Five Trends That Help VARs Grow

With an economy in the doldrums, it's hard to believe there are companies out there not only surviving but thriving. The VAR500 comprises companies that, on average, grew more than 11 percent year-over-year. So what do they see as aiding their success? Here are five key trends and how they're making the most of them.

1. Social Networking Motivates Creativity

Some top 500 companies are using social networking sites as models for employee collaboration. Not everything in this arena has to do with Facebook or LinkedIn. However, the idea that people enjoying sharing ideas with others is applicable to the work environment. For example, Tata Consulting Solutions (TCS) has an internal social networking site in which 80 percent of its workforce is actively engaged.

Why bother? TCS CIO Ananth Krishnan says looking at posts is an excellent way to find future project leaders in particular areas. For Krishnan, reading ideas that bubble up from within the ranks helps him identify thought leaders. "It gives visibility to employees," he said. "There are 120,000 to 130,000 people on the social network. It has really grown virally. Average age under 30 may help also."

For example, an innovative project that uses cell phone technology to provide farmers in India up-to-date information concerning their livelihood -- such as weather forecasts, pricing, etc. -- came out of that internal networking site.

2. Layoffs Create Talent Pool

With tech companies such as Sun, HP, Yahoo and Cisco announcing layoffs this spring, there's a plethora of talent available. But sometimes it's tough to determine who the real gems are.

3MD/Denali of Redmond, Wash., has 350 employees, has no debt and owns its real estate. It's a private, cash-rich solution provider, said Vice President John Convery. "We are in a position to take advantage of a situation where great, skilled people are now in the job market through no fault of their own," Convery said. The HP VAR has made seven new hires since the beginning of the year, including a solutions engineer from Sun. It's strategically building its state and local practice, hiring experienced people who know their way.

"It used to be a stigma if you weren't employed. It meant you weren't on top of your game," Convery said, who admitted 3MD/Denali manages its bench very carefully. "I don't agree with that assessment, because we've found talented people who were laid off. It comes down to referencing -- doing your due diligence -- and face-to-face interaction. When the chemistry is there, it doesn't matter if a person is currently employed."

3. Cloud Computing: Hype?

Many VAR500 companies agree that the question with cloud computing is: Just how much of it is real, how much is "buzz," and is any of it really new?

The CIO of NYSE Euronext, Steve Rubinow, remarked at last week's VAR500 conference in New York that much of what falls under the umbrella of cloud computing is not new at all: It's grid computing, Software as a Service and virtualization marketed as "the cloud."

Still, it behooves companies to pay attention to the market, know what customers want, and if a VAR's services fall under "the cloud," then market them that way. If you can't beat 'em.

4. Selling To New Customers

During the current economic climate, making a sale is more challenging than it has been in the recent past. Not only is it more difficult to ring up new customer sales, but current customers are often working within budget confines. For Paul Whalley, president of Whalley Computer Associates, a successful strategy has been going out with his company's message and taking market share from the competition. Others agree, noting that the potential number of customers is not growing so it's imperative to prove you are a better value than your competitors. If you don't do that, they surely will.

5. Data Center Migration

Data centers are a hot topic for solution providers' customers. Some have too many -- often the result of acquisitions -- and want to consolidate, while others may need to expand a small center, or want to own their software applications but not the building that it is housed in. They may be interested in load balancing or in storage for backup tapes. But what is common among all these types of customers is the desire to have resilient, efficient environments, said Vice President of Data Center Services Bill Peldzus at GlassHouse Technologies.

"End users don't know or care where applications are. Our job is protecting from any type of outage," he said. "We have a customer who just learned how important data center planning is: Its fire- suppression system went off accidentally -- the sprinklers brought that center down for four days."

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