The Industry’s Premier Solution Providers

More than any other year before, vendors want to get their arms around the industry's top value-added resellers. Perhaps we can attribute this to manufacturers feeling anxious about the future or regretful about how they've treated their partners in the past year. Either way, vendors of all types want to better understand the big channel players and how those organizations can help them deliver IT goods and services to customers. Our readers, in search of potential partners to fulfill complex projects that extend beyond the bounds of their expertise, clamor to know that, as well.

So it's no surprise that our annual VARBusiness 500 issue,and its accompanying online listing,serve as the most enduring research project we publish. Whether a division of a vendor or a pure VAR, no one can deny the power and prestige of the VARBusiness 500, which ranks the top 500 resellers by annual revenue. Last year, those companies generated more than $278 billion in sales, a healthy 12 percent increase over 1999. Let's put that figure into perspective: Imagine the creation of another IBM Global Services (IGS),No. 1 on our list with revenue of $33.2 billion. That's how much the upper echelon of the solution-provider community has expanded. IGS is the most respected company in the business today. IBM chairman Lou Gerstner has IGS to thank for bolstering the company's overall performance during the past five years, making his job a heck of a lot more manageable.

Even more fascinating than IGS' performance, however, is that of the Internet professional services companies, such as Agency.com, iXL, MarchFirst and Razorfish. Those companies rocketed into the VARBusiness 500 last year but face nearly insurmountable challenges now that the Internet bubble has burst. As we compiled the list, many of those companies were scrambling to survive, piecing together an acquisition or filing for bankruptcy-court protection.

Interestingly enough, even though it may be just weeks before the list is refreshed, the VARBusiness 500 remains one of the top destinations on our Web site. That certainly brings comfort to the entire VARBusiness editorial team, who put their hearts and souls into the development and validation of this ranking. Yet, unlike lists that rank the performance of publicly held companies, what makes the VARBusiness 500 unique are the private organizations that populate our annual tally.

In all, you'll find 235 private companies on this year's list. But while the VARBusiness 500 serves as a badge of honor, those companies aren't always willing to divulge their overall sales performances. It takes a combination of hard-nosed research, coaxing and interpretation on our part to determine the revenue of many privately held companies we include. Once a revenue figure is agreed on for a particular company, we ask its CFO to send us a letter confirming the company's sales figure. This was a new element to our overall methodology.

For those companies' publicly held brethren, information-gathering was a bit easier but nonetheless daunting. Many of the companies listed in the VARBusiness 500 are divisions within an operating unit of a multinational conglomerate. SEC documents and analysts helped with this, but there was certainly some undeniable reluctance on the part of parent companies to disclose revenue they generate from professional services and integration work. Too often, that figure is a bone of contention with the channel partners they are trying to recruit or nurture. Still, on this year's list you'll find a large number of vendors whose solution-provider divisions are often making up for shortfalls in product sales.

Despite the obstacles we encountered, the list has clearly come a long way since we first rolled it out in 1990. In the early '90s, we collected data on only 100 companies, all of which were focused on a particular vertical market. We called them vertical VARs. The list's evolution reflects the power, pervasiveness and ubiquity of today's solution providers.

What do you think of this year's VARBusiness 500? Let me know at rdemarzo@cmp.com.