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The Ideal Solution Provider

Valuable solution providers are now characterized by their ability to capture customer spend in the data center, when it's hosted or when it's in the cloud.

Bob Faletra introduced these terms at the March 2011 XChange Americas

Transformative, Progressive and Vintage solution providers replace the previously ubiquitous terms Hypergrowth, Growth and Lifestyle VARs. For those of you who have been part of the CRN readership or XChange events, you will recognize these terms as those used in the industry to classify partners by individual P&L performance and planned or actual business growth.

As a vendor channel chief, I have targeted Hypergrowth solution providers showing up on the CRN Fast Growth list every year for recruitment. The growth of mobility, unified communications, managed and cloud services has changed our ecosystem. Hypergrowth is attractive, however, more attractive are solution providers who have or are in the process of making the transition to managed and cloud services without losing their on-premise hardware- and software-refresh skills. Valuable solution providers are no longer represented by revenue growth but are now characterized by their ability to capture customer IT budget spend in the data center, when it’s hosted or when it’s in the cloud. This is the new “attractive or ideal” solution provider capability or profile.

Transformative solution providers are characterized by a majority of company revenues recognized in a recurring revenue fashion. This is an emerging business model for solution providers and represents a very small population. Cloud pure-play solution providers like those who grew up around the Salesforce.com or Google public cloud models also fall into this category where the majority of revenues reflect a recurring-revenue-managed or cloud service offering, or project-based services in support of recurring-revenue-managed or public cloud solutions.

Progressive solution providers are characterized by an active investment in training, education and solution offerings in a recurring-revenue-managed or cloud service. The majority of company revenues are project-based hardware and software-refresh driven; though recurring revenue solutions are an emerging capability, new offerings have been identified, sales staff has been trained and the transition is under way. The majority, greater than 60 percent of solution providers in the U.S., fall into this category.

Vintage partners are those who largely remain in a hardware and software one-time-charge, project-based revenue strategy. There are likely no plans to incorporate recurring revenue offerings onto the line card. In fact, some Lifestyle partners fall into this category as they near retirement and feel a need to protect and maximize company revenue used to calculate a company sales price. That’s fair, and I might do the same thing in the short term if I saw an immediate exit plan. If by chance, however, there is a longer-term future for your company, don’t wait to engage on the Progressive track.

Where do you land in the new model, and why?

BACKTALK: Contact SVP, IPED MarketBridge Alliance Rauline Ochs via e-mail at rauline.ochs@ubm.com.

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