Services The Key To Success, Fast-Growing VARs Say

A razor-sharp focus on services is leading to dramatic increases in sales, VARs said Wednesday at CRN's first annual Channel Chiefs and Fast Growth Executive Summit in New York.

Solution providers attending the event, some of whom are recognized on the 2006 CRN Fast Growth 100 list, said services prowess is driving more customers to view them as strategic partners and outsourced IT departments, rather than as just another vendor.

Click for photos of the Fast Growth 100 ceremony

Michael Axelrod, a principal for e-Brilliance, said the Conshohocken, Pa.-based solution provider expects its sales to jump to $6 million this year, up from $3 million in 2005. Virtually all of the revenue gains stem from services rather than product sales, he noted.

E-Brilliance's increased business is coming primarily from .Net and J2EE application development, according to Axelrod. That services expertise has led the company to work with vendors like IBM, Microsoft and BEA Systems, but licensing revenue isn't part of the solution provider's business model. The secret to e-Brilliance's success: "truly understanding the client's needs," he said.

"We understand the business needs of the client. We don't consider ourselves a vendor. We consider ourselves a strategic partner," Axelrod said. "That tight relationship means that e Brilliance acts as the outsourced IT department for its customers and is therefore not going up against other solution providers to get business."

Larry Rine, CEO of Intersect IT Solutions, Lake Bluff, Ill., said nearly all of his sales growth is coming from the company's managed services offering. "We are a services business," Rine said, adding that he expects services relationships to drive more product business.

That's the case at SL Powers, a West Palm Beach, Fla.-based MSP that has seen its hardware and software product sales triple over the last several years.

"The only thing we are selling, marketing and focusing on is our managed services products," said SL Powers President Rory Sanchez. "With every one of our clients, we have reached that trusted adviser level where everybody wants to be."

In turn, that has led customers to look to SL Powers for full range of products. "They are not price shopping us," Sanchez said. "They know we are not the low-price leader. They also know we are not price-gouging them."

Sanchez said that three years ago, he expected 70 percent of his SL Powers' sales to come from services. Instead, the company's sharper services focus continues to drive product growth, with sales still split 50-50 between products and services.