A value-added reseller (VAR) operates as an intermediary between original equipment manufacturers (OEMs) and end-user customers, enhancing their hardware and software solutions with additional services and value before delivering them.
VARs typically maintain partnerships with vendors like IBM, Dell, HP, Microsoft, and others, transforming the functionality of their off-the-shelf offerings into tailored “turnkey” solutions for customers.
Whether bundling software applications with hardware or delivering customized configurations, VARs excel in adding value throughout the IT distribution chain. Operating under short-term, project-based contracts within a defined project scope, they generate revenue on a flat fee-for-service basis.
Do VARs still exist?
Yes, very much so. If you’re questioning whether VARs are still relevant in today’s tech landscape, your question is understandable — yet the reality is that VARs not only continue to exist but many thrive by embracing change and innovation to remain resilient across the changing IT landscape.
For example, VARs have evolved to harness fast-growing cloud and hybrid cloud solutions, broadening their services portfolio and staying at the forefront of innovation. By embracing the latest hardware and software innovations and maintaining their agility, they continue to play a crucial role in guiding businesses through the complexities of the digital era.
Advantages of working with a VAR
Working with a VAR offers several advantages for businesses seeking not only purpose-built technology solutions, but also expertise and on-demand support and a flexible, scalable, partner-based relationship.
Customized solutions
VARs specialize in tailoring solutions to meet the specific needs of their customers. Whether it’s integrating legacy systems with modern technology or developing bespoke software applications, VARs excel at creating customized solutions that align with business objectives.
Expertise and support
VARs possess deep expertise in the products and services they offer, allowing them to provide comprehensive support throughout the implementation process and beyond. From initial consultation to ongoing maintenance, VARs serve as trusted advisors, helping customers navigate the complexities of technology adoption.
Flexibility and scalability
Unlike off-the-shelf solutions, VARs offer flexibility and scalability, allowing businesses to adapt and grow as their needs evolve. Whether it’s adding new features or expanding infrastructure, VARs provide solutions that can grow with the business, ensuring long-term success.
Vendor relationships
VARs maintain close relationships with technology vendors, allowing them to access the latest products, updates, and resources. This partnership ensures customers receive cutting-edge solutions backed by industry-leading support and expertise.
Disadvantages of working with a VAR
While working with a VAR offers numerous benefits, there are also drawbacks to consider, from cost and resource considerations to developing dependencies on their services.
High Cost
The customized solutions VARs provide may come at a higher cost than off-the-shelf alternatives. It’s important to weigh the benefits of customization against the associated expenses to ensure an appropriate return on investment (ROI).
Potential for Dependency
Businesses that rely heavily on VARs for technology solutions may become dependent on their expertise and support. This dependency can pose challenges if the VAR experiences disruptions or changes in its business model.
Limited scope
VARs may have limitations regarding the products and services they offer. While they excel at customizing solutions within their areas of expertise, businesses may need to engage multiple VARs or providers to address their full-stack technology needs.
Resource constraints
Smaller VARs may have resource constraints, impacting their ability to scale or provide timely support. Businesses should carefully evaluate the capabilities and capacity of their chosen VAR to ensure they can meet both current and future requirements.
How (some) VARs transformed into MSPs
In recent years, the business landscape has undergone significant change, with organizations requiring solutions for a wide array of needs such as data security, disaster recovery, cloud services, mobility, and virtualization. Concurrently, the rapid growth of remote work has shifted from being an extra perk to becoming a standard practice for many businesses.
As the technology landscape evolves, VARs are adapting their business models to meet the changing demands of their customers. Many are expanding their service offerings to include managed services and are leveraging their hardware and software integration expertise to provide comprehensive solutions — repositioning themselves as managed service providers (MSPs).
The distinction between VARs and MSPs is beginning to blur as their roles and services overlap. With the rise of cloud technology and subscription services, many VARs are exploring opportunities to tap into recurring revenue streams by offering services beyond deployment and implementation.
