There is little doubt that VARs have begun to target new opportunities in the small and midsize business space.

However, what are those business end users looking for from VARs and solution providers to help with their IT concerns?

The answer, according to Joslyn Faust, a principal research analyst at Gartner, is better service and support, a better price, and a great value from the solution the VAR has provided.

In her address at the IT ChannelVision conference in Phoenix on Oct. 4, Faust offered VARs a guide to several emerging trends in the SMB space.

There are about 10 million small businesses in North America and about 100,000 businesses fall into the midsize range, according to Faust's research.

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While there are lucrative benefits in those markets right now, VARs are facing stiff challenges from vendors selling direct and from retail chains, such as Best Buy, offering low-cost hardware.

"This is a very large and very attractive market, but also one that is very challenging," Faust said during her talk, "Learn From Your Peers How to Successfully Reach the SMB Market."

Faust urged VARs to present themselves as technology consultants or advisers, who can help SMBs determine what solutions they need for their business and what IT products they can afford.

Like many of the other Gartner speakers at the conference, Faust talked about the need to develop collaborative relationships among VARs to better leverage the marketplace.

SMBs will most likely spend their IT dollars on security and disaster recovery during the next three to five years, as well as business intelligence solutions. However, Faust's research found that many SMBs are not sure what technology they will buy in the future.

Lee Marks, senior development engineer for Activant Solutions in Greenville, S.C., said his customers have already begun asking for many of the same products—security, business intelligence, disaster recovery—that Faust mentioned during her talk.

"A lot of my guys don't know the word 'business intelligence,' but they do know that they have a lot of data and they want to be able to sort through it and find out what it means," Marks said. "A lot of people are coming around to security and disaster recovery solutions, especially after Katrina."

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Amy O'Neil, director of vendor relations at GreenPages in Kittery, Maine, said her company has already begun using partnerships and collaboration. The company is using that to leverage itself in the SMB marketplace.

In addition, O'Neil said her company will act as an IT consultant if it cannot provide the solution a customer needs. Instead, GreenPages will steer the work toward one or more of its partners.

"We're not afraid to tell an end user that we can't provide something but that our partner can deliver that solution," O'Neil said.

What SMBs will not spend money on, according to Faust, is Linux, knowledge management, RFID, SOA (service-oriented architecture), open source and outsourcing.

Marks has already taken notice of that trend. He said that his SMB customers no longer are asking for RFID, even as the price has dropped.

As for vendors, Faust predicts that Microsoft and Dell will dominate the SMB marketplace for the next three to five years. She said Microsoft's business intelligence application will begin to change the SMB space.

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For VARs, Faust suggested that they target niche markets—hedge funds, for example—and show customers that their solutions are cost-effective and easy to use.

"You want to highlight that solutions have good value," Faust said.