It cuts both ways. The steadily increasing demand for cloud and hosted services means both carriers and VARs are equally eager to partner with each other, and is at least partly behind the convergence between what used to be two separate and distinct channels. As the boundaries between the IT and telecom channels begin to blur, so too are old labels such as "IT VAR" and "telecom agent."
Craig Schlagbaum, vice president of indirect channel sales at Comcast Business Services, said that as VARs adopt carrier services and advise clients on the best connectivity solution for their business, both groups should simply be known as "solution providers."
"I think in time the two communities will be indistinguishable; they'll look the same," said Schlagbaum. "That has to do with end users' needs and desires. They want someone buidling all those solutions for them, and in effect that's what a solution provider is. That solution provider may be selling cloud services, communications services, professional services. In the end, to the client they look like the trusted adviser, which is what a VAR is, which is what a solution provider is, and I think in time it will be one and the same."
Although full convergence is not yet upon us, many carriers say that traditional IT and equipment VARs are quickly becoming their fastest-growing partner base. According to Vince Bradley, CEO of master agent World Telecom Group, up to one-third of World Telecom Group's new partners this year came from the IT solution provider space. He expects to see that number explode in 2012.
Because VARs have that unique trusted adviser relationship with customers, telecom service providers and cable companies alike are actively courting the channel. And more and more, for VARs selling services in the cloud, connectivity is a critical piece of that sale. When looking to offer a total solution to customers, VoIP, SIP trunking, MPLS, VPLS, co-location, Ethernet and other networking technologies are becoming integral components.
But navigating the labyrinthine world of carrier services can be tricky. The residual revenue streams are unfamiliar to VARs used to up-front compensation, and in the carrier world where commissions aren't paid out until months after the sale, it can take time to see significant compensation build.
Another perceived barrier to carrier adoption is simply that telecom companies and carriers haven't been viewed as channel-friendly. VARs worry that they will be competing with carriers that also sell hardware. Or that once they've made that hard-earned carrier sale, they may lose the client to the carrier once contract renewal time rolls around.
But that perception is changing as more carriers -- seeing the massive opportunity VARs present -- are abandoining their competitive posture and launching programs to tap the power of indirect sales and welcome VARs with open arms.
For VARs willing to make a top-to-bottom commitment to carrier services, the payoffs can be huge. Carrier services are a definite value-add for end-users; they can increase VARs' stickiness with their clients and prevent another service provider from swooping in and providing these valuable services in their stead. Selling carrier services means that VARs will no longer sell the client a box and move on to the next sale; now, they'll stick around providing solutions and support for the life of the contract. And the revenue streams, which are significant once accumulated, keep flowing on a monthly basis for the life of the client relationship.
Carriers feel that the enormous benefits VARs bring in terms of market penetration and client loyalty are well worth the investment in training and education. Many telecom service providers and cable companies have programs that cater to VARs as they are getting acquainted with the carrier space. VARs can start selling carrier services in a variety of ways: they can simply earn a fee by referring a client, work side by side with an agent or carrier while they're learning the ropes, or take full control of the sale from the initial consultation to install. There are also options to partner either directly with the service provider or through a master agent. Many programs offer presales consultation and support, product training and education.