VARs Grapple With High Price Of Software Talent

The biggest challenges for the software partners of top-tier vendors may be the same hurdles the vendors face. That would be finding and retaining talent and keeping the cost of that talent and their infrastructure within reason, according to Mick Gallagher, CEO of LST.

"General and administration cost is constantly rising. Couple that with software margin erosion and [the cost] of implementation, it puts pressures on partners to increase marketing activity locally," he said.

And local activity requires both money and real-world presence.

That may have been one reason Gallagher's Fallbrook, Calif.-based company, then known as Life Sci Technologies, acquired Lohmueller & Associates, a Raleigh, N.C., NetSuite specialist.

LST, with expertise in life sciences, now has coverage in California, Utah, Nevada and North Carolina.

LST delivers solutions either on premises or via a hosted model. Its primary software partners are Oracle and NetSuite--a provider of hosted ERP.

Software-as-a-service is something LST believes in, but while some customers welcome what can be a lower cost of ownership and predictable pricing over time, others still worry about security.

"Clients want to ensure their data is secure and private. When this is a standard with SaaS, then functionality and rapid deployment will be the key to success," Gallagher said.

Another issue is partner vs. partner competition. Microsoft Business Solutions partners in some locales say their ranks are so saturated that margins have been squeezed unacceptably. The key, Gallagher said, is more partner-and-partner collaboration vs. competition. The age of specialization is here and it can be difficult for any one solution provider to field the resources necessary to support a customer's entire tech infrastructure.

"The client looks to the partner to be a trusted adviser. The partner may be seen as the one source to handle all their main software components," he said. "We service Oracle, JDE, PeopleSoft and Siebel [but] for a single partner to have expertise on staff with experience in all those modules takes years. Therefore, for resource availability your choices are collaboration or acquisition. Collaboration is immediate and acquisition is costly. We have chosen to do both."