Finding Growth With Emerging Vendors

Steven Burke

June 19, 2009, 07:05 PM EDT

Solution providers are driving a higher percentage of their sales and profits from emerging vendors in the midst of the greatest economic downturn since the Depression. That's because emerging vendors are delivering more innovative solutions at a better price for customers and driving higher profits for solution providers.

In 20 years of doing data backup for his small- and midsize-business clients, Robert Henriksen has suffered through many sleepless nights.

"I've had plenty of failed restores with older products," said the president and owner of Houston Technology Consulting of Houston. Failed restores, indeed. Thirty-three percent of the time, Henriksen said, he would run into problems doing a backup restore with traditional tape and disk.

All that changed when Henriksen did a deep dive on online backup and made the decision to partner with emerging vendor eFolder, an Atlanta-based online backup and e-mail archiving service that has been winning raves from solution providers for its innovative technology and best-in-class channel program.

Since partnering with eFolder, Henriksen says he has tripled his profits and provided his business with a robust recurring revenue stream that is for all practical purposes "in perpetuity" since his clients are much more satisfied. A backup solution for a five- to 10-person office could run $2,500 with older technology products, he says. Now it's a monthly recurring fee and the client knows their data is secure and can be easily restored. "Clients are much more satisfied," said Henriksen. "They don't have to do anything. It runs in the background. I feel much smarter. I am happy and sleep better. It's a much better solution for them and me."

eFolder is one of 140 vendors in this year's CRN Emerging Vendors class. Solution providers say they are driving a higher percentage of their sales and profits from these emerging vendors in the midst of the greatest economic downturn since the Great Depression. That's because emerging vendors are delivering more innovative solutions at a better price for customers and driving higher profits for solution providers.

Solution providers say emerging vendors across the board -- in software, storage, security, networking, VoIP and virtualization -- are delivering hands-down greater return on investment (ROI) for them and their customers. They say emerging vendors are more channel-friendly (like eFolder, many emerging vendors are members of the 100-percent-channel sales club) and provide better technical support and service (solution providers say they are able to get high-level technical help at any and all hours from top-level technical talent). Not only that, they say they are able to get to developers and make product changes that benefit their clients.

Henriksen says he has put in several change requests to eFolder's development team and received a new build in a couple of months. In 20 years of doing business with dozens of vendors, Henriksen says he has never partnered with a company that is as responsive to partners.

One reason for that kind of channel commitment is that eFolder was co-founded by two former solution providers and was built from the ground up as a channel-centric company. "We come from the channel," said Bill Gross, co-founder and secretary-treasurer of eFolder. "We feel like we know how the channel wants to be treated and how they should be treated."

That kind of channel commitment is paying off for eFolder, which continues to show double-digit sales growth. The company's storage recurring revenue stream was up 25 percent in 2008. "We're pretty excited about it," said Gross. "In my experience, the smart people and strong people take advantage of bad times and actually do better."

Kevin Hoffman, CTO of eFolder, says the company's online backup solutions are being embraced by customers looking to cut costs and improve their cash flow. "Instead of a huge up-front fee to buy software and maintenance contracts, our usage model is month to month," he said. "It helps smaller companies with cash flow. Hard times favor a business model like Software-as-a-Service."

Henriksen couldn't be happier with eFolder and its products and services. "I like the business model and the steadfastness that they only work through the channel," he said. "I don't need to worry about channel conflict. They support me to make me successful and that makes them successful. It's a win-win situation."

And he now sleeps a lot better. "I have more peace of mind, more money, better service and more responsiveness," Henriksen said. "It's been a big step forward."