Great channel programs and terrific salespeople don’t mean a thing in the channel if you don’t have the right kinds of products driving high-margin sales opportunities. And yet, many solution providers tend to base their analysis of what products are best to sell solely on the margin generated by the product itself rather than the value of the total solution that the product drives.
For example, in the world of hardware, it’s pretty easy to conclude based on the margins of the products that there isn’t a whole lot of incentive to sell PCs or printers. In fact, you may conclude, as have many others, that there is no point to selling these products, given the relative lack of profit they generate.
But such analysis doesn’t stand up in the cold light of day, because printers, for example, generate a lot of opportunity for high-margin toner cartridges, while PCs power most of the higher-margin solutions that customers want to buy. So unless you’re involved in the PC sale, you’re basically making it easier for someone else to create a one-stop shop that will freeze you out of the business.
Given all that, today there are a handful of product areas that most solution providers should give some serious thought to mastering given all the high-margin revenue associated with delivering solutions that leverage these technologies. And if you had to pick the five areas with the most downstream profitable services revenue attached, the list might look something like this:
1. Virtualization: Although this may look like a way to spend less money on hardware, it’s really a new method for distributing applications and providing disaster recovery and higher levels of security that, in sum, make this technology one of the most valuable assets a solution provider can master.
2. Power management: On the face of it, this is about upgrading a system to use more energy-efficient processors. But in reality, it’s a technology that drives major data center design opportunities that can be coupled with any number of additional higher-margin racks and power supplies.
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3. Thin provisioning of storage: A still relatively new approach to storage management that creates all kinds of opportunities to discuss the customer’s overall approach to data center management.
4. Voice over IP: As a technology that lowers telecommunication costs, VOIP is becoming increasingly popular. But as it is also a technology that is latency-sensitive, a conversation about upgrading the overall network infrastructure to support VOIP is never very far away.
5. Service-oriented architecture: As the new standard way to deploy and manage enterprise applications, SOA represents series computing. But given the fact that most SOA implementations are built using piggish XML Web services standards, the opportunity to upgrade servers, storage and networks usually materializes shortly after the third SOA application gets installed.
There are many other examples where the emergence of one technology or another creates multiple ancillary opportunities down the road. You just have to be committed to look around your customer’s IT shop to determine what the next opportunity will be, given all the things that have gone before.
In fact, we here at eWEEK are so excited about how much good engineering contributes to the channel, we’ve been asking readers to help select the best products in the channel for calendar 2006 so we can provide some overdue recognition. We expect to publish those results next week, but if you want one last shot at voting for your favorites, check out the survey here.
In the meantime, the next time you run into a chief technology officer or somebody from product engineering at a vendor that does a good job for you, don’t forget to tell him or her one thing after you’re done trying to get all your preferred changes to the next iteration of the product at the top of the development list. And that one simple thing that always keeps them come back for more is, “Thank you!”
Michael Vizard is editorial director of Ziff Davis Media’s Enterprise Technology group. He can be reached at michael_vizard@ziffdavis.com.