Alternative Vendors: You've Got Options

Is there a sure thing in the IT industry? One can certainly argue that legions of VARs are making a consistent living pushing the wares of big guns such as Cisco, IBM and Microsoft. It's smart business, after all, as well as safe (at least for the most part) and often lucrative. But all the same, it's a crowded field, with VARs sometimes climbing over one another for deals, scraping for margins and, yes, clamoring for something more.

Options. Yes, there are options. Just as investors are advised by their money managers to diversify their financial portfolios, savvy solution providers should consider expanding their product offerings beyond those of the market leaders.

According to VARBusiness' first annual Alternatives Survey, that's exactly what solution providers are doing. On the average, VARs recommend or sell eight alternative vendor products. The larger players fill out their portfolios with products from about 17 vendors at once.

VARs' addition of alternative or emerging technologies to their product lines is a highly strategic maneuver; to wit, it's the executive management team that evaluates potential new products nearly three-quarters of the time.

In fact, evaluating alternative vendors and products is a constant part of the business life cycle. Thirty percent of solution providers said they study the merits of an alternative vendor on a monthly basis. And among large VARs, 21 percent conduct such evaluations weekly, with nearly one-quarter of those folks surveying the field every day.

And for good reason. By aligning with the so-called alternative vendors, VARs are expanding their market reach into today's diverse customer base while plugging critical holes in their product lines. Along the way, many revel in a more personalized relationship with the No. 4 or No. 5 player in the market, an intimacy not typically attainable when dealing with a market leader.

"The thing I've seen after 20 years in this business is that a company that wants to be a market leader, but isn't, is so much more flexible in accommodating us. They're hungry," says James Kernan, president and CEO of Networks Plus Technology Group, a $10 million San Diego-based solution provider that has cast its lot--and successfully--with alternative players such as Xerox, Trend Micro, NSI and FrontRange Solutions.

Kernan attributes his company's success to a combination of his own aggressive sales strategies and key partnerships with the likes of Xerox, one of the alternative vendors named in the VARBusiness survey.

Networks Plus had been looking to gain more services opportunities and work more closely with its vendor partners in co-selling arrangements. Enter Xerox, which engaged Networks Plus in a pilot program to sell and implement DocuShare, its document-management software product and a competitor to market leader Documentum. Kernan contends that DocuShare features 85 percent of Documentum's functionality--at one-third the price. But that's not the only reason he's happy with Xerox's program.

"Xerox listened to the requirements I had before I signed on the dotted line, including giving us tools for analysis and assessment and hiring field sales consultants to help us go to market," Kernan says. "We'll be a loyal partner to them."

Mark Drum, director of North American channels at Xerox, says the company has made a concerted effort to help partners move up the food chain to more sophisticated, higher-level disciplines such as document management/imaging.

"We want to get partners to higher ground," Drum says. "And it's not just about taking products and some training and putting it on a Web site. We're putting experts in the field with our partners."