Chain Reaction

The two channel veterans, who were briefed on the Techknowledgist Services program by CompUSA in August, are glad the wait is finally over.

For years, Walsh, the owner of Computer Station of Orlando, Fla., and Deeley, the manager of Graymar Business Solutions, Timonium, Md., have looked for a large national chain to put together a win-win partnership that tied its product sales muscle with a local solution provider&s services expertise. That search has ended, they say, with CompUSA&s effort.

“I&m really excited about this,” said Walsh, who figures the CompUSA program could conservatively bring him $10,000 to $15,000 in additional services revenue each month. “This is a very compelling opportunity.”

Walsh, who oversees a $1.2 million shop with four services technicians, calls the CompUSA partnership a “no-lose proposition.” He said he may even add another services tech if the partnership pays off. What&s more, he said, the CompUSA effort could spark other retail chains to build local VAR partnerships, potentially forever altering the channel landscape.

CompUSA Vice President of Business Services and Corporate Strategy George Coll said the CompUSA Techknowledgist Services program is aimed at supplementing the chain&s 20,000-strong in-store and on-site services team with VARs skilled in areas as diverse as break/fix, wireless and wired networks, storage solutions and VoIP.

CompUSA will set the services rates (both fixed and hourly depending on the service) and will work with VARs on developing price quotes for complex jobs, he said. “It&s a new delivery model and new strategy to partner with [outside] individuals rather than having only CompUSA team members that provide services,” said Coll. “It&s recognizing the needs and demands of our customers that buy from us and need technology support.”

Coll said VARs interested in teaming with the company for services opportunities must file an application and be certified by the chain.

The company does not have a set number of VARs it is looking to recruit, Coll said. But solution providers briefed by CompUSA said the company is looking for two or three VARs near each brick-and-mortar retail location to ensure there is services talent available even if one partner&s techs are booked on other projects.

One of the most appealing aspects of the CompUSA program is that it is primarily a services subcontracting arrangement, say solution providers. That&s a lot different than the agent relationship proposed to partners by IT behemoth CDW, Vernon Hills, Ill. Under the CDW SolutionEdge program, solution providers give up their customer lists and transfer their product sales to the IT product discount giant in exchange for an agent fee. In addition, CDW brings in SolutionEdge partners as service providers in existing CDW accounts in their area.

“They are looking for a partnership of equals,” said Deeley of the CompUSA program. “They don&t want to take your hardware business from you. What they are offering you is the opportunity to increase your revenues without giving anything away. CDW wants to rob you blind. CDW wants me to give up 30 percent margins across the board on my product sales.”

Norm Lillis, CDW&s vice president of sales, said his company is looking for different partners than CompUSA. “For folks who want to stay in the product fulfillment business, that&s not who we are talking to,” he said. “We are talking to the exact opposite people. We are not talking to tons of VARs. We are only talking to the more sizable players out there.”

Tom Thibault, formerly the president of Thibault Associates, a Pleasant Hill, Calif., solution provider that signed on with CDW&s SolutionEdge, said the CompUSA program would be of little interest to him because of its small-business focus. Thibault sold his company last month to Armanino McKenna, a San Ramon, Calif., accounting and consulting firm, but remains on as a consultant. The company continues to use the CDW agent program. “[CompUSA] isn&t in the space that we are in,” Thibault said. “Our business is [the] small to large corporate space.” However, solution providers briefed on the program said the relationships CompUSA is putting in place will allow it to deliver complex solutions such as wireless LAN with multiple access points for a manufacturing facility rather than a simple SOHO wireless network.

Walsh said the opportunity is a lot different from the break/fix jobs being driven by some services organizations. He stresses that CompUSA&s decision to not force partners to source products from the chain or give up customer lists makes the program a slam-dunk. Furthermore, he said, he will look at sourcing more products from CompUSA. “This brings me services dollars and I&m not giving up my customers to CompUSA,” he said. “And besides that, we get to deal with a company that has the depth and breadth of product and pricing that I don&t have.”

