The traditional reseller is in transition. The buzz in the software
reseller community today is "How do we add value". All of us
associated with the industry know that shrinking margins on the box have made it
imperative for us to offer services.
The only way one could have a competitive advantage is by
selling services with the box. Services is the key differentiator between
a VAR and a box reseller. The services business has brought about greater
productivity and efficiency, which means cost saving and healthier bottom lines.
The more successful resellers have nurtured key accounts,
limiting their business volume on the short term but gaining huge customer mind
share through services. One must remember though that products are still the key
to account control and therefore resellers have to balance their focus on both.
Adding value to box sales
Every software reseller must understand what his organization
is capable of delivering, among a large number of options when it comes to
adding value to his box sales. Being an expert in all areas and assuming the
role of a "technology expert" is good for sales, but will make value
addition unsustainable. There is no way a value-added reseller (VAR) can manage
to provide services for all the current leading technology areas. He will have
to pick and choose his area of strength.
The VAR has the following options:
a) Do a need analysis for customers and play the role of a
b) Provide product comparisons to facilitate decision making
for the customer.
c) Charge for support. Many organizations are willing to
separate the cost of the product from cost of support. A support contract could
involve placing an employee at the customer’s site for a fixed number of hours
a week. Alternatively the VAR could charge on a per-call basis.
d) Training is a lucrative value-add and many organizations
would prefer the VAR providing it, except that finding and retaining a team with
high level certified technical skills is a difficult task.
e) Network administration and management at customer site. A
lot of exciting networking products are available and the lack of skilled
manpower at the customer’s end would give the VAR a great opportunity.
f) Outsourcing as a concept is gaining ground again. Large corporate entities
want to outsource repetitive work leaving only critical work to their own staff.
and call center services are some examples of outsourcing.
g) Software maintenance and application management.
It would be a good idea also to reflect on new trends, which
are emerging worldwide. A trend fueled by the Internet and e-business culture is
sure to affect all of us in the near future. The New Age VAR needs to sell
solutions and specialize in service areas. The traditional VAR is now in
transition with new business models like:
- Application Service Provider
- E-business Solution Provider, etc.
What this means is that there will be a shift towards
consulting and e-business as a core component of the VAR’s services business.
A new VAR could be wise to look seriously at the following service options:
a) Consulting services where the VAR conducts systems studies
based on customer’s future plans and recommends an e-business strategy
covering hardware, software, networking and applications.
b) E-business and web-enabling technologies where the VAR
develops and implements e-business solutions and also coverts existing
applications to a web-enabled environment.
c) Networking services by studying network topology at site,
providing network design and implement networking and security solutions.
d) Software application development services
Developing skills in the Web and networking technology like
remote access, security, high speed Internet access, Groupware, SQL databases,
etc will be the key to survival in this cut-throat market. The need here is to
specialize in specific areas and look at partnering with other technology firms
to cover gaps in skills. Selling products with Internet and e-Business services
attached is likely to be the biggest revenue earner in the coming years.
A VAR can handle this transition by paying close attention to
the following points:
- Internal training to adapt to specific technology areas,
and develop internal systems to measure customer satisfaction.
- The VAR should introduce support services in a Web-enabled
manner, by providing text chat support and allow customers to log in to their
- Focus on a specialized area and partner with other VAR’s to provide