Virtual VARs

The biggest proponents of the virtual VAR model are distributors. To one degree or another, they have all boosted their services beyond basic logistics to include a variety of offerings that result in them interacting with end customers directly on behalf of their VAR customers.

The core difference between broadline and enterprise specialty distributors in this regard is scale. Companies such as Ingram Micro and Tech Data, concerned about the decline in the volume of purchases moving through distribution, are adding support services intended to allow solution providers to focus on consulting with their end customers rather than tying up capital on logistical operations.

Many of these efforts mirror services that traditionally only have been associated with specialty distributors serving enterprise customers. The challenge facing Ingram Micro and Tech Data is whether or not they can profitably deliver high-touch services to VARs within an open distribution model.

Traditional enterprise distributors are betting their rivals can't be profitable combining volume, services and an open model. They argue that VARs building complex solutions that truly leverage a distributor need to have ongoing relationships under a closed model where the two sides can interact on a daily basis over the life span of a project.

It's hard to say that one argument has more weight than the other. The fact of the matter is that distributors of all stripes and sizes increasingly want to embed their services inside the business models of their VAR customers. For some VARs, this is an unnatural act fraught with peril because their business is now more dependent on the quality of services delivered to their end customer by their distributors. For others, it's a highly efficient business model that is as natural as breathing.

Today, there are probably more VARs in the former than the latter category. But given the complexity of the solutions being built today and the costs associated with running a company, it's clear that tomorrow that balance will shift.

Are you moving toward the virtual model? I can be reached at (516) 562-7477 or via e-mail at [email protected].