How Do You Measure Up?

A maniacal focus on the bottom line helped the BIC solution providers hit a gross margin number close to double that of the typical solution provider, the IPED data show. Product margins for the BIC group averaged 47.6 percent vs. 25.8 percent for the rest of the channel universe. BIC consulting margins were 37.8 percent vs. the industry average of 27.5 percent. And managed services margins for the BIC reached 30.2 percent vs. 23.7 percent for the other VARs.

The average deal size for BIC partners was almost 20 percent higher than for non-BIC solution providers: the average transaction for a BIC solution provider totaled $43,000 vs. the industry average of $36,000. Customers handled by BIC solution providers, as measured by annual revenue, also tended to be larger than those managed by average VARs, IPED finds.

For example, 27 percent of total revenue for the BIC group came from customers with annual sales of more than $250 million, compared with 22 percent for the industry average. Likewise, while 50 percent of the average solution provider's revenue came from companies with annual sales of less than $10 million, the BIC group derived 46 percent of its sales from this client group.

BIC solution providers, too, kept a tight rein on cash flow. Their net working capital, the length of time receivables are outstanding, totaled 7.8 days for the BIC group vs. 26.8 for the average solution provider.

Not surprisingly, the BIC solution providers embraced business models that tilt more heavily toward services and away from product sales than did the average solution provider. BIC solution providers derived 25 percent of their revenue from consulting services vs. 19 percent recorded by the average VAR. Conversely, the BIC solution providers generated 40 percent of their sales from products vs. 45 percent for the average solution provider.

BIC solution providers also supported a higher percentage of billable hours during which employees can fuel their services-oriented business models.

Next: A look at billing, marketing and training