Going Direct

"We didn't think the reseller offered significant added value that we can't get by going direct," says CIO Larry Thomas. And it's not just hardware he is talking about. The company has deployed a business portal using software from CA and Cognos. The company acquired the software direct from the vendor, though it used Cognos partner Sky Solutions to implement the solution.

But now Thomas is looking to bring the maintenance of that system in-house. "It's not that we're untouchable, but it's our culture to do as much directly as we can," Thomas says. "It's nice having that one throat to choke."

Thomas is not alone. According to VARBusiness' 2003 State of Enterprise Spending survey, 52 percent plan to go direct, while the remainder intends to turn to a third party. That near-split is consistent with years past, says John McCain, COO of Cap Gemini Ernst & Young. "We weren't expecting to see any dramatic shift," he says, "although we're seeing more BPO [business process outsourcing] deals come our way."

Many large enterprises are scrutinizing the use of professional services as well. Halliburton, the Houston-based oil-drilling giant, is looking to keep IT spending flat. While it wants to outsource its data-center and storage operations, the company is planning to end its engagement with Accenture, which was the key contractor in a large SAP rollout, says IT director Hugh McIntyre.

So where's the opportunity for solution providers? While 18 percent of those surveyed say they've increased how much they will purchase direct through vendors this year over last, 13 percent say they've increased how much they'll spend through indirect channels. And a majority have maintained the same proportion of buying through direct and solution-provider channels.

Despite preferring to go direct, Landstar's Thomas says he finds it easier to purchase Microsoft software from GE Capital. And Burlington Coat Factory CIO Michael Prince is also using solution providers for special projects. "We use VARs for point solutions but prefer to do the heavy lifting ourselves," he says.