Transitioning into MSPs allows VARs to capitalize on recurring revenue streams and provide ongoing support and maintenance to customers. This transformation enables them to adopt a proactive approach to IT management, ensuring the reliability, security, and performance of their customers’ technology infrastructure.
Transitioning from a VAR to an MSP can offer numerous benefits — including a more predictable revenue stream, deeper client relationships, and opportunities for recurring revenue streams. But on the other hand, resource limitation, risk aversion, market dynamics, lack of expertise, and regulatory compliance constraints are among the reasons some VARs may choose to avoid the transition and continue to serve customers as traditional VARs.
What is the future of value-added resellers?
Despite the ascendancy of MSPs and the prevalence of cloud-based solutions, the outlook appears bright for VARs who continue in the role of delivering innovative and impactful solutions.
As artificial intelligence (AI), the Internet of Things (IoT), and blockchain continue to gain momentum, VARs are harnessing new opportunities to distinguish themselves and offer value-added services in a way that strategically positions themselves for enduring success.
10 companies that still call themselves VARs
Numerous well-known companies continue to embrace the VAR business model and deliver tailored technology solutions to their customers. Here are ten notable examples:
- Arrow Electronics: A global provider of technology products, services, and solutions, offering a wide range of IT products and services to businesses, government agencies, and educational institutions, with expertise in engineering, procurement, and supply chain management.
- Avnet: A global technology distributor and solutions provider, offering a comprehensive range of IT products, services, and solutions to businesses, government agencies, and educational institutions, with expertise in design, integration, and lifecycle management.
- CDW: A leading multi-brand provider of information technology solutions to business, government, education, and healthcare organizations in North America and the United Kingdom, helping customers design, orchestrate, and manage technology solutions.
- D&H Distributing: A distributor of IT and consumer electronics products, offering a wide range of technology solutions and services to resellers and retailers across North America, with a focus on providing value-added services and support.
- Ingram Micro: A global technology distributor and supply chain services provider, offering a wide range of IT products, services, and solutions to resellers, system integrators, and retailers, with expertise in logistics, financing, and marketing support.
- Insight Enterprises: A global technology company empowering organizations of all sizes with Insight Intelligent Technology Solutions and services to maximize the business value of IT.
- SHI International Corporation: A global IT solutions provider with over 35 years of success and $11 billion in revenue, offering expert guidance, support, and specialized procurement services to corporate, enterprise, public sector, and academic customers.
- Synnex Corporation: A global technology distributor and solutions aggregator, offering a comprehensive range of IT products, services, and solutions to resellers, system integrators, and retailers, with expertise in logistics, financing, and technical support.
- Tech Data Corporation: A global distributor of technology products, services, and solutions, offering a comprehensive portfolio of IT products from leading technology vendors to resellers, VARs, and MSPs, with expertise in logistics, integration, and support.
- WWT (World Wide Technology): A technology solution provider with a focus on digital transformation, offering a comprehensive range of IT products and services, including consulting, integration, and managed services, to organizations worldwide.
VAR vs. other models
Businesses seeking to work with technology partners have three essential choices: VARs, MSPs, and OEMs. Here’s a quick breakdown of the three acronyms, followed by more in-depth comparisons of their operating models.
- OEMs produce off-the-shelf hardware and software products that can be purchased directly by the end user.
- VARs act as intermediaries between OEMs and end users, augmenting products with additional services or features to meet customers’ specific needs.
- MSPs offer comprehensive IT services on a subscription or managed basis, providing ongoing management and support.
Understanding the differences between the three supply chain partners is crucial for decision-makers in determining the most suitable company to fulfill their particular needs.
VAR vs. OEM
VARs and OEMs provide distinct services and play unique roles in the technology ecosystem.
Business approach
- OEMs are product-centric, often selling their products directly to end users or through authorized resellers and distributors. They also provide technical support and warranty services for their products, generally without extensive customization or integration services.
- VARs provide value-added services in addition to product sales, such as installation, configuration, training, and ongoing support, offering comprehensive solutions that encompass both products and services.
