When '500' Speaks, Listen

Hundreds of VARBusiness 500 members recently gathered at New York City's Marriott Marquis to honor the best-performing solution providers of the year and spent two days sorting through today's channel issues.

The event, which started out as a modest award ceremony several years ago, was the single largest gathering of VARBusiness 500 companies and sponsoring vendors to date. Anchoring the conference was a gathering of about 100 integrators to discuss hot issues in today's IT space, from Dell's recent foibles to an overall state-of-the-market assessment. (We expanded this year's event to allow for these discussions, laying the groundwork for an even better show in 2007.)

Four of today's most successful VARBusiness 500 companies assembled for a kick-off panel moderated by VARBusiness editor Larry Walsh, delving into the secrets of operating a successful solution provider.

IBM Global Services' James Corgel, Champion Solutions Group's Chris Pyle, Future Tech's Bob Venero and Logicalis' Michael Cox bandied about a wide range of issues, but one topic got everyone on the edge of their seats: how customers' purchasing departments are gaining more control over value-added services. Every solution provider has to deal with purchasing departments trying to squeeze pennies from peripherals sales, but now the cold-hearted purchasers have set their sights on consulting and professional services, which were previously sold to IT or line-of-business managers.

"Purchasing has stepped in and taken over where we sold value-added services and started taking it to the commoditization level," Champion's Pyle said. "They've gone to the Wal-Mart school, and they're squeezing every nickel."

When the topic first came up, I wondered if it was a bit overbaked, considering the healthy gross and profit margins that VARBusiness 500 companies demonstrated last year. Why get so worked up over some purchasing managers doing what they do best? Well, the backdrop to the discussion emerged later during one of our executive roundtables.

When the topic there turned to second-quarter sales, the participants clammed up, waiting for someone else to start talking. But then Sirius Computer Solutions CEO Harvey Najim, who would be honored that evening with a Lifetime Achievement Award, admitted that the second quarter had been one of the most difficult he has encountered in more than 20 years in the business. Suddenly, hardened channel veterans, who have seen it all, opened up and agreed.

While each exec faces different challenges, most agreed that meeting their sales goals for the second half of 2006 is going to be difficult. While some struggle to manage the complexities of their services business, others are perplexed by soft product sales. For Najim, the challenge is transitioning from a business that focuses on selling high-priced IBM Unix servers to one that centers on lower-priced Intel-based systems.

As for keynotes, Donald Trump's right-hand man, George Ross, offered a spirited look at what it takes to be a great negotiator, and author Malcolm Gladwell mesmerized the audience with anecdotes from his latest best-seller, Blink.

Ross, looking great at 78, can regale any crowd with his Trump stories. Attendees came away with two pieces of sound advice: 1) Business is about relationships. If you take the time to build lasting ones, you'll undoubtedly be successful. 2) Be yourself. Ross is very comfortable with who he is and makes no apologies if he offends or confronts you. (Oh, yes, there's a third suggestion: Never ask Trump about his hair.)

Gladwell talked about how a person's gut instinct can often trump a decision based on careful research. I'm not sure if it dawned on the crowd of nearly 500, but it's just that kind of behavior that defines VARBusiness 500 executives, and VARs in general. Because they often don't have the time or money to conduct a lot of research, they trust their gut. And guess what? Most of the time, they're right. I suppose that's what makes them so good at what they do.

For full coverage of the VARBusiness 500 event, visit our VARBusiness 500 home page.

VARBusiness Trivia Contest Update

There's no winner yet for the June 26 trivia question (Before CA renamed BrightStor, what was the product's name and feature set?), but here's another: What was the first HP laser printer, and when was it introduced?

ROBERT C. DEMARZO is vice president/publisher of VARBusiness and GovernmentVAR magazines.