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The Security Squeeze
As in other areas of IT, many security solution providers are getting squeezed from all sides to commit to 100 percent exclusivity with their vendor partner.
“There’s always been pressure,” said Jim Freeman, principal and CFO of Attain Technologies, a Denver-based solution provider. “When we started our business 10 years ago, we set it up as vendor-agnostic. It’s a little hard for me to pick a solution until I know what the problem is. What’s happened over time is that we find ourselves doing more multivendor solutions so we don’t run afoul of the pressure we get from HP, CA and Cisco.”
Freeman feels he has successfully resisted the intensified vendor pressure and has remained vendor-agnostic by sticking to a model that never allows revenue from any one vendor to exceed more than 40 percent of his business. Vendors inevitably will have more leverage over the VAR once revenue starts to exceed that, he said. “If you’re 90 percent HP, you’re going to get the pressure,” said Freeman.
It also helps that he keeps almost 50 percent of his business in managed services, which enables him to be more self-sufficient and less vendor-dependent. Should Freeman become exclusively reliant on one vendor, he believes “it would make it very difficult for my recommendations to have as much credence with our customers. My credibility with the customer is gone if [vendors] need us to influence deals in their direction. It’s just not realistic in a channel model.”
Other security-focused solution providers, however, can see their way clear to submit to a vendor’s exclusivity clause if that vendor partner helps them provide a specialized or niche service to customers. Leo Bletnitsky, CEO of Las Vegas-based Las Vegas Med IT, said that GloStream, which provides electronic medical records software, demands partners uphold exclusivity by requiring them to refrain from advertising or selling competing products. Glo-Stream also requires a $36,000 entry fee for its channel program. “I’m sure if it came to their attention that we were selling competitive products, they may choose a different partner,” Bletnitsky said.
Being exclusive wasn’t a hard decision in this case because the only competing product wasn’t as strong, he said. Meanwhile, GloStream reciprocates the exclusivity clause by solely partnering with Las Vegas Med IT to sell its products in that geographic region. “It’s nice that it’s not open to everybody,” he said. “We have exclusivity from them and they have exclusivity from us.”
In this case, Bletnitsky said he was confident he was promoting the right product. If not, he was at liberty to recommend other products -- just not sell them. “If our solution is not right for the customer, I’m going to let them know. Even if we convince someone to buy something from us that isn’t the right solution, eventually they’re going to figure it out,” he said. “The client is worth a lot more than the sale.” —Stefanie Hoffman
NEXT: Riding The Software Train