The VARBusiness 500: In the Right Place At the Right Time

We call this year's VARBusiness 500 "The Architects of the New Economy" because these companies, in particular, are helping to build the e-business economy. Dot-com or brick-and-mortar customers, along with the broader solution provider community, have only one place to turn to put the Web to work--the VB500. The phrase "The Architects of the New Economy" doubles as our tagline and is resonating with our readership, so there's no better place to examine these new business models than in this issue. "New" might not apply to all members of this elite roster, but for every new entrant, there are dozens that have reinvented their business models by focusing on e-business solutions and services.

That is probably the biggest story of the VB500. Overall sales for the group were $231 billion, up a healthy 21 percent over the previous year's total of $191 billion. The revenue gain was the result of strong demand for the products and services the VB500 companies provide, along with the inclusion of 78 Internet professional services organizations on the list. Many of the companies on this year's list were helping to transform entire industries.

Can you think of two markets more impacted by e-business than financial services or manufacturing? It's no coincidence that 348 solution providers listed financial services or manufacturing as an industry focus. Not only has e-business reshaped the way we trade stocks, but it is transforming the less sexy backroom operations of firms such as Merrill Lynch or the way the Big Three automakers manage parts inventories.

Under Pressure
Clearly, the VB500 companies are in the right place at the right time. Still, it's a volatile and strange locus. (At least two VB500 companies are operating under Chapter 11 bankruptcy protection.) Never before has there been as much pressure on business models or from the competition. And as many companies transition to a more services-oriented model, they are being tested by a severe shortage of IT workers.

In addition, the explosion of business models serves as an interesting backdrop. As Al Senia, our features editor, writes in his "What's Happening To Our Market" story on page 31, the Web integrator model has been sliced and diced to encompass five distinct business models: ASP, ISP, interactive agency, strategic Web consultant, and Web integrator and developer.

No matter what you call yourself, heed the advice of Nelson Carbonell, CEO of Cysive Inc., one of the most profitable Web integrators in the industry: "We provide one critical service. We allow [our customers] to build the technology platform they need to run their businesses. And we don't do anything else. We think technology differentiates the winners from the losers." For the future, Carbonell sees customers relying on a wide range of e-business specialists who are best-of-breed in the areas of consulting, infrastructure or development.

This year's list is a tribute to the spirit of entrepreneurs, like Carbonell, who are willing to support a wide variety of business models. It's also a guide to how the consulting branches of technology vendors are blossoming. Sure, IBM Global Services is on top with $32.2 billion in sales, but it's followed by a long list of vendor units from others, including Sun Microsystems Inc. and Microsoft Corp.

Still, the list is about the companies and people who make their livings selling technology. It's about No. 264, Western New York Computing Systems out of Rochester, N.Y., or No. 500, International

Integrated Solutions Ltd., operating out of suburban Long Island, N.Y. These are the mainstream solution providers that are making their livings selling to the nation's small and midsize businesses.

What do you think of this year's VARBusiness 500 crop? Let me know what your thoughts are at rdemarzo@cmp.com.

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