CDW: Friend of the Channel?

When CDW announced its SolutionEdge program last year, it was no doubt met with skepticism by many a reseller. After all, VARs had been complaining about CDW's pricing pressure and its adverse effects on their margins for quite some time. Now, the multibillion-dollar direct marketer is proposing that solution providers actually team up with CDW and hand over product fulfillment while they provide the services and overall solution. That's quite a shift for the channel, considering that 27 percent of midsize VARs consider CDW a major threat to their businesses, according to VARBusiness' 2005 State of the Market survey.

So, could this bizarre arrangement turn a foe into a valued friend? For some solution providers, it already has. After a successful pilot launch last summer that targeted fewer than 10 solution providers, CDW is opening up the program and partnering with more resellers. In fact, more than a few say the SolutionEdge relationship has redefined their businesses for the better.

Dan Duffy, CEO of ePartners Solutions in Irving, Texas, has emerged as one of CDW's biggest fans. EPartners, a top Microsoft Business Solutions partner that specializes in software services, signed on with CDW in March and says the partnership has already yielded results.

"We started the CDW partnership this year, and we're now on a $3 million run-rate for sales from that relationship," Duffy says. "We have 47 dedicated salespeople on our staff, but with CDW we now have 2,500 salespeople. So we'll go into CDW with software solutions and help train their salespeople on how to present key messages on Microsoft solutions."

Even some solution providers that do quite a bit of hardware and software sales are finding value with SolutionEdge, such as San Jose, Calif.-based Dicar Networks, which joined the program in the spring and features CDW's offering prominently on its Web site. Dicar has a solid business around networking technology, teaming with such vendors as Cisco and Hewlett-Packard and offering solutions from security to Voice over IP.

Why, then, would the solution provider want to partner with CDW? Dicar president Armando Garcia says he saw a chance to improve his company's product business. Garcia says the partnership is the best of both worlds--Dicar can continue to concentrate on increasing its high-margin integration and consulting services while still providing products to its clients via CDW's supply chain. With approximately 70 percent of Dicar's product sales now fulfilled through CDW, the solution provider has access to more SKUs and vendors, and can get them to the customer faster, Garcia says. "That was the best route to the SMB market for us," he says.

There's an upside for CDW, too. While the IT powerhouse has more than 60,000 SKUs, a dozen distribution centers and a dominant sales presence, CDW hasn't been able to provide integration, installation and consulting services on a local level--until SolutionEdge. Now, CDW plans to tap an increasing number of VARs to help it deliver those services and extend the customer relationship beyond Web-site purchases for bargain systems.