Heather Clancy

THE BUZZ

May 24, 2007

It was great to connect this week with so many solution providers during CRN's annual Industry Hall of Fame event, especially just a week after we reported about Dell's new thinking with respect to the channel. Many of you tell us that it will take weeks if not months to convince you of the company's sincere change of heart.

Certainly, Hewlett-Packard's intentions for business partners seem a lot clearer. But it hasn't always been that way and I couldn't help but notice the healthy growth in services revenue the company reported for its second fiscal quarter. Revenue for consulting and integration rose 8 percent and outsourcing services rose 12 percent. Overall, the division recorded an operating profit of $459 million on revenue of $4.1 billion.

Last week, the whole vendor services topic actually came up during my interview at the Forrester IT Forum 2007, during my interview with the research firm's chairman and CEO George Colony.

Part of our conversation centered on the role of the VAR and systems integrator in deploying and recommending business technology solutions. It is Colony's contention that the systems vendors will need to continue to get deeper into consulting services in order to influence more sales of their specific products.

Here's part of what Colony had to say:

"Business technology is the very coordinated dance between technology change, process change and organizational change. That is very, very important that those happen together. I think the technology visionary of the 1990s was Lou Gerstner, because Lou figured that out. He said IBM can no longer just sell big boxes, throw them over a wall, just sell the technology, without going over that wall into their client companies and helping them change process and change the organization. My belief is that whether you're Cisco or Microsoft, you can no longer in the future just sell technology, you have to be in the consulting business."

While Colony conceded that this capability could be provided by VARs or systems integrators, it will take more than "arm's length" partnering.

"If you look at any technology company 10 years from now, I believe that somewhere in the area of 25 to 40 percent of their business should be in the consulting business," he said. "And this may not be as good for them, this may not be as profitable for them, and their stock valuations may not be as high, but I'm talking from the customer side. If they're going to truly build business technology, they're going to need not only technology change but process and organization change. The [customers] are going to need help."

I suppose we'll see, but I do believe Dell's decision to partner more publicly with the channel indeed is driven by businesses' flight to technology solutions. One thing you can say for Dell: It has always been focused clearly on what the customer wants, and I believe VARs can benefit from this new dialogue. It will give them a clearer picture about what is best for their own business.

What can the channel learn from Dell? E-mail your comments to hclancy@cmp.com.