"We rely on our VARs to be solution providers, not product salespeople," says Ellen Rome, vice president of sales and marketing at StorServer, a provider of business-continuity products.

If you're looking for a strategic advantage, get proactive. There are so few qualified trusted advisers out there that expecting one to come knocking on your door is like banking on winning the lottery. Don't play the odds. Check in with colleagues you respect. Go to networking events. See who can walk the walk.

"You pick a guy to mow your lawn or fix your air conditioner, but in IT, we wait for the right guy to show up," Stelzl says. "That's simply not going to happen."

That's not to say you should avoid all sales calls. If you set the parameters properly, sales calls can be a quick way to assess a VAR's capabilities. Moreover, while avoiding such calls might make you feel like you're saving time, others--even business heads in your own organization--might interpret your refusal as laziness, a bunker mentality or a rigid attitude. If your company is a prime "prospect," and the IT department doesn't take the call, someone else at your organization with much less IT expertise likely will. Salespeople are tenacious--they will get through, and you need to be the person to steer the conversation."If you have your head in the sand," warns Haines, "you will get bypassed." The last thing you want is for your boss or boss's boss to hear how you've sloughed off what seems to be a great deal or business improvement possibility. It's much better to invest 30 minutes to rule in--or rule out--a potential asset. That way, when the CFO calls you and wants to know why we're not doing business with so-and-so, you can respond intelligently.

Better yet, if you're able to relate a real story about a misleading sales pitch, you can make an annoying vendor not only go away, but stay away. If you discover that the statement "we provide the hospital with professional services," actually means "we provide the hospital with printer maintenance," you'll save your co-workers a ton of time if they're contacted by the same vendor in the future.

When you're deciding which type of provider to use, consider whether you want a "vendor-agnostic" systems provider or a true VAR with a product relationship. This decision depends largely on the nature of the project: If it's a straightforward single-vendor implementation, a provider with a product bias is fine. If, instead, you're asking for a study on what product you should be using ... well, don't let the fox guard the henhouse.

Even after you decide which type of provider you want, finding the right adviser is a little like doing a job interview. Haines counsels IT managers to ask about how a provider has structured its practice.

"If their only answer is, 'we've been trained,' it's time for 'no thank you,'" he says. You must listen for a somewhat detailed description about methodologies and look at credible frameworks. If a desktop management VAR tells you it's going to "install and leave," for instance, take your business elsewhere. But if it provides a detailed checklist and lifecycle flowchart that clearly illustrates real-world experience in handling desktop management on a long-term basis, move on to the next, and most important, step: Check references and vet the organization. This means, for example, checking up on certifications to find out if a "CISSP on staff" claim is still valid. As Ronald Reagan said, "Trust, but verify."We must emphasize that vetting your provider isn't about doing a single project--it's about finding one that is worth having a conversation with and worth sharing your initiatives with. The savvy provider is going to know this will generate business at some point. But don't put the cart before the horse--the relationship must come first, before any projects are assigned. Even if "all" you're doing is a simple lifecycle server replacement, you're still not going to trust this to the pay-by-the-hour PC tech.

Tie the Knot ... or Not

Finally, decide what kind of contractual relationship you want, and how the project will be structured. Obviously, check market rates and make sure you're not paying a premium, but heed a word of caution based on our collective experience: Absolute power corrupts absolutely--that is, if a vendor is given carte blanche or is signed on to a fat contract with no performance metrics, you can expect poor performance. If you don't want a junior engineer assigned to your project, say so.

If you want signoff and the right to rigorously interview a new engineer or consultant assigned to a project, spell it out in your contract. If you possibly can, build in either a review period with an exit clause, or build longer projects out in a "cancel at any time" way. If a vendor offers an attractive discount for you to sign on for a long period of time, say yes only in the context of a service-level agreement. For tips on SLAs, see "Service-Level Management: You've Been Served". For more on negotiating contracts with vendors, see Affordable IT: Negotiating IT Contracts .

"If I get a rep that's not that great, I'd call the company and ask for a replacement," Stelzl says. "You're not stepping on toes, you're investing your money wisely."Just as you need feedback on your staff from the IT perspective, a provider needs customer feedback to know where problem areas are. But you can't provide this if you're not familiar with the chain of command at the provider.

Jonathan Feldman is director of information services for the city of Asheville, N.C., and a contributing editor to Network Computing. Previously, he was director of professional services at Entre Solutions, an infrastructure consulting company based in Savannah, Ga. Write to him at [email protected].

Whether you're looking to date-and-see or to go steady, here's a quick reference guide for a successful VAR relationship.

» Identify whether you're seeking a commodity product or looking for actual "value add." If it's the former, stop here--you aren't looking for VAR love, you're looking for a quickie on the Internet.

» Make an appropriate investment in the presale relationship. If you ever expect to need local-area talent, odds are you'll need it pretty darn quickly. If you've sized up capabilities and separated the "no-talent shoe salesman" from the savvy technology consultant, you'll be ahead of the game. This doesn't mean you have to commit to 20 hours of meetings, just make what you feel is an appropriate investment in time. Don't be afraid to share your IT strategy, unless it's a proprietary company asset. See if the players have experience in your industry, if that matters. But don't leave this until the last minute. Although you often can quickly tap a regional or national organization, finding local talent can be a long process.» Scope the project. After you write your scope of work, consider whether it fits into the "local-area VAR" model, or whether you'd be better off with the product manufacturer's professional-services organization. Decide whether "vendor-agnostic" is right for this project.

» Vet prospective service providers. Check references rigorously. Find out if the employees with the sexy credentials are still with the organization, or if they've left but the company "accidentally on purpose" left these names in its publicity materials.

» Negotiate contracts. Check what the market rate is for the job you're negotiating, and make sure you're getting a good price with appropriate SLAs (service-level agreements). The larger the dollar amount involved, the greater the need for a service contract.

» Follow up. When things go wrong, know the chain of command at your VAR. Don't be afraid to be frank with your sales consultant about the level of service or change reps if need be.

Smart value-added resellers have dumped their ex-shoe-salesman types and are leading the charge with consultants who know about their customers' businesses and have substantial IT architectural knowledge. But a few VARs still haven't gotten with the program--we've all heard horror stories about IT managers seeking business intelligence who end up enduring mind-numbing presentations.We're here to help you avoid that pain. In a nutshell, select a VAR that seems honestly interested in your business, listens closely to what you have to say, respects your requirements and concerns, asks meaningful questions, takes ownership of presales inquiries and follows through on answering your questions. After you make a purchase, the VAR should track the sale and offer you updates. You shouldn't have to guess when your order will arrive. Yes, you can have all this--it just takes an investment in time and patience to build a healthy relationship.

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