Small VARs Find Strength in Numbers

 
 
By eweek  |  Posted 2006-03-31
 
 
 

Small VARs Find Strength in Numbers


Jim Locke, principal of JW Locke & Associates, knows a thing or two about partnering. As founder of the Small and Medium Business Technology Network, aimed at small and midsize business VARs, Locke has spent the better part of the last year creating and promoting a forum where small VARs—such as his own company—can seek out partnerships to create new business opportunities.

Freelance writer Beth Stackpole recently caught up with Locke to get his thoughts on why partnering is increasingly essential to SMB-oriented VARs, to explore how to forge the most profitable relationships and to hear about whats next for SMBTN.

Why is partnering important for smaller VARs, and what kinds of benefits can they expect?

Partnering is especially important to smaller VARs because it gives them a range of opportunities and lets them appear bigger than they are. It can help level the playing field against larger vendors.

Say there are geographic areas that you dont typically cover, yet youd like to take care of a particular client. By partnering, you can cover those areas, whether theyre local or out of state. Partnering lets you leverage skills sets you dont have in-house or lets you deliver products or services you dont have.

For example, JW Locke does phone systems, but we dont do cabling. I know someone who does, and I let them do that work for me. That way, I dont have to be the small guy—I can be a general practitioner, but I dont have to do all the general practitioner work.

Theres also additional revenue to be derived by partnering. As a small shop, sometimes you bypass a particular engagement because you dont think you have the bandwidth to handle it. Partnering can help you balance your services. I added $100,000 to my revenue line this year based on that kind of relationship. I had a client that wanted to retain me for a much greater time period than I had available, and they needed a higher skill level than I had available. I couldnt take them on and balance their needs with my own staffing, and I didnt want to hire someone else, because it would eat into the profit. Through a VAR partnership, I didnt have to bypass this opportunity because I wasnt equipped for it.

When and why should an SMB VAR seek out a partnership?

Everyone should be partnering at this point, especially if youre a smaller VAR. It makes sense to look bigger than you are. Theres lots of work out there, and most [VARs] dont have enough manpower to handle it. You also can get coverage for vacations or an illness. It gives you more control into where your clients are purchasing technology because youre selling deeper into the account.

How do you evaluate a potential partner, and what are some tips for choosing a VAR that makes sense?

I didnt do partnering before SMBTN, and part of the reason was that it was too difficult to evaluate partners. SMBTN gives me the opportunity to get to know people so I can tell if they know a particular area or if theyre technically proficient. Its much easier through an organization—there has to be some structure or framework that allows you to get in with a group of smaller individuals to see if youre on the same page.

The SMBTN picked up dozens of members on the East Coast, boosting membership past 400 and expanding group members ability to service clients in that area. Click here to read more.

The idea is to start small and pick partners extremely carefully. You have to find people who are a good match—they have to have a similar outlook on business and trade, and it doesnt hurt to have a similar client base. It would be a mistake, for example, for an enterprise-oriented VAR to partner with an SMB VAR because they have completely different ways of working.

The partner also should have a similar work ethic and deliver services more or less like you do. By starting with small engagements, you can make sure theyre qualified to do the work by your own guidelines—not just if theyre certified in a particular technology. They can have all the certifications in the world, but you need to know if the person just sat in a classroom for a bunch of months or if they can actually translate that work into the field.

You also need to know how the partner works beyond their technical capabilities. For instance, if you partner with someone and theyre doing work on your behalf, they cant just come back and say heres what I did—they have to provide a detailed report on the work that you then use to report back to the client and as a base for billing. Does it take three days or three weeks to get that kind of material from them? Depending on how quickly they take care of this kind of administrative work directly relates to how fast you get paid. Sounds like a small thing, but its not, and everyone does things differently.

Next Page: Why some partnerships fail.

Why some partnerships fail


Why do partnerships fail?

Most partnerships fail when you find out the person you partnered with isnt performing the work you assigned to them at a quality level that meets your standards. Poor communications is one of the problems. A lot of these partnerships fail in the details because a VAR didnt properly explain his expectations to the partner, or the partner doesnt fully understand the expectations of the engagement.

All of a sudden, theres a misunderstanding before you start the work, and that leads to all kinds of problems. The nice thing is, once you start to work with a few partners, a lot of those issues go away. The better you know your partner, and the more you do business with them, the better the relationship becomes. You each become an extension of each others company, and you want to make sure youre doing a good job for the partner.

On average, how many partnerships should a VAR strive for? Is one sufficient, or do you need multiple partnerships for different disciplines?

Im a big believer in multiple partnerships to cover whatever it is to meet your needs. You might need several partners to cover different disciplines and for geographic purposes.

I have two general partnerships with companies that I work with all the time, and, beyond that, I have at least a half-dozen other partners that are specialty providers—companies that focus on Web development [and] cabling and another new one around Microsoft CRM [customer relationship management]. In those areas, we decided were not going to do it ourselves; instead, were going to address the need by working with partners we trust who wont take our business. The cabling partnership, for example: Thats one area that we completely outsourced before and made zero dollars on any efforts. Now, were making $70 a drop, and thats not a bad deal.

How should a VAR position its partnerships and partnership strategies to customers, and whats the key benefit to them?

In some cases, we explain them, and, in some cases, we dont. We size up the client to figure out which way best meets their need. In either case, people are a lot more savvy about outsourcing—you cant pick up a newspaper these days without someone talking about the virtues of outsourcing, especially around IT. People seem to understand this model of service delivery—they may have questions, but theyve seen it work in other industries. If it makes sense for their bottom line and gives them the results they want, theyre fine with it.

It also gives the client more flexibility with whom they work, with the same controls. After all, whats the difference between a referral and a partnership? In my mind, theres a stronger relationship with a partnership because the partner knows they have to answer to me at the end of every business day. Comparatively, a referral is a lead—they can follow up if they want, but theres no control whatsoever. At the end of the day, we want to be positioned as the go-to guys for technology for our clients. Whether theyre putting in a phone system or building a Web site, we want them to pick up the phone and call, and we need to have partners to be able to fulfill that wide range of services.

What are customers biggest concerns about VAR partnerships, and how do you alleviate them?

Their biggest concern is that youll turn their account or project over to a partner and not keep an eye on it. The only way to alleviate that is to have constant contact with the client and with the partner. If you dont, its basically a referral. To maintain control, we have someone from our office follow up on every service call with the client. We maintain control over the customer relationship, and, in that way, we please the customer and make sure our needs are being met as well.

How can an organization like SMBTN help, and does it make sense to cooperate with your competition?

SMBTN is about more than partnering. Were focused on three areas: Business development, which includes partnering and co-marketing; professional development, which is mostly in the area of training; and vendor relations.

I am still surprised at the good fortune we have had forging relationships with SMB vendors. Sonicwall, Microsoft, Symantec, 3am Labs and Trend Micro are some of the vendors who have partnered with us, offering our members benefits from specialized training to discounts. Many of these are things that they would not be entitled to as a smaller reseller. I think it is our strength as a group of SMB-focused resellers that has caught their eye.

Whats next for SMBTN?

Our second annual conference is coming up March 30 to April 1 in Buena Park, Calif. [In February,] we began airing a radio show pilot in six cities in the United States and on the Internet. I am very excited about both of these events, but, frankly, the thing that amazes me is the growth of our membership. I had set a goal of doubling our membership from 250 to 500. It now looks like we will meet that goal by the end of March. It is our increase in membership that will allow us to go further and do the things we want to do.

Beth Stackpole is a freelance writer in Newbury, Mass. She can be contacted at bstack@stackpolepartners.com.

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