VAR to VAR

Industry insiders have more than a few theories about the growing trend among resellers to turn ideas into products for the VAR community.

Kirk Robinson, vice president of channel marketing at Ingram Micro North America, said the channel always has a need for more new solutions, and VARs with the expertise and willingness to take risks will step up to the plate.

The channel often can't wait for others to provide solutions to customer problems that need fixing today. "We know what we need and the nuances of our business that people not operating in the industry wouldn't know," Bellini said.

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NMGI President Steve Harper said he agreed. "VARs understand the true needs of VARs," he said. That explains why DoubleCheck doesn't require certification for VARs, which lowers the barrier to entry. In addition, the company provides marketing materials and allows the partner to private-label the product.

"We leave control with the VAR," Harper said.

Multiple roles

Harper sees his company as one-third VAR, one-third consulting company and one-third ISV. DoubleCheck, he said, currently markets 18 product SKUs to its partners.

The trend of VARs assuming multiple roles is likely to continue gaining momentum. Highly Reliable's McBride said that as hardware profit margins continue to shrink, VARs thinking about survival will continue pursuing other business models.

This year revenue from 3-year-old Highly Reliable Systems has exceeded that of McBride's Sierra Computers, a 20-year-old VAR. The child has become bigger than the parent, said McBride, who expects Highly Reliable Systems to generate $4 million in revenue in 2008—double the $2 million he expects will be generated this year.

McBride credits this success to what he calls lack of follow-through by vendors in channel relationships, while putting in place certification requirements. "Many manufacturers have been giving the channel lip service for years, which has led to a lack of trust," he said.

Indeed, say some solution providers, manufacturers and providers tend to define "partner" differently.

For its part, Software One, of New Berlin, Wis., has put a new twist on the definition. A Microsoft LAR (Large Account Reseller), Software One saw a gap in the industry when it came to providing software licensing to the SMB market. So the company launched the VARassist Partner Program to help channel partners with a joint go-to-market strategy addressing licensing needs.

"We're 100 percent focused on software licensing and don't compete with our partners," said Brian Fuher, VARassist program manager.

As an outsourcing agent for its VAR partners, Software One provides expertise on enterprise and select agreements, primarily around Microsoft products, which would otherwise be too time-consuming and difficult. The LAR-VAR partnership also opens up market opportunities for channel partners that were previously out of reach.

"Our biggest challenge is creating trust with the VAR community that we're looking out for their interests [and] their customers and that we're giving them the best deal," Fuher said.

High expectations

While solution providers may see introducing products and services for their peers as a necessity, they also recognize that a VAR can be another VAR's most challenging customer. Not only do VARs know what bad service is like, they also are not interested in spending excessive time figuring out how a product works.

"We have to provide a level of service that's really top-notch," says XiloCore's McDonald. After all, VAR vendors aren't just supporting clients; they're supporting experts.

At the same time, there's nothing like having access to the company's president if you're having a problem with a product. Often connecting at trade shows, seminars or through a partner network, the VAR community can get small pretty quickly.

"Not only am I not going to take your customer, if you have a problem with my product, tell me what's wrong and we'll fix it," Harper said. "I'm accessible."

In general, many VARs agree that they often bounce ideas off one another and ultimately offer best-of-breed products that are highly focused and highly customizable.

Many solution providers are surprised it doesn't happen more often.

The trust factor still remains a hurdle for some channel partners. Eberting, who's been in the business since 1994, admitted that it took him a long time to not view every VAR as competition. "I eventually learned there's value in reaching out to other VARs and leveraging each other's strengths," he said.