Services The Key To Success, Fast-Growing VARs Say

Solution providers attending the event, some of whom are recognized on the 2006 CRN Fast Growth 100 list, said services prowess is driving more customers to view them as strategic partners and outsourced IT departments, rather than as just another vendor.

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Click for photos of the Fast Growth 100 ceremony

Michael Axelrod, a principal for e-Brilliance, said the Conshohocken, Pa.-based solution provider expects its sales to jump to $6 million this year, up from $3 million in 2005. Virtually all of the revenue gains stem from services rather than product sales, he noted.

E-Brilliance's increased business is coming primarily from .Net and J2EE application development, according to Axelrod. That services expertise has led the company to work with vendors like IBM, Microsoft and BEA Systems, but licensing revenue isn't part of the solution provider's business model. The secret to e-Brilliance's success: "truly understanding the client's needs," he said.

"We understand the business needs of the client. We don't consider ourselves a vendor. We consider ourselves a strategic partner," Axelrod said. "That tight relationship means that e Brilliance acts as the outsourced IT department for its customers and is therefore not going up against other solution providers to get business."

Larry Rine, CEO of Intersect IT Solutions, Lake Bluff, Ill., said nearly all of his sales growth is coming from the company's managed services offering. "We are a services business," Rine said, adding that he expects services relationships to drive more product business.

That's the case at SL Powers, a West Palm Beach, Fla.-based MSP that has seen its hardware and software product sales triple over the last several years.

"The only thing we are selling, marketing and focusing on is our managed services products," said SL Powers President Rory Sanchez. "With every one of our clients, we have reached that trusted adviser level where everybody wants to be."

In turn, that has led customers to look to SL Powers for full range of products. "They are not price shopping us," Sanchez said. "They know we are not the low-price leader. They also know we are not price-gouging them."

Sanchez said that three years ago, he expected 70 percent of his SL Powers' sales to come from services. Instead, the company's sharper services focus continues to drive product growth, with sales still split 50-50 between products and services. Several security integrators, meanwhile, said they are driving more of their growth from product sales. They pointed to F-5 and Juniper Networks as driving incremental sales growth.

David Gilden, a partner at Acuity Solutions, said he expects the Tampa, Fla.-based company's sales to soar to $12 million this year from $5.7 million in 2005. About 80 percent of the revenue stems from product sales, with roughly 20 percent from services.

"We are focused on security," Gilden said. "It's natural growth. We have opened some more offices and gotten into some new areas, like federal [government business]."

Gilden said he's not concerned about relying on product sales as long as it's driving the "appropriate amount of profit and the services revenue is growing in comparison to itself, not in comparison with the overall revenue."

Todd Gabel, vice president of sales and marketing at Nexum, a Chicago-based security integrator, said his company's sales will hit $18 million this year, up from $13.5 million. Eighty percent of his sales are still from products, and 20 percent of sales are coming from services, he said.

"Products bring services, and you can't look at it any other way," Gabel said, adding that his loyalty to vendors like F-5 and Juniper are helping drive sales. "They are growing so fast they can't handle it," he said. "They are pushing it to their best partners out in the field. The smart manufacturers that are growing are partnering with people that are committed to them."