Learning From Failure

Many solution providers are facing the most challenging period of their careers

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Thomas J. Gotshall, president of Technical Solutions, looked me in the eye and said, "I am just glad I survived 2001." That was his reaction when we spoke about this issue's cover story, "Why VARs Fail" (page 30). Just about every solution provider I encounter these days has a tale of how harrowing the past 12 to 18 months have been in this business, or a story of a fallen comrade. To begin with, the ratio of uncertainty and change is high for those living in the solution-provider community, so to say this is the most challenging period that group has ever faced says a great deal. As a result, many are reflecting on what went right,and what went wrong,in their businesses.

About the only words of comfort I can find are that success is the result of surviving your failures. I can't take credit for that paraphrase, but it is certainly applicable to the solution-provider community. Many of today's most successful solution providers are those who've persevered through the tough times, applying the lessons from their failures to their future business decisions. Some were able to do that way back in the early '80s, when it was becoming apparent,to some,that they had no future in hawking boxes. Many multimillion-dollar businesses with hundreds of employees were shredded like Enron's financial documents, never to be seen again. Others fought to make the transition to the next generation of technology-solution selling.

The cycle was repeated in the early '90s, when the pure product reseller model was under intense pressure, prompting many to start building services businesses. Moving from products to services was,and still is,no easy task, but many solution providers owe their success today to that bold decision. Others in our cover story were scorched because they were too tied to product sales or couldn't manage unwieldy services businesses. Perhaps we are on the precipice once again,which is why we decided at this particular time to run a story on failure.

As we began reporting and researching, we realized solution providers often don't get much in the way of great management advice. So we sought out those who have been successful working with solution providers and leading them to more profitable futures. You will find some of their expert advice in this package and also on our Web site. You may even want to develop a worksheet based on consultant Ken Wasmer's advice.

Meanwhile, economic forces continue to play out in the channel today. One longtime technology integrator in New York closed up shop after a long run, but had three dozen employees scooped up by a Chicago-based integrator experiencing a banner year. Talk about your best of times and worst of times. Another veteran, Lante, escaped the ravages of the dot-com bust and survived to pick up the assets, accounts and employees of fallen integrators. Then we have a story that will send those born after 1980 to the microfiche files: Industry pioneer Jeff McKeever, whose life's work collapsed into a Chapter 11 filing last year, has decided this business is too good to resist. During a time when many of his peers are plotting retirement, he's buying back the company name and hoisting the MicroAge banner back up the flagpole.

What is even more fascinating is the sheer number of consultants and strategists who are building businesses around helping solution providers prosper. Some are former solution providers who experienced the agony of defeat. That alone makes them worthwhile teachers. Others are making a living by aggregating salary information that can help integrators price out customer projects or make careful payroll decisions. A cottage industry has blossomed from the solution-provider community intent on bringing companies back to health or improving the fortunes of those on the right track. So we called on some of these experts to pen stories for this issue and for our Web site, which has resources that aren't in the book.

Industry veteran Rob Wolfe, executive director of sales at Avcom, recently told me: "This industry goes in cycles that flush out the weaker players, and it's happening right now." Rob's right. We hope our cover story helps you to not only survive, but thrive. Tell me your story at rdemarzo@cmp.com.

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