While some industries like housing or the automotive industry were hit immediately and very hard, VARs in the IT industry have proven to be resilient. Seven high-profile VARs share some of their secrets to success and speculate on the economy.
In this series
- The recession-proof reseller
- What to sell during a recession
- Companies that are still buying
- How the economy is impacting your business
- How VARs are surviving the struggling economy
- Advice from seven successful VARs
Joe Brown is president of Accelera Solutions, a VAR focused on the virtualization space. Accelera, the fifth-fastest growing company in the Washington, D.C. region, is on the Inc. 500 this year, and has enjoyed three-year sales growth of 777 percent. Not only has Joe not been negatively impacted, he says, "this past quarter we had two of the biggest months in our history, revenue-wise." Joe recalls that his company was born "just after the tech bubble burst" in 2001, and "we just launched off like a rocket right away. It's really due to the fact that we're tightly focused on the virtualization space. One of the things we're going to be doing is limiting the number of manufacturers we're going to represent and stay focused on existing core relationships we have, versus trying to expand that. I think when you have challenging economic times, the best thing to do is circle the wagons, stay true to your name, and stick with what you have and what you know versus trying to extend yourself too far."
David Berman represents the Home Theater Specialists of America, a consortium made up of 63 members. Most of the integrators in the consortium are reporting that "business is good, at least above flat," in what is seen typically as a luxury market. Many of the integrators have expanded into high-end lighting control systems, and home automation control systems that regulate utilities and HVAC. Part of the success can be attributed to green initiatives, and also due to the fact that these high-end control systems are a lot less costly than they have ever been - a factor that has opened up the door to a whole new class of buyer. William Dunn, president Dunn Solutions Group, says his company thrives on diversification. The IT consulting firm specializes in business intelligence, data mining and predictive analysis. "We don't bet on any one area," says Dunn. "We're a medium sized consulting firm but we do a lot of different things, which helps us. If one thing goes sour we're right there with other things. There are companies that bet the farm on one piece of technology or one line of business, and history is littered with dead consulting firms that did that."
Compunite, led by president Steve Ferman, continues to succeed due to an innovative "One Rate" program that appeals to both the techies and the bean-counters. Ferman's success hinges on two strategies; first by being more of a trusted consultant than a simple reseller of goods and services, and second, by providing a wide range of necessary services under a single umbrella for a single, flat rate. Ferman says that focusing more on accumulating several annuity-based deals, rather than expensive up-front projects, is the best way to weather hard times. And while he sees more people holding off on major new acquisitions, he believes "there will be some big growth areas in cloud computing. To that extent, people are just saying, 'I don't want to own the infrastructure. I'll pay you a flat fee and you buy it, maintain it, install it, and that's going to lead us to a lot of virtualization." And lastly, it's all about how you approach the customer relationship, especially in hard times when customers may be in panic mode. "People want to have a little more hand holding, they want to know that you actually care and that you're there, and they're not just a number to you. They want more of a personal touch."
Michelle Drolet, founder and CEO of IT security services firm Towerwall, says "we have been in business for 15 years and have weathered several storms." Seeing the midmarket as the "sweet spot" for her industry, Drolet's business continues to grow on plan, despite the economy. Information security is becoming seen as much more essential than ever before, partly due to increased legal requirements, and partly due to increasingly dangerous threats. Drolet has observed that "everybody's being watchful. People are still spending money, just not as fast."
Dave Taylor co-founded Sparxent this summer to become a large, globally focused solution provider through a worldwide acquisition strategy. His vision is to create a business model that blends consulting, solutions, integration, development and services into a single source for IT. The overall strategy is to address midmarket challenges and increase ROI. Taylor says, "more and more today, VARs tend to be overly beholden to one particular vendor. It's difficult to tell where the vendors' sales team ends, and the VAR begins, and I think that's left VARs as a little bit of a slave to the vendors. They have too narrow a portfolio." He believes that VARs were meant to be on the customer's side - with an approach of, "let's sit down with the customer and see what's best for them, and then we'll go out and find technologies and assemble it into a solution for you. It just doesn't happen that way any more."
DLT Solutions' President and CEO Rick Marcotte focuses on the government market, and has been able to achieve its goals by tightly integrating with a large and strategic selection of IT hardware and software manufacturers, and providing 24x7 phone and email technical support. Marcotte says that the broader economic slowdown "has had a ripple effect in our markets as tax revenues decline, especially at the state level." Maintaining a successful integration strategy in this environment means acknowledging that there will be much more scrutiny on the part of clients. He encourages "increased customer dialogue to ensure that there are no collection surprises for accounts receivables," and to "increase the sales proposition to focus around cost reduction and ROI generation."