For small- to medium-sized businesses (SMBs), the importance of a value-added reseller (VAR), or channel partner, is that data storage vendors "simply can't get enough feet on the street to serve SMBs and VARs fill that gap," said Mike Karp, vice president and principal analyst at Ptak Noel Associates, a consulting and analyst firm. Karp said the VAR role is good for SMBs on multiple levels. First and most obvious is that VARs are able to work closely with their SMB customers. "In the VAR world, SMBs can be somebodies as opposed to just a $500 dollar account for someone with a $20 million quota," said Karp. Also, Karp added that VARs can often provide very aggressive product pricing. Using a VAR may reduce your overall data storage costs. Another "plus" of the VAR relationships is that they can "represent the SMBs in the aggregate to the vendor community," said Karp.
The benefits that an SMB will get from working with a particular channel partner varies widely, said Karp: It's private enterprise in action. "There is no one formula for how VARs do business," he said. Typically, said Karp, VARs at the most general level can be divided into two segments: those that handle broad, horizontal markets, like CDW, a company that sells everything to everyone, and those that focus on a vertical or a market segment, such as the legal profession.
"That second group of VARs knows the special bundles and can put things together and deliver the consulting services that are very valuable to companies in a specific segment, all of which more generic VARs or even professional services companies would have trouble matching," said Karp. The specialized value-added resellers benefit because their expertise allows them to earn money from higher margin consulting work rather than simply marking up boxes and software. "An SMB could go and buy some of the products they need off the shelf at Staples but it is the 'value-added' that the VAR offers which allows them to become an SMB's trusted advisor," said Karp.
Still, Karp admitted that not all channel partners are created equal -- you need to find the expertise you require and the right chemistry to ensure a successful relationship.
Finding the right channel partner for your storage needs
Greg Schulz, principle and analyst at StorageIO, said finding the right value-added reseller is a matter of doing your homework. Small businesses must keep in mind that just because a company is a VAR doesn't mean they are adding any value to your business. However, the right VAR may be able to provide design, assessment, implementation and ongoing support, rather than just selling a shrink-wrapped product. Schulz said the first thing you need to do is determine as much as possible about the VAR, their formal offerings and the way they do business. For instance, will they sit with you and help you take a step back to determine what your recovery points are or should be, and will they take the time discuss your broader business objectives?
"Interview them!" urged Schulz. "That is what you need to do to begin to understand their capabilities. If you were going to hire someone to be on your staff to do design optimization and improve backup you would do the same thing." Furthermore, he advised SMBs to try to meet some of the people who would be involved in delivering services. "The more you plan to rely on a VAR, the more you should want to know them and their people. Their skill sets and ability to provide knowledge transfer are key," he said.
Schulz also suggested SMBs should ask the following before selecting a channel partner:
- Exactly what is meant when a "service" is offered?
- What methodologies does the VAR employ, how do they use them, and how they would they be used in your company?
- What is the experience of the staff (in detail)?
- What are the VAR's experiences with specific vendors and with specific kinds of technology?
- How many of a VAR's people are employees and how many work on a 1099 basis?
- How much direct access will you have to relevant staff people?
- Can they provide references?
At St. Louis-based Cannonball Agency, an advertising firm, Mike Duval D'Adrian, the director of IT and prepress, has found that working with a value-added reseller is a key to success. "I'm the whole IT department and I can't do everything," he said. Since the company's inception several years ago, Duval D'Adrian has worked closely with one VAR, Digital Partners Inc. (DPI), an Apple Inc. VAR. "They aren't the lowest cost hardware provider but they are competitive and they always there when I need help on something," he said.
Shopping for a channel partner
Matina Koester, founder and president of Digital Partners Inc., agreed. Her firm sells storage and services to SMBs and larger customers, mostly in media-related fields.
She recommends those that are "VAR shopping" to ask about available levels of service and support and the availability of remote support. She said her company's pricing approach is based on being competitive on hardware purchases -- but always including much more built-in service and support than a discounter would provide. "If people want to buy hardware elsewhere, that's OK, they can always buy a services contract with us," she added. Plus, Koester said bigger customers generally pay for services at the same rate as smaller companies. "We do bulk pricing for big hardware purchases but services are billed on an hourly basis," she explained.
Koester said SMBs should also consider value-added resellers as training partners. "We have industry expertise as well as deep product knowledge that we can share," she explained.
It is that combination of industry and product knowledge that keeps Duval D'Adrian with DPI. "I might have an idea about how to do something and they will usually be able to offer good suggestions or point out additional things to think about," he said. Best of all, Duval D'Adrian said DPI doesn't "nickel-and-dime" him. "We have a real relationship -- they provide a lot of additional help that they don't charge me for and I give them my business when we need to grow or update our hardware," he added. On the rare occasions when DPI can't solve a problem, they are usually able to recommend someone from their network of consultants that can address the problem cost-effectively," he said.
Duval D'Adrian said it also helps that DPI is close to his business. "I wouldn't say that's a requirement, but in our case it has been important," he said.
The bottom line, advised Karp, is that for an SMB, picking the right VAR, or channel partner, is a very important decision. "In a lot of areas, there isn't all that much difference between the technology from one vendor and the technology from another vendor. For a smaller business, the more important issue, as far as I'm concerned, is how you get along with your VAR because they can potentially work with you as a long-term partner and advisor," he said.