It's tough to be a VAR in a competitive, low-margin world, so VARs have to constantly refine their business models to remain profitable.
One approach, which many in the channel admit is underutilized, is to adopt the very notion VARs constantly pitch to customers: automate.
That means taking customer orders and processing them electronically. But there is much more to it.
To get the best return on automation investment, VARs not only need interconnected systems that keep track of the complete sales cycle, from bidding to fulfillment, they also need real-time links with suppliers.
VARs are looking for tools that automate more and more points along the sales cycle, including order taking, solution configurations, supplier inventory and price checks, product returns, and even customer billing.
In short, VARs that decide to automate the sales cycle often end up trying to replicate the setups of online retailers CDW Corp., Buy.com Inc. and Insight Enterprises Inc.
"They see that in order to survive they need an online presence," said Debbie Andrews, director of product marketing at CNET Channel of CNET Networks Inc., San Francisco, a provider of e-commerce technology and sales automation.
The problem is that VARs don't want to or don't have the capital to make themselves look and operate like a CDW or Insight.
"Our customers say, 'I want to have systems as powerful as CDW's and Insight's, but I don't want to spend the money,'" said Asif Hudani, president of Ingeniasoft Inc. of Irvine, Calif., a provider of sales-automation tools to VARs and integrators.
Fortunately, Hudani said, they don't have to. His company is competing for mindshare against companies such as CNET Online and VARStreet Inc. to get VARs and integrators to adopt its sales automation technology.
Ingeniasoft's FourChain solutions provide VARs with e-commerce and cataloguing capabilities and connections to the inventory systems of distributors. Hudani said the software is customizable, and those VARs that need it can take advantage of a supply-chain automation component.
"What it allows you to do is to use our application to very tightly integrate with your ERP system," Hudani said.
Ingeniasoft's technology helps VARs grow their business by not only establishing links to buyers and suppliers, but also using tools for such things as setting up catalogues and configuring solutions. For companies that want it, Ingeniasoft's technology even provides strategic hints on how to expand the business, Hudani said.
Ingeniasoft customers have two options for using the technology. Smaller customers typically opt for a solution hosted by Ingeniasoft, while larger companies, generally those with $30 million or more in revenue, buy the rights to host it themselves.
CNET Channel, a subsidiary of CNET Networks Inc., targets VARs and integrators with revenue of $5 million to $50 million for its ChannelOnline e-commerce hosted solution, said Scott Danish, the company's vice president of global marketing.
"These are the kinds of guys who need as much efficiency as possible," Danish said. "We're enabling them to automate an entire sales cycle."
CNET Online's pitch to prospective customers revolves around the opportunity to grow revenue through private e-commerce storefronts. VARs and integrators that don't necessarily want or need a public online storefront can still give customers the option of buying product over the Web through private links.
QuestingHound LLC, a VAR in Fort Lauderdale, Fla., has opted for that route. The company uses ChannelOnline for customers that require Web-based purchasing, said President John Boden.
QuestingHound also uses the software internally to provide electronic links to its sales staff. "Most of our outside reps work out of their home offices, so we just give them a login," Boden said.
Use of the electronic tool has helped the company achieve a high level of efficiency, he said, adding that QuestingHound is on a mission to automate as many of its business processes as possible.
Boden said he has been talking to CNET Online about integrating customer invoicing into the tool, something he hopes will happen in the next year to year and a half.
With ChannelOnline, VARs and integrators can customize storefronts for specific customers. They also can implement procedures, such as specifying profit margins by product for specific customers, which allow them to run the business more efficiently.
The ability to set rules around pricing was a priority for Connecting Point Technology Center of Las Vegas when it decided to offer online purchasing to customers, said President Ron Cook. The company uses VARStreet's Xponential Commerce platform, and without it, Cook said, keeping track of what prices were set for which customers was virtually impossible.
Cook and other VARs found in recent years that offering customers the option of shopping online became nothing less than a necessity. Some customers started to insist on it, and now several large corporations and government agencies require that certain products, such as laptops, network cards and printers, be procured via the Web.
"If you don't have an online presence, you can't do business with them," said Rad R. Sundar, co-founder and CEO of Santa Clara, Calif.-based VARStreet.
VARStreet's mission, according to Sundar, is to provide links between the various constituents in the IT supply chain, from the end-user buyers to the product suppliers.
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