Who's Afraid of CDW?By Pedro Pereira | Posted 2006-09-20 Email Print
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Opinion: VARs with the right strategy have less to fear from CDW's incursion into their territory than those who have not changed with the times.
Online retail giant CDW's acquisition of a Midwestern VAR this week to beef up its services and solutions business is sure to have some VARs nervous about increased competition.
It's an understandable fear, but whether it is warranted depends on how these VARs have been running their businesses and what they have set as strategies for the future.
To be sure, competition will continue to increase because, if nothing else, CDW will make more acquisitions, as its executives hinted in a conference call this week to discuss the purchase of Berbee Information Networks for $175 million.
And, by the way, so will other VARs that are on the prowl for acquisition targets that can expand their geographic reach and technical and service capabilities.
Among them is Logicalis, the $500 million VAR, based in Bloomfield Hills, Mich., that has embarked on a shopping spree to boost revenue and widen its customer reach.
So, yes, tougher times lie ahead for small VARs that have to compete with bigger companies with more resources and greater ability to secure and offer attractive prices based on volume.
But these VARs have options, not the least of which is selling the business to one of the acquirers. According to CDW CEO John Edwardson, many are trying to do just that.
"There are literally hundreds of companies around the country founded 15, 20, 25 years ago whose owners are looking for an exit strategy," Edwardson said.
"That presents an opportunity for us to grow this particular segment of the business."
Selling, however, is not the only option for VARs facing increased competition from channel Goliaths.
The small local VAR remains the single best source of IT products and know-how for a multitude of small businesses that need a trusted advisor to help them apply technology to their business goals.
And they will remain so as long as those local VARs are approaching customers with the right strategy, which means taking an interest in the customer's business beyond selling them the next laptop or printer.
It means making sure you have a contract with the customer to provide needed services. It means assessing customer needs and monitoring performance to make the appropriate recommendations before a need turns into an emergency. It means offering options such as online storage, printing equipment leases and remote monitoring of the customer's equipment and applications. It means discussing things like replacing aging applications with software-as-a-service plans that are easier on the wallet.
And most importantly, it means making sure customers have reliable, secure technology that does exactly what they bought it for.
So long as VARs are keeping on their toes in helping customers with their business goals, the expansion of CDW into their space should prove a lesser threat than if they stick to old ways of doing business.
The IT channel, as anyone who has been around long enough will attest, is a dynamic place that requires constant vigilance and the flexibility to adjust to the changing currents.
As companies such as CDW and Best Buy make incursions into the territory of VARs, they must be more vigilant and adaptable than ever.
Pedro Pereira is editor of eWEEK Strategic Partner, contributing editor to The Channel Insider and a veteran channel reporter. He can be reached at firstname.lastname@example.org.