Ahead of the Curve: Mastering Change

Unlike previous years when the story of the VARBusiness 500 was the sheer size of the market or the monumental valuations of the companies, this year the story being told is that of the companies themselves. The patrons of business reengineering are reengineering themselves. The doctors must now swallow hard and take their own medicine. They have advised their client companies to embrace supply chain efficiencies, and now they are doing it themselves. They have been the arbiters of systems integration through the extended era of merger mania, and now they, too, are acquiring companies and attempting to grow organically themselves.

Growth through external financing is being facilitated by the emergence of Web integrators, an up-and-coming breed that has helped loosen the purse strings of the investment community. They don't fit Wall Street's classic valuation models. Influenced by the stock market success of these companies, financial analysts are tossing out the old models and replacing them with new ones that accommodate the new companies.

Exodus Communications Inc., which makes its debut in the VARBusiness 500 this year, is a 5-year-old Web integrator that has grown 325 percent in the past year and has millions tied up in its data centers. It has raised the barrier to entry for systems integrators generally. Exodus and companies like it are redefining the VARBusiness 500,at the very least, they are defining their own segment. Most of all, they are redefining the way Wall Street looks at large service companies. Find out how in "High Finance Becomes E-Finance" .

Our second feature, "Selling At the Top" , confronts some of the cultural and marketing changes taking place among the VARBusiness 500. With CEOs losing their jobs because they can't come up with a coherent plan for the emerging world of e-commerce, the VARBusiness 500 is in the hot seat. Planning for e-commerce is a technocrat's nightmare because it is neither a straight technology nor a political play. It involves some seat-of-the-pants decisions, and CEOs are flailing about looking for answers. Can the VARBusiness 500 provide Web economy direction to its legacy customers, or is the chasm between the dot com generation and traditional companies already too wide?

In our third feature, "Inside Outsourcing" , we explore the business of outsourcing. Outsourcing became a dirty word in the past five years because many of the expected benefits never materialized for end users. The same things that prompted end users to outsource in the first place are prompting outsourcing companies to outsource themselves. They are seeking and finding many of the same supply chain efficiencies and retail price advantages their customers are seeking. Our feature examines which companies are achieving those goals.

In our final feature, "Giant VARs Breaking Into Small Biz", we tackle the problem or opportunity afforded by small and midsize businesses (SMBs). Everyone knows that the real growth in the market is among SMBs. But the VARBusiness 500 has not traditionally been able to support and service scores of small companies. It's a part of the market, however, they will ignore at their own risk. Many among the 500 have invented strategies for adding SMBs to their target markets. IBM Global Services, for example, has been out front on this issue, choosing partnerships with VARs as the business mechanism. Is it succeeding? Or is this market just too risky for its tastes? We cover those issues in our story.

No doubt, the numbers speak for themselves, so in this issue we concentrate our features on the topics that most closely affect the VARBusiness 500,those that drive the numbers. We hope and trust you'll enjoy this issue.