A Not-So-Gentle Reminder That There's Value Beyond Volume

We wrote extensively about this "Few and Foolish" syndrome,as CRN's outspoken News Editor, Steven Burke, loves to label it, in last week's July 29 cover story. As you're probably aware, many vendors think it's OK to pin their hopes on an elite cadre of volume-focused solution providers, looking for a quick way out of the high-tech spending slump we all wish would end. The heck with the masses, many of them seem to be saying. Although they might not declare it publicly, actions speak loudly.

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HEATHER CLANCY

Can be reached at (516) 562-7446 or via e-mail at [email protected].

Even some of the broadline distributors are making it tougher for the little guys. First, Tech Data and now Ingram Micro have initiated fees of around $100 just to open an account. In theory, any solution provider joining the fold at either distributor can get this money back once it becomes an active customer. Ingram Micro, as outlined in CRN Distribution Editor Scott Campbell's page 3 story, likely will credit the fee toward the solution provider's first purchase. For Tech Data's part, the distributor offers each new customer a credit toward education, marketing or technical services.

OK, so $100 isn't really a large sum to swallow, and part of me understands where Ingram Micro and Tech Data are coming from. The distribution business is tough these days. They need to subject new customers to some sort of screening. But it's the principle of the thing. It sends a negative message.

It seems misguided to discourage any potential entrepreneur, especially those that are evangelizing new areas of technology. I was reminded of this last week when one of my reader contacts called out of the blue to tell me he'd started a new business, centering some integration services around videoconferencing technology. I think few would argue that his start-up represents the future. But if a vendor or distributor judges his company's value solely on a volume basis, he probably won't make it past the doorman. It's interesting that in the first month that Tech Data initiated its fee, its number of new accounts fell almost 40 percent, even though the distributor's senior vice president of sales, Tim Curran, reports that revenue from new customers has remained the same.

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>> 'If a vendor or distributor judges a start-up company's value solely on a volume basis, that start-up probably won't make it past the doorman.'

Certainly, many "members only" groups, such as Ingram Micro's Venture Tech program, make sense. If someone is looking for customized support or service from a distributor, they should expect to pay for it. Similarly, if a solution provider wants to sell the latest high-end server or storage array, it should expect to make a serious skills investment.

But as Joe Burke, vice president of Arrow Electronics' Enterprise Computing Solutions division, is quick to point out, the names of his company's top customers by volume change from quarter to quarter. His philosophy is to help his customers rise to the occasion and join that list. Of course, the nature of Arrow's relationships with its solution provider customers differs dramatically from the ones they might cultivate with other distributors: When a VAR or reseller turns to Arrow or another midrange distribution player, it is making a serious commitment it must live with for at least a year.

Instead of dissing the guys with no track record, vendors and distributors should look for any opportunity to pin their own growth to the success of the newcomers. Why should they limit themselves to the fortunes of a privileged few?

ROBERT FALETRA is on vacation and will return Aug. 19. Meanwhile, HEATHER CLANCY, editor of CRN, is looking for your tips at (516) 562-7446 or [email protected].