Expertise
- OEMs typically offer standardized products or platforms that are mass-produced and sold to various customers. These products may have limited customization options and are designed to meet the needs of a broad audience.
- VARs excel at customization, offering personalized solutions that align with the unique requirements of each client, with the flexibility to adapt products and services to meet specific preferences and objectives tailored for the client’s business.
Loyalty
- OEMs build brand loyalty by delivering high-quality products with consistent performance and reliability. They focus on product innovation and differentiation to maintain a competitive edge in the market.
- VARs work with multiple technology vendors and partners, allowing them to offer a diverse range of products and solutions. They remain vendor-agnostic, selecting the best-in-class components and platforms to meet the specific needs of each client.
Mission
- OEMs specialize in the design, development, and manufacturing of hardware or software products, creating original platforms or components that serve as the foundation for technology solutions.
- VARs specialize in creating integrated solutions tailored to their customers’ needs, leveraging their expertise to combine hardware, software, and services into cohesive offerings that address specific business challenges.
VAR vs. MSP
While VARs and MSPs both work with vendors to offer bespoke technology solutions to their clients, there are key differences between the two.
Operating model
- MSPs work on a subscription-based model, providing ongoing services and support for a recurring fee.
- VARs typically operate on a project-based or transactional business model, where they generate revenue from one-time sales or implementations.
Depth of expertise
- MSPs possess deep expertise in managing and maintaining IT infrastructure through specialized teams with certifications in areas such as network security, cloud computing, and data management, allowing them to deliver comprehensive managed services.
- VARs excel at integrating hardware and software components into tailored infrastructure solutions.
Relationship agreement
- MSPs typically offer service-level agreements (SLAs) that outline the level of service customers can expect, including response times, resolution times, and availability guarantees, ensuring accountability and transparency in service delivery.
- VARs may not always provide formal SLAs, as their engagements are often project-based and may not involve ongoing support commitments.
Proactive vs. reactive orientation
- MSPs adopt a proactive stance in IT management. They continuously monitor and manage customers’ systems to sidestep issues and prioritize preventive maintenance, security updates, and performance optimization to minimize downtime and disruptions.
- VARs often respond reactively to client needs, addressing issues and providing support on an as-needed basis.
Scalability and flexibility
- MSPs offer scalable solutions that enable seamless expansion or contraction of services as needed, ensuring that customers always have access to the resources and support they need.
- VARs may have limitations in scalability, as their solutions are often customized for specific needs and may require additional customization or integration to accommodate growth.
Risk management style
- MSPs assume a greater degree of risk management, assuming ownership of ensuring the reliability, security, and performance of customers’ IT systems, including proactive measures against cybersecurity threats, data loss, and system failures.
- VARs are equally mindful of risks during setup and installation, but by nature may not always have the same level of oversight or control over ongoing operations.
Services scope
- MSPs offer comprehensive managed services and ongoing support for technology infrastructure.
- VARs primarily focus on hardware and software sales, customization, and integration.
Vendor management
- MSPs manage relationships with technology vendors on behalf of their customers, ensuring that hardware and software components are properly licensed, updated, and supported. They serve as a single point of contact for all tech issues.
- VARs may also facilitate vendor relationships but typically focus more on product sales and integration rather than ongoing vendor management.
Bottom line: VARs are vital partners in the IT channel
The role of VARs has undergone significant evolution over the past several decades. With their deep expertise in integrating hardware and software components, VARs add value (hence the name) at every stage of the procurement process, serving as trusted advisors and strategic partners for businesses seeking technology solutions.
Looking ahead, the future of VARs appears promising, fueled by ongoing advancements in technology and evolving customer demands. As businesses continue to seek tailored solutions aligned with their strategic objectives, VARs will play a vital role in delivering innovation, agility, and value. As pillars of innovation and customization, they remain poised to empower businesses to thrive in an increasingly competitive and complex digital world.
Get to know some of the most progressive VARs and MSPs — handpicked by our experts — in our Hybrid Solution Provider (HSP) 250 list.
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