Compliance and regulatory issues and how they affect solution providers were the main topic as Arrow Enterprise Storage Solutions this week rolled out its first solution provider advisory council as part of its first-ever solution provider summit.
Unlike most partner conferences, where most of the time is spent on issues related to the vendor and what it offers to solution providers, most of the Arrow ESS summit was taken up by third-party consultants offering information on compliance and marketing issues.
Lance Sedlak, director of enterprise storage marketing at Arrow Electronics North American Computer Products, said this was intentional. "We wanted to give the big picture of the new markets for our customers, and then get into specifics about how Arrow will help with the new opportunities," he said.
Randolph Kahn, Esq., principal at Kahn Consulting in Highland Park, Ill., and an expert in compliance and regulatory issues, told solution providers that the focus on IT has shifted from faster, better and cheaper to compliance.
However, Kahn said, there is still much confusion as to what compliance means, and how the channel can present solutions to help their customers.
Compliance is more than laws and regulations, Kahn said. Instead, it includes any company policy. As an example, he cited the case of a hospital that had a policy to put information from a patient's visit into his record within two days of the visit, but in one particular instance that information was not recorded until five weeks later. Five years later, that patient was involved in a lawsuit with the hospital, and the hostpital's case was hurt by not following the policy.
For that reason, Kahn said, it is important when approaching customers about compliance issues to involve corporate executives as well as the IT department, because they control the budget and create corporate policies. "If the people at the top have a 'get it done at all costs' mentality, you don't think that will trickle down?" he said.
Kahn was followed by Tori Eggleston, director of planning and strategic services at Industry Direct Ltd., an Atlanta-based consulting firm.
Eggleston said compliance is a huge opportunity for the channel, with spending for Sarbanes-Oxley alone expected to be in the $3 billion to $4 billion over the next couple years. HIPAA spending, on the other hand, could be upwards of $12 billion, she said. In 2004, she said, the average cost to a Fortune-200 company for Sarbanes-Oxley is expected to be between $5 million and $7 million.
The business case for IT solutions related to compliance includes a number of selling points that address customer pain points, Eggleston said. These include the saving of significant audit and attorney fees, a decrease in errors and omissions insurance premiums, a limiting of the possibility of human error, and relieving of staff of manual operations related to answering one-off questions about a company's compliance status. "Your job is to bring the cost (of doing business) down and reduce error," she said.
For storage solution providers, compliance issues is an attractive market because it means new business for both new and existing customers, and takes advantage of new budgets. It is also a profitable business because certain practices are repeatable for multiple clients.
Ryan Morris, president of Circa 65, a Denver-based provider of marketing services to the channel, later took the stage to discuss the importance of marketing for solution providers.
One of the biggest mistakes solution providers make is marketing because their competitors do it. If one cannot correlate marketing spending to sales, it becomes a hollow strategy. "For solution providers, marketing must be measurable," he said. "If it can't be measured, I don't care what it looks like, what the idea is, how much it costs, or how many people see it."
Morris also told the audience that advertising on a one-time basis is worse than not advertising at all. "If someone sees a mailer from you, and nothing else, they may think you have gone out of business," he said.
There are three points a successful marketing program must have, said Morris. First, the message must focus on the customer, not on the solution provider, and should stake out a unique position. "When asked what you do, the common answer is, 'I sell EMC,'" he said. "The answer should not be about you, but what you can do for the customer."
The second point is that marketing must be targeted to specific potential customers. "If you send out 5,000 mailers, you are doing it wrong," he said. "You have to know who your customer is."
The third point is to offer customer education seminars. Morris explained this point by defining those three words. By "customer," he meant the actual decision maker, not the "techies looking for a free T-shirt." By education, he said to hire an expert to make sure attendees' time is not wasted. He also said not to "beat the customer up" with a sales presentation at the end. And by "seminar," he said it has to be face-to-face, not over the phone.
Morris also suggested three things that should not be done: mass marketing to the mass media, focus on speeds and feeds, and participating in big trade shows.
Sedlak said that Arrow is working to build the business practices of its solution providers with services aimed at helping them with such things as compliance and marketing.
The distributor is working on a funding model in which the financial investment to implement new strategies are spread across the vendor community, Arrow itself, and individual resellers, said Sedlak. Details of the program are expected to be available in July, he said.
"These services will be delivered under Arrow's marketing support services programs, and will be provided by Arrow and firms such as IDL and Circa 65," he said.
The distributor will initially target its largest solution providers for the program, Sedlak said. "But it will be available to all organizations that are truly interested in growing their practices," he said.