Partner Power

Unlike the channel efforts of many big brand-name manufacturers, these solution provider programs are put together by companies that are not only “talking the talk, but walking the walk,” said Rory Sanchez, president of SL Powers, a West Palm Beach, Fla., solution provider. “Anytime a VAR creates a reseller program, it’s channel-driven. That’s because they have designed a program that they would like to see every manufacturer build.”

Sanchez is one of the VARs profiting from this growing peer-to-peer play. SL Powers resells the DoubleCheck Email Manager appliance made by Network Management Group Inc. (NMGI) because it packs a lot more margin with a lot less channel conflict.

In the case of an outright sale of the DoubleCheck product, Sanchez is making 50 percent margin compared with a typical 25 percent margin for a competitive bigger brand offering. With a managed services sale, the difference is astronomical: triple the margin over the stand-alone DoubleCheck product over a three-year time frame.

What’s creating these kinds of high-margin opportunities are channel programs crafted to drive highly profitable solution sales, said Sanchez. NMGI, for example, does not publish Web pricing or sell to direct market reseller giants like CDW. When NMGI had a request from a South Florida direct marketer, the company was forced to buy the product from Sanchez. In addition, NMGI does not overload its channel partners with hefty training fees or certification investments. Last but not least, NMGI allows its channel partners to brand the product under their own name.

Sanchez said it only makes sense to resell solutions that have been proven in the field by colleagues. “We are all walking in the same shoes,” he said. “Why would I want to reinvent the wheel? I would rather spend my money with someone that is in the same business as I am rather than a giant corporation where I am just another number.”

The list of offerings being sold by solution providers runs the gamut—they include managed services, such as network performance monitoring, automated tape backup and hosted e-mail spam filtering; extended warranty services; data storage backup systems; and even an e-mail newsletter service. Solution providers say that along with the higher margins, key factors include better and more responsive technical support, the ability to get features easily added or to customize a product, and last but certainly not least no channel conflict. “The bottom line is I make more money selling the DoubleCheck product and I don’t have to worry about my customers being stolen,” said Sanchez.

Besides reselling products from NMGI, Sanchez is running his business with ConnectWise PSA, a professional services software package that was developed and is now being resold by solution provider ConnectWise of Tampa, Fla.

Sanchez is also poised to take the VAR-to-VAR plunge himself beginning in mid-January with a plan to let VARs resell his Guaranteed Networks managed service. Sanchez’s aim is to implement a franchiselike model, letting other VARs leverage the huge back-end investment already made by his company. “They end up making more money because they don’t have to spend the several hundred thousand dollars we did to get up and running,” said Sanchez. “They sell it and maintain the customer relationship.”

That ability to maintain the tight local customer connection without the threat of a direct offensive by a potential flip-flopping channel vendor is another factor behind the peer-to-peer partnering movement.

While the possibility for conflict between solution providers remains a possibility, NMGI, ConnectWise and other solution providers said they respect solution providers’ accounts and would not break a sacred trust between colleagues and partners.

“That fact that we are a VAR makes us a more successful vendor,” said Steve Harper, president of 21-year-old NMGI, which now has more than 100 DoubleCheck partners. “We value the VAR’s time and are not there to inundate them. It does not take a rocket scientist to figure out that we get it. Most of the tier-one vendors with their channel and marketing programs have gone out and hired the best and brightest from business schools. But if you haven’t sat behind a desk and used your credit card to make payroll, you don’t understand the true pain that a VAR feels.”

Harper said NMGI, Hutchinson, Kan., goes out of its way to make sure that all its partners compete on the same level playing field. “The more you sell, the bigger gift box you get at Christmas,” said Harper. “That’s about it.”