Growth Engine

All told, the 2008 VARBusiness 500 is worth $377.76 billion. That's a bit larger than the GDP of Saudi Arabia. Another way to picture that: Roughly 375 NFL stadiums can be built for that amount of money, although there'd be far more stadiums than teams.

This year, 113 companies debut on the list, the same number as in 2007. Mergers and acquisitions affect the list every year, taking away perhaps from one market area but adding to another. Finally, companies that were started up only a few years ago are now coming of age and making some serious revenue. The list continues to evolve and is as vibrant as ever; despite all the recent economic turmoil, the threshold to enter the list has risen--our 500th company is a $32.6 million concern.

Last year, we debuted our separate list for vendor services divisions, such as IBM Global Services, Cisco Services and Xerox Services. Those vendors that offer system integration, IT training, fix-and-repair services are included within that listing. In 2007, VARBusiness included 25 companies; in 2008, we offer a Top 40.

EDS took the top spot for the second consecutive year, leading the pack with $22.1 billion in revenue. Though it's increasingly tougher to post increases at such high sales rates, the technology-services company saw a better than 4 percent rate of growth. EDS president Ron Rittenmeyer took on the role of CEO on Sept. 1; see our interview with Rittenmeyer on page 24. Rittenmeyer replaced Michael Jordan, who was brought in to lead a turnaround at the company in 2003.

The collective growth of this year's top solution providers outpaced last year's significantly. In 2007, the list's solution providers increased revenue by 18.6 percent and the 500th company recorded revenue of $24 million. This year's revenue growth is nearly six points greater, and the last VAR on the list reported sales of $33.4 million--slightly less than a 40 percent jump.

Why are solution providers doing so well in the face of a lackluster economy? A number of VARs say it's because they offer cost-effective ways for clients to stretch their IT budget dollars. Return on investment is increasingly important, especially when times are tough. "We're starting to see less focus on technology and more on operational efficiencies," said Robert Venero, CEO of Future Tech (2008 VARBusiness 500 No. 337) Holbrook, N.Y. "There's no question that ROI is going to be one of the strongest drivers in '08."

Of course, the largest system integrators and consultants contribute a great deal to the $377.76 billion figure. The Billion-Dollar Club has 64 members, up from 57 last year. Those elite VARs make up $275.67 billion in combined revenue--73 percent of the total VARBusiness 500. Of those solution providers, 56 increased revenue year-over-year, an increasingly difficult feat to achieve as companies grow.

That leaves more than a quarter of the list's revenue to be made up by the remaining 436 solution providers. The 113 newcomers pulled their weight, contributing $32.67 billion to the overall figure, with an average annual revenue of $289.07 million.

Next: Mergers And Acquistions