Can The Carriers Commit?
Both Presidio and SPS highlighted carrier sales as a great way to add recurring revenue and margins, while driving yet one more selling point with customers. Representatives from both solution providers admitted, however, that most carriers don’t have a good track record when it comes to the IT channel.
“Carriers tend to reach out every three or so years and tend to change their programs,” Mulloy said. “There’s always a confrontation or competition on who’s going to drive the hardware or services.”
Partnering with Verizon and AT&T is often a “nonstarter,” Mulloy said, because both are Cisco Gold partners that also sell hardware to customers. That, according to VARs, leads to conflicts.
“Some of the larger LECs [local exchange carriers] just aren’t channel-friendly,” Franconere said. “The way they manage certain types of accounts sometimes makes it difficult to work together.”
If carriers are to be true partners with VARs, VARs need to know those carriers aren’t going to compete with them, said Nigel Williams, senior vice president, sales and strategic alliances, at service provider Level 3 Communications, Broomfield, Colo.
Level 3 is unique among service providers of its size, Williams said, because it doesn’t embrace those reseller deals itself, preferring to let partners lead.
“We could do that -- we could become resellers, too -- but that gives us a ‘me too’ value proposition,” Williams said. “And then, I’m competing with Dimension Data, or BlueWater or Presidio. I believe I get better value by partnering with them. Why it works is I’m not competing with them.”
A solution provider like Presidio, Williams said, can layer its professional services on top of customer engagements as it brings Level 3 services into the deal. With Level 3, VARs can earn 15 to 18 points of commission on the total contract value of the deal for the life of the contract, which, as the deal sizes expand, can mean some pretty healthy returns, Williams said.
He estimated that more than 80 percent of VARs are missing out on significant revenue by ignoring carrier services such as Level 3’s.
“This is additive, and a lot of them are leaving money on the table by not bundling telecom into that value proposition,” Williams said. “At Level 3, I’m not a Microsoft, or an Avaya or a Cisco reseller. That’s the beauty of it.”
NEXT: Residual Reluctance