Roundup: Hot Topics From Four VARBusiness 500 Roundtables
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What's on the minds of VARBusiness 500 executives? At Tuesday's VARBusiness 500 Conference, a handful of themes emerged from a series of captivating roundtable discussions. Here are the highlights:
Managing Channel Conflict
One hot-button issue for any solution provider is managing channel conflict, something some vendors do much better than others.
"As a multivendor partner, we work well with some vendors, but with some of our others we're trying to find the sweet spot for trying to avoid channel conflict," said Keith Boyer, COO and CMO for Data Management Group, a solution provider in Hampton, Va.
"We're working real hard at it and trying to get the vendor to realize that we control the account as much as the vendor," said John Varel, CEO of Fusionstorm in San Francisco. "Size helps. Where we might not have gotten a return phone call from a vendor at one point, once we do $X million in sales for them, they know that if they don't get back to us, we'll call VARBusiness and complain. We want to keep our margins, and God know they want to keep theirs, so we keep an open dialogue."
Others say that while some vendors are better than others at managing channel conflict, no one has got it down perfectly.
"Even if they have [managing conflict] as a stated policy and can talk about why you should continue working with them, they've never been able to do it; I don't care who the vendor is," says Frank Mogavero, chairman of Data Systems Worldwide in Woodland Hills, Calif.
Hiring And Retaining Employees
Hiring and retaining people with the right sales and technical skills is top of mind for executives running some of the most successful solution provider companies. There's an IT skills shortage, according to the executives, and it's causing them to rethink how they staff their organizations.
"There just aren't people out there," says Richard Bocchinfuso, CTO at MTI Technology, based in Irvine, Calif. "We used to not hire young people. We used to say that we don't develop people but hire them. That has changed. We have interns this year. We want to train them and put them into the workforce."
Mike Cox, president and CEO at Bloomfield Hills, Mich.-based Logicalis, says the personnel situation is a bit of a revolving door; he's been hiring back salespeople who left for the competition only to find that the grass isn't any greener.
Shiv Kumar's solution to the staffing drought is to partner with other solution providers to fill in gaps in his own company's skill sets. ZSL, in Edison, N.J., specializes in business-intelligence solutions, says Kumar, the executive vice president. To be able to offer customers other services, the company has created a formal network of other VAR partners.
NEXT: Problems with hardware sales and the way enterprises do business.
Softening Hardware Sales
Harvey Najim, president and CEO of San Antonio-based Sirius Computer Solutions, has a confession: He said he's been in the high-tech business for 80 quarters—20 years—and has never seen a softer quarter than the past three months of this year, especially when it comes to hardware. Turns out he wasn't alone. Other participants chimed in to corroborate Najim's assessment of the quarter—among them, Jim Dixon, president and CEO of CompuCom Systems, a Dallas-based systems integrator targeting enterprise accounts.
"I was wondering what was going on, if it was just us," Dixon said. "But then I started talking to other people and found out that it was an industry thing."
Data from VARBusiness' State of the Market midyear report revealed the same finding: What solution providers have struggled with most in the past quarter is hardware sales.
But the $25 million question is why. What made hardware such a tough sell for VARs from April through June? Nobody at the roundtable had definitive answers, but a few had theories.
"People are worried about the war [in Iraq], the price of oil," said Chris Ferry, executive vice president of Technology Integration Group, in San Jose, Calif. "The stock market's doing terrible, and nobody wants to spend money."
Najim thinks the channel is just caught in a customer-purchasing down cycle.
"At Sirius, we're hitting the depth of that curve in almost all [product] areas," he said. "Customers are becoming very smart purchasers, too. They know when pricing rises and dips, and I wouldn't be surprised if we get a lot of end-of-June orders, when the prices have been driven down."
Enterprise Purchasing Agents
Another recurring theme for the solution providers gathered at the VARBusiness 500 roundtables, and throughout the event, is the increasing prevalence of purchasing agents taking responsibility for enterprise technology spending that had been under the jurisdiction of IT departments.
The result, VARs say, is further erosion of already tight margins given that sales are being judged more by cost than by overall technology solution value.
"We're running into this on a continuous basis, " said Lew Johnson, president of New York-based Siwel Consulting. "Once a [purchase order] required maybe three signatures when it came from IT. Now you see POs with 12 signatures. Everybody and their brother needs to approve it. There is no way to get around it."
While the trend of companies using stock-purchasing strategies for technology buys muddies the VAR waters, most solution providers at the VARBusiness 500 Conference said the tactic is here to stay, and they are resigned to working within such systems.
"We acknowledge this can be painful when dealing with long-term clients," said Laurie Benson, CEO of Inacom Information System, in Madison, Wis. "On the other side of it, all of us who expect to grow need new customers. We view [presenting the business case to a purchasing agent] as a strategic opportunity."
Others say they deal with purchasing agents on a case-by-case basis and factor it into their negotiations.
"It comes down to creating value and maintaining that value," said Alan Creepo, vice president of sales of Cleveland-based CBIZ Network Solutions. "Be confident in the full solutions that you are selling. For us, we're just not going to break things out line item by line item. We just won't sell that way. You have to be prepared to walk away from the deal."
