5 Take-aways From The 2009 VAR 5003:00 PM EST Thu. May. 28, 2009
The solution providers that make up the VAR 500 are a diverse bunch but share certain common factors. Here are five interesting facts pulled from our exclusive research.
1. Public Vs. Private Companies
Roughly two-fifths of the list is made up of public companies, and their average revenue far outpaces not only the average revenue of private firms, but of the overall average as well. Public companies had an average revenue of $2.6 billion, while private VARs' was $340 million. The average revenue for the list as a whole was $1.2 billion.
The results are even more dramatic when looking at the median, or midpoint, of these VARs.The median revenue of public solution providers was $494 million. Private integrators' median revenue was $79 million. Overall, median revenue was $138.4 million.
2. Technology Of The Highest Growth-Rate VARs
The average growth rate among VAR 500 companies is 11.6 percent. Some grew more, such as HP Services (which includes the former EDS), which grew 34.5 percent.
Among those highest growth-rate VARs, the top five technologies sold include: unified communications solutions, virtualization software, enterprise storage solutions (SAN, NAS, disk), data center consolidation and enterprise security management software. The top three technologies that are growing in importance are virtualization software, data management software and VoIP hardware.
Data management software is increasingly becoming mission-critical to integrators' customers, said Stephen Blythe, CEO of Blytheco (No. 508).
"All companies have some form of ERP or CRM software in their business today. The key to our continued success is to provide these companies with the highest quality services and solutions that are relative to their business and provide a significant ROI to their business. If we cannot prove that ROI value, they will continue utilizing their existing applications," Blythe said. He added that current economic conditions have magnified the value of ERP solutions as a means to reduce customers' costs, thereby increasing their workflow productivity.
3. Largest Vertical Markets
The top VARs run the gamut, serving commercial, government, small, midsize and enterprise markets. Dell Services is one example of a solution provider with diverse customers. But no matter what, the customer is always focused on getting the best value for the money.
"Services that can simplify IT operations and maximize return on investment are increasingly important during these economic times," said Tim Griffin, vice president of Dell Global SMB Services.
The vertical markets in which VAR 500 companies most often engage include federal government, financial services, health care, state and local government, education (K-12) and manufacturing.
Clearly, some technologies generate more revenue than others. VARs that sell data management software, for example, reported average revenue of $350 million. And that wasn't the highest: Providers of Linux-based solutions had the top average revenue -- $452.6 million. The third-highest average revenue VARs sold virtualization (average revenue of $322 million), followed by enterprise storage ($313.3 million) and midrange servers ($305 million).
5. Outlook For Technologies
We asked these top VARs what technology markets they considered to be most crucial to their success. In order of importance, they said: Backup and recovery solutions, networking equipment (hubs, switches and routers), enterprise storage, basic security and servers.