Distributors Flag Renewal Opportunities For VARs

When Tech Data launches its MyOpportunityTracker system this month, it will be the latest distributor to develop a Web-based system that alerts resellers to renewal opportunities and helps them keep track of customers' assets.

Ingram Micro launched its Reseller Services Portal last year, and Synnex's online system, which helps resellers track software, hardware and services contracts, is already more than two years old. All are free to reseller customers.

The reason for these initiatives is simple, say executives. It's the hundreds of millions of dollars being left on the table by resellers that don't pursue renewing services contracts on hardware assets.

"Nobody else has the value proposition or the reach or the position in the channel that the distributors do to really make an impact here," said Justin Crotty, vice president of services for Ingram Micro North America, Santa Ana, Calif.

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Crotty said distributors are better equipped to provide this service to resellers than any vendor because of their unique position in the channel.

"We can present a more holistic, fuller picture across both the brand and the technology spectrum for each of these VARs," said Crotty. "We have the relationships with those VARs and we have much more information on the total solutions they've been selling to customer accounts, and we can bring that data together to help each of these vendors."

Crotty said about 1,300 resellers currently use Ingram Micro's Reseller Services Portal, which is powered on a platform developed and sold by MaintenanceNet, a maintenance contract management software company in Carlsbad, Calif. Ingram uses its portal to help resellers track service contract and warranty renewals for its top vendors.

Between early May and early August, Crotty said that Ingram anticipated just shy of $100 million in services contract renewal opportunities on products from Hewlett-Packard, IBM, Cisco Systems and Lenovo. Another $121 million could be generated selling service contracts or refreshing hardware on uncovered assets from those vendors, he said.

"We've seen that there is a tremendous amount of money that's being left on the table at all levels of the channel," said Jason Beal, senior group manager of the Ingram Micro Services Network. "So the reason for us going out and creating tools like this and creating a focus on this market is really to benefit both Ingram Micro and our partners, being both resellers and the manufacturers."

Solution provider MCPc used to track only its IBM renewals using an IBM tool. Now, the Cleveland company is using Ingram's portal to get a handle on its various renewals as a way to boost revenue.

"Right now we're not seeing a huge profit on it," said Terina Jones, a product specialist at MCPc, "but it looks like it could be a huge profit in the future."

Resellers say tracking renewals can offset money lost through shrinking margins.

Nth Generation, a $30 million-plus solution provider based in San Diego that also uses Ingram's portal for tracking renewals, will do about $3 million in service contract business this year, said Rich Baldwin, president and CEO.

"It's very lucrative business because typically it's higher margin, anywhere from 10 percent to somewhere in the low 20s. It's pretty much a no-brainer. People know they need to support their mission-critical infrastructure," said Baldwin.

Meanwhile, the new Tech Data system will identify upselling opportunities by showing what had been sold before as well as higher classes of warranties and services contracts available on different assets, often at higher margins, said Doug Riccardi, director of e-Business, North America, at Tech Data, Clearwater, Fla.

"We're not only bringing [VARs] the opportunity on a platter but also giving them the opportunity to upsell at a higher margin renewal," said Riccardi.

He said Tech Data created its system in-house as a way to maintain control over some VAR and end-user information.

End-user concern about managing IT assets is helping push the growth of services renewals, said Pradip Madan, senior vice president, corporate strategy and development, at Synnex, Fremont, Calif.

"There is so much hardware and software out there, and in the hands of such a diverse population, and the ongoing experience, positive experience, of the end customers basically depends on everyone in the supply chain knowing what they have, and reminding the customer at the right time about the upgrades, coverage and renewals," said Madan.

Umer Bashir, senior warranty specialist at solution provider En Pointe Technologies, El Segundo, Calif., which uses Ingram's portal, said a "risk-management attitude" is developing among end-user customers and the attitude transforms into revenue for resellers that are on top of their renewals.

"Renewals are a premade sale," said Bashir. "You don't have to work hard on them, you just have to get back to your customer and let them know this equipment is in danger and they need to cover them. It's pretty easy to pursue them."