Arrow's Midmarket Mojo

Arrow has built more than 40 end-to-end solutions for specific vertical markets and technologies for midmarket customers, said Kevin Gilroy, president of Arrow Enterprise Computing Solutions. The distributor's goal is to develop solutions that solve specific customer needs, but are also replicable to take to multiple customers, he said.

To date, midmarket initiatives from both vendors and distributors have failed because they weren't economically feasible to all parties and because they lumped the wide range of customers that comprise the 100- to 5,000-seat space together, Gilroy said. Arrow's new program will be different, he said.

"What makes this different is VAR analytics, an algorithmic work based on subjective and objective data. This is a nonlinear model," Gilroy said. "We're understanding the end user for the first time. We're not contacting them or selling to them, but we have a health-care expert in-house and all he does is understand health-care business problems. We're going to bring on other market experts."

The initiative is rooted in a broader change that's occurred within Arrow's ECS group, Gilroy said. No longer are there a group of siloed divisions focused on specific platforms for about 700 VARs, as was the case with the old Support Net, MOCA, SBM and storage-focused units. After acquiring Alternative Technology Inc.—and its 6,000 customers—Arrow restructured itself for more cross-selling opportunities, and Arrow ECS sales have increased 91 percent on a global basis in 2007 compared to 2006, Gilroy said.

Arrow's goal is to provide every VAR with strong, end-to-end solutions that solve specific business problems for specific vertical markets. That means incorporating hardware, services, ISV applications, storage and more—and doing it in such a fashion that it can be tweaked, but replicated, across multiple customers, to lower solution providers' SG&A costs, said Mark Taylor, vice president and general manager of Arrow ECS' Midmarket Group.

"The whole investment in data analytics helps build a road map. How to take a reseller in Atlanta, who's sold to three local hospitals, but is not aware of another 27 in the area he covers, how can we help him target those companies with these solutions and what are the business problems those hospitals are facing? Wrap around marketing services and that really makes this a powerful business model. It changes the economy for that VAR," Taylor explained.

In developing its midmarket initiative, Arrow sought advice from VARs, including Jeff Albright, founder of Albright Consulting Services Inc., Evansville, Ind., to best figure out what the VARs needed. Albright thinks the program will be big for solution providers.

"Rather than just some knee-jerk reaction by saying 'we're going after the midmarket,' these guys go about it fairly methodically," Albright said. "They've done it right, they've got the back end of things ready to roll and they have the depth of [vendor] partnerships to make it happen."

In particular, Albright sees value in the creation of vertical market solutions to take to multiple customers. "This is stuff that's reproducible. It's not cookie-cutter, but it's easily tuned for more client executives," he said.

Arrow has enlisted IBM Corp., Armonk, N.Y., as its first key partner in its midmarket push. While IBM has been criticized by some VARs for a perceived lack of products designed for the midmarket, Gilroy said the vendor was a logical choice to hit that customer segment.

"They have the right pieces of the puzzle. The failure hasn't been the lack of the right toaster for midmarket, the failure's been in the go-to-market. It's been in replicable, scalable solution sets to make a ton of money," Gilroy said. "We're not seeing the [disconnect]. There are a lot of midmarket companies that want to see Unix in their solution."

Added Albright, "Historically, people's perceptions were you can get laptops from IBM or mainframes, but now when you look at the breadth of product line, from the xSeries all the way up to zSeries, with pSeries in the middle [midmarket products] are there. You can run pSeries in a blade chassis; you can run Sun Solaris on the blades. It's a more pervasive footprint than it used to be, even two years ago."

Next: Gilroy Offers 'Glengarry' Leads