VARs must master partnering if they are to stay competitive in 2006, according to analyst predictions released Jan. 24 by IDC.

As VARs are pushed into thinner verticals to meet customer demand for deeper business process knowledge, they will be forced to bring in multiple partners to fulfill complete solutions, said Christina Richmond, a Hardware Channels and Alliances analyst at IDC and co-author of a report on the topic.

"Partnering will have to become a core competency of VARs if they are to succeed," Richmond said.

"You are going to have to know how to find these guys and pull together deals with multiple solution providers. You're going to have to know what these contracts look like, how to still negotiate with a customer."

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"VARs will have to break away from their well-formed habits and old fears about trusting each other this year," she said.

The overarching trend this year, as in the past, is that the increasingly complex solutions and business demands of customers require deeper knowledge of business processes, the report said.

"We are continuing to move away from product sales for the sake of product sales," said Ken Presti, research director of Network Channels at IDC and co-author of the report.

"The channel is getting more involved with needs of customers. They need to know what processes look like and what your like day to day business is like, where is the pain."

"It's much different than saying, 'You need a VPN application; let's go ahead and put it in.'"

The trend has been building for several years now, Presti said, but vendors are beginning to promote the model as a route to bump product sales.

VARs will seek thinner verticals as they look to master industry pain points and solutions, but who and where they serve must be observed, Presti said.

"If you're out in Peoria, Illinois, where Caterpillar [a construction equipment manufacturer] is, you may wish to try that vertical, or if that's overcrowded, something that complements it," he said.

"If you're out in the middle of New Mexico, covering a large territory, you probably want to remain a generalist."

"But there is no doubt VARs will benefit from knowing the businesses of the customers they serve," he said.

"If you go in to a health care client for a solution, the next time you go into a health care provider, you're better prepared."

Services attached to solutions will continue to be important in the coming year, with more VARs, especially those in the SMB (small to midsize business) sector, choosing the Managed Services model, which promises recurring revenue streams, the study predicts.