Rocky Road Ahead

By June, all good sales and channel managers start using the tools at their disposal to hit their numbers for the year. At that point, you can pretty well estimate how close you'll get to your target--at least in most industries. High-tech, though, can be a pretty unpredictable place, so you can never really be sure if you're ahead of the game or behind the eight ball.

That's one reason we compile a midyear report based on the annual VARBusiness State of the Market survey. What we found will be useful whether you run a solution-provider organization or operate channels for an IT vendor. Here are two key findings.

1. VARs are on a shopping spree to help them drive sales in the second half of the year. Not content with their existing product mix, solution providers are bringing in new gear while shelving slow-movers faster than a Las Vegas blackjack dealer can shuffle a deck of cards. While solution providers aren't putting gear-filled boxes curbside for the garbage man, they are reconfiguring their portfolios, which sends subtle messages to certain vendors.

When we surveyed VARs in the fourth quarter of 2005, they said they expected to add, on the average, only seven new lines to their portfolios this year. But they've added 12 in just the first half, and they anticipate adding six more in the coming 12 months.

The reasons for those additions are varied. Some added Acer after shopping around for better display prices; others are gearing up to add Novell's new desktop Linux software as an alternative to Microsoft. But it all comes down to one thing: Solution providers are trying to hit their numbers, and they'll add whatever is necessary to do it.

Need evidence? Of VARs surveyed for our State of the Market midyear report, 39 percent said their sales through the first half of 2006 fell short of expectations. And keep in mind that solution providers are generally an optimistic lot. Now is the time for every vendor to spend some quality time with VAR partners, or suffer the consequences.

2. Hardware sales are the softest part of the channel's sales portfolio through the first half of the year. We looked at a variety of areas, including consulting services, software sales, break-fix and managed services, and hardware seemed to be the most problematic, especially for small solution providers.

CA, like a Timex, takes a licking but keeps on ticking. Another day, another scandal.

Maybe the company will be forced to go back to using its full name--Computer Associates--to distance itself from its latest financial woes: the mismanagement of $70 million in sales commissions. Let's throw out all the cliches: This will rock CA to the core, bring it to its knees and find it flat on its back. I say any company that can survive all that CA has can endure the latest problems with ease.

Given all that the company has been through, CA employees are probably treating the latest fiasco about as seriously as they order lunch in the company's outstanding cafeteria. Just look at The Wall Street Journal for the week of June 5. It's all there--the mismanaged commissions, the departure of sales chief Greg Corgan, a former IBM executive. Then, right after, are three pages of ads touting CA's products and strategy. Whoever said fact is better than fiction had that scenario in mind.

I'm sure when John Swainson took over CA he couldn't have prepared himself for what has befallen the company. He lost his top sales executive, COO and top technical strategist, and endured financial stress that would make Alan Greenspan cry. But the $3.56 billion machine just keeps going. Deep inside CA, developers keep writing code to support the company's storage, security and management software, while solution providers head out the door to visit with customers. Short of a sinkhole swallowing the entire Islandia, N.Y., campus, I just can't see anything that will stop CA.

VARBusiness Trivia is back: Before CA renamed BrightStor, what was the product's name and original feature set? Nobody came up with the right answer to last issue's question, although there was lots of e-mail about ComputerLand of Texas: Name one of the industry's earliest and biggest computer resellers that was based in Texas. The answer: CompuShop or ComputerCraft. E-mail me with your answer.

Robert C. Demarzo is vice president/publisher of VARBusiness and GovernmentVAR magazines.