Deeley, who oversees a $6.5 million shop with eight services techs, said it&s hard to know how much additional services revenue he could add to his top line given that he still does not have details on the scope of the deals. But he is optimistic he could end up doing a lot more than an additional $15,000 a month in services business. Deeley, whose company is a part of the Ingram Micro Services Network (IMSN), said he sees the CompUSA effort impacting CDW. He does not see a conflict with IMSN, which he views as an organization that extends his solution reach nationwide with services reps from other IMSN shops.

Coll said he hopes participating solution providers will look to CompUSA as their “own warehouse rather than tying up capital in inventory. They can view the local CompUSA store as their partner and part of their supply chain. We can make their business simpler and more profitable.”

One question that hovers over the CompUSA initiative is who will be impacted if the program is successful. Among organizations providing services with local VARs are Computerrepair.com, which began processing online services transactions through VARs some 18 months ago, and IMSN, which has been providing nationwide service through local VARs for more than a decade. Computerrepair.com, which said it has 10,937 services partners that use its network to bid on services jobs, said CompUSA is a large account that currently takes advantage of the Computerrepair.com platform.

“CompUSA&s on-site service is being powered by Computerrepair.com,” said Glenn Nortman, executive vice president of sales at Computerrepair.com. “Anyone that walks into a CompUSA store and wants services, then that tech is being dispatched from Computerrepair.com.” CompUSA, for its part, said the chain maintains an active relationship with Computerrepair.com.

As for IMSN, Justin Crotty, vice president of North America channel marketing at Ingram Micro, Santa Ana, Calif., called the CompUSA initiative another sign of the power of local VARs as the trusted advisers to small and midsize business. “It&s about time,” said Crotty of the CompUSA move.

“These guys have finally recognized the way to the SMB market is through VARs. We have been saying this through the beginning of time. We support this from a channel perspective.” That said, recruiting an army of VARs and setting up a services organization is no small matter, noted Crotty. “What they are undertaking is difficult,” he said. “As a sales guy and longtime IMSN business development guy, I believe we are uniquely positioned to help companies like CompUSA effectively deploy this type of VAR relationship into their strategy.”

Leonard DiConstanzo, group vice president of client services at ICP, a Staten Island, N.Y., solution provider that is also a member of IMSN, said he would be open to the CompUSA services partnership—if it pays. “Unless they are going to pay me $25 an hour, I&m going to look at it,” said DiConstanzo.

One potential danger facing any such services effort, he noted, is if the sales organization sells the customer the wrong solution set or product. He said years ago he was forced to clean up a services engagement from a vendor and from then on has been proactive in designing and budgeting the services part of a joint engagement.

Tom Derosier, co-owner of CPUGuys, a Hanson, Mass., solution provider, said he has been waiting for years for a national retail chain to establish tight ties with local solution providers. “CompUSA is stepping up and doing something different by hiring local guys who know the streets and addresses and also have advanced technical skills,” he said. “This just validates what local VARs have been doing for some time.”

Ted Hunter, general manager of Champion Networks, Brunswick, Maine, said he is open as long as the contract terms and conditions are right. “I&d have to take a look at it,” he said.” I&m not familiar with CompUSA. If we can make money at it and control it from a services perspective, I&ll take that work. But you have got to have control of that services piece. If you don&t know how to do the work and you don&t know what the costs are, you can&t set a price. It&s that simple.”

Hunter said he already is generating strong services opportunities from his tight partnership with Gateway, under which he specs out the services job and Gateway bills the client. “That works great,” he said. “We do good business with Gateway. We charge Gateway for the labor and Gateway pays us. But I&d look at CompUSA with more scrutiny than Gateway.”

Nevertheless, the VARs who have had initial discussions with CompUSA are ebullient. “If CompUSA pulls this off it would mean a lot in terms of the revenue and success of independent VARs in the channel,” said Walsh.