Sales Model Sabotages CA's SMB PlanBy Pedro Pereira | Posted 2005-06-24 Email Print
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Computer Associates wants VARs to source its SMB-targeted product suites from online retailers, but the chances of VARs doing so are slim to none.CA's new SMB initiative reminds me of the old saying, "What if you threw a party and nobody came?"
The Islandia, N.Y.-based company has put together some data-protection bundles that that should have VARs salivating because they are easy-to-deploy technology that addresses serious business needs. The SMB (small and midsize business) suites include anti-virus, data migration, backup and anti-spyware technology.
But VARs are likely to respond only with regrets to this invitation, because of the unusual channel model Computer Associates International Inc. is using. The model can most kindly be described as "perplexing," and, as such, it has little chance of success.
These stores belong to the type of company consumers love because they sell stuff cheap and ship it in a hurry. Nothing wrong with that.
I've bought a respectable, growing pile of electronics and computer equipment from online retailers. It's tough to beat their prices, even if you have to stomach the loud, busy screens bursting with bold-cased words and exclamation marks that remind you of annoying car commercials.
(As long as I'm in a confessional mood, it's time for full disclosure: I earned about $3,000 from CA last year for freelance copywriting, and my wife worked there for seven years.)
Next to direct-selling vendor Dell Inc. of Round Rock, Texas, online retailers are the biggest irritants for channel companies. They are a constant source of frustration, because VARs, after giving a customer a price quote, often get this reply: "I can get it cheaper online."
VARs do not want to source products from the very people who make it tougher for them to stay in business. It's like telling small-town corner grocers to use Wal-Mart as their supplier.
George Kafkarkou, senior vice president of SMB and consumer channels at CA, said this strategy resulted from research the company conducted in the SMB marketplace. "The launch partnersPC Mall, Tiger Direct and CDWhave significant traction with the SMB market and will help drive sector adoption of the suites."
There's no question that online retailers have traction in the SMB market. But CA's research strikes me as incomplete. Study after study shows that local VARs and integrators are best equipped for supplying technology and services to small and midsize businesses.
Customers increasingly view the VAR or integrator as a strategic partner that can solve a business problem. And while a business customer, who, after all, is also a consumer, may want prices as low as what is available online, the customer will defer to the VAR or integrator to decide which products to use as part of the solution.
VARs and integrators have an enormous amount of power on brand decisions; when they make a recommendation, the customer typically takes it.
And when the time comes for a VAR to decide whether to buy a brand from a competitor such as CDW or from a distributor that does not sell direct to end users, and therefore does not compete with the VAR, which choice do you suppose that VAR will make?
The best strategy for penetrating the SMB market is to use the vendor-distributor-VAR model. It is efficient and clean, and it has been honed for the past 20 years as the IT industry has evolved.
Slipping a layer between distributor and VAR by forcing the VAR to source products from online retailers makes no sense. Adding touch points along the delivery chain complicates the process and increases the opportunity for error.
CA should reconsider its approach. Expecting VARs to give business to competitors is, simply put, a bad idea.
Pedro Pereira is a contributing editor for The Channel Insider. He covered the channel from 1996 to 2001, took a break, and now he's back. He can be reached at email@example.com.