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Lucky Seven: VAR Consortium M7 Finds Success Banding Together

Knowing they couldn't compete with services giants alone, the seven VARs formed M7 to battle them together.

The power of partnerships has always been evident in the IT channel, but a group of seven solution providers has taken it to the next level.

The seven companies, all independently owned and run, formed their own consortium last year called M7 Global Partners as a means to seek more opportunities collectively than they could have chased individually.

VAR consortiums are not a new concept; solution providers have often joined for the purpose of giving smaller companies better buying power with vendors or to help them find partners with skills outside their core competencies or geographic reach.

But M7 has a different approach. All the members possess very similar skills. They are all high-end Microsoft, VMware and Citrix Systems partners, experts in the desktop virtualization space. They've also known each other for years, having served on various vendor advisory councils.

Not long ago, the group started a conversation noting that their virtualized desktop opportunities had started to multiply, from 1,000 to 2,000 user deals up to 15,000 to 20,000 users. And as the size of the bids increased, so did the competition. Increasingly, those projects were being sought by the IBMs and CSCs of the world, according to Ira Silverman, president and CEO of Gotham Technology Group, a New York-based solution provider and M7 member.

Knowing that they couldn't compete with those services giants alone, the seven VARs formed M7 to battle them together, Silverman said.

"Marketing against those players is tough. Even though we might be better equipped to do it, lots of times we'd lose those deals only to have the end user go back to the [large systems integrator] and say we'll award you the deal but you have to sub this small part back to Gotham," Silverman said. "The customer wants a national-level [reach]. We said let's band together. We know we can supply them with talent and professional services across the whole country. Whether it's the West Coast or Tennessee, they get the same deliverable."

The seven companies include: Gotham; Entisys Solutions in Concord , Calif.; IPM in New York; LPS Integration of Nashville, Tenn., Right! Systems of Lacey, Wash.; IntraSystems, Braintree, Mass.; and AEC Group in Pittsburgh, Pa.

Gotham and the other VARs have already won deals as M7 that Silverman believes they could not have won individually. M7's rapid success has not gone unnoticed either. Last month, M7 won Microsoft's Virtualization Partner of the Year award at the vendor's Worldwide Partner Conference.

"M7 Global Partners' unique approach to solving IT infrastructure challenges has helped its clients look beyond traditional virtualization techniques to expand their opportunities to lower operational costs while improving service levels and management efficiency," said Bob Kelly, corporate vice president of Infrastructure and Server Marketing at Microsoft, in a statement.

M7's member companies are no strangers to accolades themselves. Entisys received CRN's VAR 500 Top Technology Practice for Virtualization award in June and Gotham took home the Top Vertical Practice for Financial Services .

Next: Growth Plans

Mike Strohl, president and CEO of Entisys Solutions, was wary about joining M7 even though he had known the other members for years through Citrix partner councils and other organizations.

"For the most part we opted not participate in any types of consortiums over the years because my view of them is they are a bunch of people that got together to somehow use the strength of the group to tell vendors what to do to get more MDF. That's a heck of a lot of work to get not a lot of result in my opinion. It's just pounding your own chest," Strohl said. "I've always felt [a consortium] could work if it focused on two things: if it's in a hot market and you have like-minded businesses looking at what you could do as a national organization vs. regional, to be able to use power of that type of group to uncover and grow opportunities that you didn't have access to as a regional partner."

Enterprises are being hit with cloud pitches from all different directions: vendors, systems integrators, service providers, said Strohl. The key to successfully winning that deal is to apply things like governance, local focused staff and consulting services into the opportunities, he said. In other words, continue to act like a local VAR who will still get to know the customer.

"In the first year, develop a foundation, adopt some early loose partnerships with some of these companies, test concepts and make sure you get the organization down. The bigger question is why not to add more partners. We've reached threshold of the business structure. We can add partners nationally and internationally."

Right now, revenue from M7 only accounts for about 5 percent of Entisys' total revenue. Strohl said that should increase over time, but is unlikely to surpass Entisys' legacy business.

"In the next 12 months, in all reality it will be only 10-15 percent. Then it could go to up to 20-30 percent. I see it leveling out there," Strohl said. "I think both businesses should grow. We're creating influence and opportunity for one another. The 70-30 model is a good one. M7 will never sell products. It will sell services and drive products through partners."

Craig Stilwell, vice president of Americas channels and field operations at Citrix, said he also was a bit skeptical of M7 when he was first approached by the seven members. He assumed they wanted to negotiate more market development funds and told them that would not be possible.

"We couldn't give them any more partner pricing advantage than they already receive. They told me that's not what they're after. They told me they're marketing under the M7 brand so that they have more firepower all together than if they were separate," Stilwell said.

Next: All Parties

WinStilwell was not surprised that the group has found success.

"It feels like they've been able to work thorugh any issues to date. They have rules of engagement and they remain friends through this," Stilwell said. "They're definitely all pretty special to us and we know them well. They share resources across teams, across geographies. Not only do they share their own best practices but also best practices that we give them. For example, all our partners, particularly our platinum partners, receive collateral from own consulting group.

"Having seven fairly like-minded folks that have taken it to another level and adopted methodologies and collateral has been great," he added. "It's also helped them establish closer relationships with Microsoft and other vendors. That's good for us because Microsoft is a good part of our community. It's probably helped our joint customers as well."

M7 has a detailed service level agreement to ensure that individual companies get rewarded for bringing opportunities to the group and for the work they perform, Silverman said.

"The company that brought it to the table runs the deal," he said. "They bring in resources from other M7 companies. What's nice about this is we're all about top Citrix platinum VARs but we all have top practices in other areas too. Some are strong with EMC, some are strong with other storage platforms. Some have a VoIP practice, some have strong security practices. We go into a customer, we can bring in M7 and offer more across solutions platforms."

Silverman said the goal of M7 isn't to create a Super VAR, with each of the seven companies eventually being swallowed up in a rollout.

"These things tend to take on a life of their own but I can tell you we're all happy now as individual companies. That was not a goal when we started this," he said.

Silverman said he's already been through one roll-up with FutureLink, a high-profile application service provider that went out of business a decade ago, so he's in no hurry to do another. "The problem with rollups is the principles end up losing interest and becoming non-motivated to succeed. That's the difference here. We all are distinctly motivated to be successful," he said.

But M7 is looking to become a more independent organization, with its own employees and maybe its own chief executive, Strohl said.

"The seven partners will become more like a board of directors. We need to have somebody spearheading the business model, the vendor relationship model and the sales model. There's a lot of things to do. As the model matures that will evolve into needing [additional resources]," Strohl said.

M7 plans to recruit more VARs to be members, though the group can be select in picking the right company to fill a geographic or technology or vertical market hole, Silverman said.

"One of the places we have a hole is the Chicago area. We're looking for a partner there. We're not only looking to fill a geographic area but to fill practice areas. There might be a practice area we think is hot and a strong player with Microsoft Lync that we would look to consider is that something we could partner on and be able to sell that practice across the whole country," Silverman said.

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