The Partners Of the Year

Every year, many of the industry's top vendors dole out their "Partner of the Year" awards to the best and brightest solution providers. In preparing this special Business Intelligence issue, which takes a look at the partners that constitute the channel and the state of their market today, I thought it would be worth looking at how these benchmark solution providers performed in 2003. Would their success, or lack thereof, provide insights on the unique state of affairs in the channel today? Here's what I found.

Vendors aren't dummies, and they generally have a handle on who their better partners are, as measured by both financial success and the ability to satisfy customer demands. So it would naturally follow that partners of the year outperformed their peers in terms of market success. More often than not, they did. That said, however, many still struggle to compete.

"One would think that companies like ours would have no trouble competing, but we're still struggling like everyone [else]," says Terry Petrzelka, president and chairman of Tectura, a Phoenix-based company singled out by Microsoft as a Partner of the Year previously. Of course, "struggling" to Petrzelka means planning for his company to only double in size over the next 12 to 18 months. (This year his company is likely to post sales of around $35 million.)

Unlike others that are taking as much profit out of their companies as possible--if they can generate profit at all in this tough IT economy--Petrzelka is ploughing back virtually everything his company nets into the company. Like Cisco CEO John Chambers, Petrzelka believes in investing heavily into his company during a down cycle to pave the way for future growth and profits.

"All I'm trying to do is keep at zero or just above profitability," says Petrzelka, who believes a rebound in IT spending is in the offing. Another reason he's encouraged to keep investing more of his own money into the company: Petrzelka is seeing renewed interest by venture capitalists in funding service companies.

Others are seeing similar trends. Take Trigo Technologies, a 2003 IBM Partner of the Year award winner. The Brisbane, Calif.-based Linux and software development specialist, which employs more than 125 professionals across North America, Europe and India, recently received a $12 million investment led by Pequot Ventures to expand its business globally. Already profitable, Trigo is planning to use the investment to fast-track new product development while expanding sales, marketing, development and alliances.

Some companies, however, excellent or not, cannot escape the fate of the vendors they align with. BASIS, for example, a San Francisco Bay Area winner of a 2003 Sun iForce Excellence Award, survived in a difficult Sun market this year, but its parent, ProLogic, which was delisted from Nasdaq in 1998, continues to struggle. Despite the challenges ahead of it, BASIS now has a greater presence throughout the Southwest, and delivers what Sun considers to be excellent customer service and technical expertise.

Anexinet, a dot-com survivor and 2003 Lotus Beacon Award winner, is also doing its part to rebound along with the improving economy, although the Philadelphia-based company still faces challenges. After exploring alliances with MicroStrategy and Cable & Wireless, the company that once specialized in e-commerce solutions has stabilized its business by getting closer to companies whose products provide the foundation for what is sustaining Anexinet's business today: infrastructure. That has brought Anexinet closer to BEA, EMC and Microsoft.

Other partners of the year have benefited by remaining focused on what they do best. Mardi Norman, president of 2003 Sun iForce award winner Dynamic Systems, Los Angeles, has maintained a tight focus on her sector. Although federal spending is perceived to have held up better than other sectors, Norman has had to deal with tight budgets, increased competition and even shifting buying trends in order to stay competitive.

"The government, just like, I think, everyone in the economy, has a tight budget, and they're choosing to put a lot more money into maintenance services," she told VARBusiness. Once a basic hardware reselling operation, Dynamic Systems has reacted to changing buying preferences by increasing its services capabilities. Thus far, it has paid off. In the company's most recently completed fiscal year, sales grew 59 percent over the previous year.

Of course, being a partner of the year never hurts when it comes to closing new business. Shortly after being selected a Cisco Partner of the Year, Berbee, provider of technology and data-center solutions, closed a deal with EMS, a U.K.-based e-business solution and hosting provider. Not bad for a Brooklyn Park, Minn., company.