Greater Expectations: Solution Providers Demand More From Their Vendors

If you're a consumer buying a PC in a store, you can usually return it within 30 days. So, why don't resellers have a similar arrangement with their suppliers?

It's because too many PC vendor/VAR relationships stink these days, says Edward Laprade, president and CEO of Adnet Technologies, a solution provider in Windsor, Conn., whose list of partners include Cisco Systems, Hewlett-Packard and Microsoft.

"What we need from vendors is pretty simple: We need a company that can provide a quality product, and will stand behind that product when the going gets tough," he says. "There are too many vendors--mostly PC--who are now delivering absolutely horrendous service. If there's something wrong with the product--unless I refuse the shipment at the door--I am basically stuck with it."

So Laprade is seeking something better. And he's far from alone.

Many VARs participating in the 2006 VARBusiness State of the Market survey also indicate that they're maintaining higher overall expectations for their vendors and prospective partners. They want greater flexibility when it comes to putting out customers' fires, better competitive pricing and technology product improvements that address business needs.

Software Takes Precedence

While solution providers are generally optimistic about 2006, they see their greenest fields with software vendors. Nearly 25 percent say they want more software products and relationships, as compared with just under 20 percent for hardware (see "Spreading Out," below).

Simply stated, software vendors are providing the kind of win-win partnerships that VARs such as Adnet's Laprade prefers. He cites software players such as Citrix, Exact Software, Microsoft and SAP as especially strong.

"These companies have an interest in helping us develop our business," Laprade says. "We plan marketing and other events together. Most importantly, when there is an out-of-the-ordinary situation that arises with a client, they will make the necessary exceptions to the normal policies to take care of the client issue along with us."

Software advances and improvements have also enhanced the products as sales options.

"Historically, software has been very difficult to get working well and consistently," says Steve Hultquist, principal of Boulder, Colo.-based Infinite Summit, a solution provider that specializes in technology strategy, implementation and managed services. "The migration of software to Web- and standards-based has made it more effective and less temperamental. It's more likely to solve customers' problems without undue headaches."

Conversely, hardware sales are somewhat constrained by increased commoditization and downward margin pressure, says Scott Spencer, director of enterprise software and security for GTSI (No. 55 on the 2005 VARBusiness 500), a government reseller in Chantilly, Va. "In the software market, we see many opportunities to partner with companies that offer innovative and differentiated products that can be sold at higher margins, especially when associated with strong deal-registration programs."

And what kinds of software/hardware technology niches are hottest among VARs? Not surprisingly, security software was cited as the top technology, with nearly 44 percent of participants saying that this is what they want most from their vendors. Security hardware followed, at 35 percent (see "Security Sizzles," right).

"The demand for security is still very high," says Peter Ransome, executive vice president and chief marketing officer at Active Data Services, a Morrisville, N.C.-based solution provider. "We're involved in providing many solutions supporting health-care, financial, commercial and government markets. Many of the applications that we serve are impacted by HIPAA, Sarbanes-Oxley and the Patriot Act."

Storage hardware (29 percent) and voice networking/VoIP products (28 percent) are also high on VARs' lists.

"VoIP networks are becoming more prevalent because the IP-telephony market is hitting critical mass," says Richard Zimmermann, director of network solutions marketing for Forsythe Technology (VAR500 No. 95), a Skokie, Ill.-based solution provider. "The business enhancements driven by applications like unified messaging and integrated conferencing are forcing enterprise customers to adopt those technologies to stay competitive. And as these systems become more cost-effective for smaller businesses, market demand is increasing. Storage products are also popular as customers continue server and data-center consolidation initiatives. And high-speed access to a centralized data storage areas is becoming more feasible."