Best Buy Inks Services Deal With Ingram Micro Services Network

The big-box retailer has signed a deal with Ingram Micro in which Best Buy For Business will utilize the Ingram Micro Service Network as a national services bench.

It's a big win for Best Buy, which announced the formation of a partner program in June, and for the IMSN, which had upgraded its own IT infrastructure in order to support large deals with national IT providers.

In the deal, Best Buy will use its own Geek Squad technicians to handle up to sub-server solutions, such as desktop and notebook services. For server solutions and higher, the IMSN takes over, said Jason Beal, director of sales for Ingram Micro Services. In addition, IMSN provides Best Buy with a larger geographic footprint in areas where the retailer has no physical presence, he said.

"The way they describe it to us is they were having to walk away from larger national deployments and projects because they couldn't cover the majority of sites through Geek Squad. They had to turn away the business and they were tired of turning down that business," Beal said.

Best Buy executives were not available for comment. The two organizations hashed out the deal over several months. All services leads passed through to the IMSN will be issued through a centralized system at Best Buy's headquarters in Minneapolis, Minnesota.

Best Buy will create a statement of work, scoping out the details and enter the request into IMSN's system. For major projects that may require multiple IMSN partnerships, IMSN's staff will manage the request and handle the selection and deployment of resources, said Brian Weaver, manager of Ingram Micro Services. For smaller "one-off" deals, Best Buy will locate a partner with their own pre-sales team, he added.

The services rates will be based upon IMSN's existing formula for partnerships between members, factoring in the scope of services and geography, Weaver said. "You'll get higher rates for midtown Manhattan than you will in the upper Midwest," Weaver said. For larger projects, Best Buy will work with Ingram Micro to calculate quotes, Beal said.

"Part of our role within IMSN is pricing consultation with partners. We may say this is what the market will bear, but we do not dictate pricing," he said.

Ingram Micro takes a "toll booth fee" for generating the work order, not a percentage, which helps it calculate fair prices for both sides, he said.

Ingram Micro declined to speculate on how much business will be generated with Best Buy. Beal also does not expect Best Buy For Business to commoditize services margins that VARs currently make.

"They're a Fortune 100 company, like Ingram Micro. When you have a really big ship, it's harder to turn. I don't anticipate a windfall of services [projects] in the thousands in the next month or so, but some projects have been done with them already," Beal said.

Tony Williams, vice president and CTO of Riata Technologies, Austin, Tex., an IMSN member, said the Best Buy deal is exactly what the IMSN was hoping to land when it upgraded its systems infrastructure.

"The IMSN has been working real hard to seamless integrate into these national entities. It's a huge win. It demonstrates that their IT infrastructure strategy is working," Williams said. "The ease of integration into [IMSN's] systems is key. Ingram's got it now. They're a group focused on services and they're getting it. It's funny to the VARs to see those guys have to fight the battle we've all been fighting for several years [to migrate to services].

Williams also said it's too early to tell what impact Best Buy For Business could have with IMSN.

"The biggest hurdle for them is going to be getting away from the consumer mindset. If theyr'e going to be successful, they have to partner with effective and demonstrated resellers. They're working with best of breed [with IMSN]," he said.

Williams is also confident that Best Buy for Business won't lead to lower services margins for the industry. "Ingram knows what the market can bear. Geek Squad is a level of service that's going to be more commoditized than true network support and what commercial work is going to be," he said.

Kevin Learned, director of professional services at Whalley Computer Associates, Southwick, Mass., another IMSN member, noted that Best Buy has already publicly said it can't handle business clients by itself.

"They said they've been unsuccessful in business accounts using Geek Squad. They're not geared up to support them, so I don't see them try to commoditize [services] at all," Learned said. "We're very excited about the whole opportunity. The Best Buy name is a household name. Networking requires more depth of bench space with technicians at a more efficient rate than they could do themselves."