VAR500 Research: Is Vendor Exclusivity Right For You?

Loyalty may be a simple word to define, but in the high-tech world, demonstrating loyalty to any one partner isn't quite cut-and-dried.

In a recent VARBusiness 500 quarterly survey, 52 percent of solution-provider respondents said they prefer to maintain open relationships with vendors (whereby a vendor encourages sales of its own products in conjunction with those of other vendors). Forty-nine percent said they prefer to lead with a particular vendor in any given technology category and sell exclusively that vendor's products, if possible.

But ultimately, whether a VAR opts for "exclusivity" depends on a host of factors--among them, the types of solutions that VAR deploys and the nature of the VAR's business.

Take Henry Cheli, president of Herkimer, N.Y.-based Annese & Associates (No. 368 on the VARBusiness 500). He uses Cisco Systems hardware exclusively for his IP-telephony business. "We can do best-of-breed this way, and if a customer asks for a different product, we'll say we don't do it because we don't think it's a great solution."

But to put together an end-to-end IP-telephony solution, customers usually need some things that Cisco can't provide, such as application software. In that case, Cheli tries to go with Cisco-recommended vendors, or with ones he has worked with in the past. So, in a nutshell, he's Cisco-exclusive when he can be.

For Robert Swanson, president of Newport Beach, Calif.-based Delta Max (VAR500 No. 451), vendor exclusivity is a no-no. As a consultancy, his company is often called upon to perform independent hardware and solution evaluations. Being loyal to particular vendors would compromise his neutrality. "It's not enough to say you're independent. You really have to be [that way]," Swanson says. "Most consulting deals end up in big hardware and software deals, and word gets around."

To many, loyalty is a two-way street. Jeff Burgess, president of Northbrook, Ill.-based Burgess Computer Decisions (VAR500 No. 460), works closely with Hewlett-Packard and thinks it's perfectly reasonable for the vendor to expect a certain degree of loyalty when it opens doors for a VAR.

When HP brings potential sales opportunities to solution providers, "no one should be side-selling other products," Burgess says. "If an account [brought in by HP] comes back to us and says, 'I need another vendor product,' I'll go back to my HP contact and ask if they're aware that the person is asking for something else. They may say, 'Don't do it' or 'Do whatever you want.' Our attitude is that it's not our account, it's theirs."

Burgess sells products from other vendors, too, including Lenovo and Cisco, but, on any given account, he makes every effort to remain loyal to the partner that brings him in on the deal.

Rich Shovick, vice president of vendor relations at Oconomowoc, Wis.-based Paragon Development Systems (VAR500 No. 247), says demographics prevent him from selling any one vendor's products exclusively. "I would sell only HP if they could guarantee [my business] in two states, or at least in all of Wisconsin," Shovick says. "If they want exclusive, then give us exclusive. I'd wear an HP hat every single day if they could do that."