Changing your business model from reseller to solution provider takes more than the flick of a switch, and that's why the Computing Technology Industry Association is devising a comprehensive plan to help make the transition.
The association, based in Oak Brook, Ill., appointed an advisory council last spring to put together a transition plan for resellers, which the council said this week it hopes to make available some time in the new year.
The Reseller Transformation Advisory Council, which has been meeting this week to hammer out details, has devised a three-stage transformation program for resellers. The three phases are self-assessment or "discovery," preparation of a plan for success and the actual transformation to the solution model.
To facilitate the transformation phase, the council is preparing a set of tools and resources for VARs.
CompTIA formed the council after discovering through a study that too many VARs lack the solution-selling skills they need to stay in business and to provide vendors with a reliable channel.
Click here to read about why focus is critical to solution providers.
"Business partners who want to be around in three years know they need to make changes to their business models and they need help in doing that," said Kurt Yeager, a council member and director of global channel strategy for Avaya Inc. of Basking Ridge, N.J.
Yeager brings to the council Avaya's experience in aiding its partners to adopt a solution-focused model.
A year ago, Avaya embarked on an initiative called "Masters of Convergence" that offered one-on-one consulting and myriad workshops to partners on topics such as sales, services and business development. The goal was to make the company's top partners proficient in using the vendor's voice and data network convergence technology so that they can take a consultative approach to selling it.
Like Yeager, council member Katrina Klier, Microsoft Corp.'s U.S. director for partner readiness, lends to the council the software giant's experience in working with VARs and integrators.
Klier said the council will ask select resellers shortly to review the transformation plan and make recommendations if changes are needed.
In the discovery phase of the council's plan, a reseller examines which parts of the business are working and which could stand improvement. The reseller then draws on the results of that assessment to prepare a plan aimed at increasing profit potential and business viability.
For the transformation phase, Klier said, the council will make available a range of resources, including online self-paced education sessions, seminars and consulting services.
The goal is to profoundly change the way resellers do business. For instance, rather than trying to squeeze a few percentage points from product sales, the provider would add customization services to the product that are specific to customer needs. Rather than focus on break/fix maintenance services, the provider would offer consulting in such areas as IT strategy, business continuity and product lifecycle management. Rather than billing customers per project, providers would more profitable annuity-based model.
And so on.
Read more here about the trend of VARs making a transition to managed services.
Channel experts say they believe the failure to adopt a consultative business model will drive a significant number of resellers out of business in coming years. Research firm Gartner Inc. predicts that 40 percent of channel companies currently in business will no longer exist in 2008. Klier said as many as 80 percent of resellers currently face financial challenges.
Product-focused resellers are at risk not only because of ever-tightening profit margins, but also because customers' needs have changed. They want technology to help keep them in business and they want to deal with a single provider that can address all their IT needs.
"That requires an intimate relationship with and an understanding of the customer's business," Avaya's Yeager said.
Many VARs already understand these realities and have started making the necessary adjustments, while others know they need to change but haven't figured out to do it, Klier said.
"There are some that will never really internalize this," she said.
CompTIA's Reseller Transformation Advisory Council also includes representation from various other companies, including CA Inc., Ingram Micro Inc., Intermec Technologies Corp., LANDesk Software Inc. and McAfee Inc.
To kick off its reseller transformation efforts, CompTIA last spring launched a Web-based tool that resellers can use to compare their business strategies and financial performance against a solution provider model of the industry's best performers
Resellers are asked 15 questions about their business models and in response, the tool provides recommendations on how to make the transition.
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