The Waiting Is The Hardest Part

For example, if a VAR brings in Cisco Systems early in the sales cycle of a VoIP deal, the investment in sales and engineering made by the VAR on the hardware side will likely be repaid in the 30 to 90 days it takes the customer to remit. However, if a VAR brings in a telecom early in the sales cycle of a VoIP deal to ensure proper integration and an adequate service-level agreement, the investment in sales and engineering made by the VAR on the telecom side will not begin to get repaid until the carrier&'s billing cycle takes its first churn. This process could take up to six months only to realize a very small fraction of the VAR&'s total investment.

How to get a carrier program that resolves this by paying a VAR up front instead of through a series of residual payments is “the biggest, most difficult question facing our industry right now,” said Jay Bradley, vice president of marketing and business development at Intelisys Communications, a VAR and master agent in Petaluma, Calif., that does more than $100 million a year in carrier-oriented sales.

Intelisys is a hybrid solution provider and master agent formed by the merger of Resource Communications and Intelisys Communi-cations. Intelisys is working to create communities where solution providers and master agents can share opportunities and their understanding of telecom and hardware issues, said Bradley. Partnering agents with VARs gives both the expertise they would otherwise reach out to carriers to provide. And because, like telecoms, an increasing number of solution providers embrace next-generation voice/data services as a “defensive strategy,” Bradley has seen a doubling of VARs looking to partner with carrier agents. The effort is being felt at the bottom line. “We have seen an increase in deal close ratios by 20 percent because of our efforts to partner agents with solution providers,” he said.

Without a program from the carriers to accelerate solution provider compensation, the incentive to sell telecom is always going to be diminished, said an established master agent who requested anonymity. “It&'s simply a matter of a VAR&'s resources. If you have three salespeople, do you want those three salespeople selling carrier where you wait for months to get paid, or do you want them selling hardware where you get paid net-30?”

“The carrier that can bridge that gap will be a big winner,” said Paul Giobbi, president of Zumasys, Lake Forest, Calif., who laments that “there is a huge divide between telcos and the reseller channel. There is just no reason for a divide of that size.”