VAR Teaming to Co-Sell Comprehensive Data Center Solutions
Today IT VARs must consider working together to provide comprehensive business and technical solutions. Historically VARs have been able to stand-alone and provide an IT implementation of a business solution. When the solution to an end-user problem involves several applications that must work together and/or the application deployment is migrating to the IT Data Center environment it stretches the capabilities of a single VAR. The industry is moving from distributed compute environments to centralized data center environments at record rates.
When a VAR becomes a reseller for one or more system components, they sign an agreement not to sell to another VAR who then would sell to the end-user.
Regardless of the difficulties, VARs are learning to overcome their competitive nature and lack of trust in order to develop Co-Selling models to satisfy this market demand. These VARs must develop Trusted Advisor Teaming arrangements or miss out on the high growth opportunities. VARs not providing these teamed solutions may in fact become niche players and experience diminishing revenues and margins.
Here are some recommendations to allow VARs to work together to provide much needed comprehensive solutions.
- Independent – The components can stand-alone on their own merit and the VARs just sell their components “Independently” through separate selling cycles.
- Referral – The components can stand-alone on their own merit, but the solution concept is presented sequentially by the VARs. The joint selling is more like a “Referral” arrangement. This is akin to having the General Practioner doctor refer patients to a Specialist doctor. Each doctor diagnoses the patient’s problem and provides a remedy. Sometimes this results in a one VAR providing a finder’s fee to the VAR uncovering the opportunity and referring the business.
- Side-By-Side – The components can stand-alone on their own merit and can be sold “Side-By-Side”. Both VARs sell their respective capabilities jointly providing problem diagnosis and remedy prescription. The VARs still sell separate components to the end-user, but may divide the selling activities up between them and there is an equitable sharing in margins based on selling contributions. Examples of margin sharing ranges from zero to 30%.
- Joint Selling – The most difficult scenario is when the components of one VAR are integrated into the other VAR’s components to provide the end-user with a comprehensive solution. This is a classic Systems Integration (SI) model. The System Integrator basically does all the selling including evaluating alternatives and solution design. When this situation occurs both VARs team up to implement the solution. When this happens, the VARs still sell independent components to the end-user, but share margins based upon the equity of the contributions. Examples range from 40% to 70% depending upon the implementation contribution.
- Prime Contractor – When the customer demands to have a Single All Inclusive Contact and have all implementation activities Prime Contracted by one VAR, and get Only One Invoice for all the products and services, then this would violate the VAR’s agreement with their suppliers. This requires a contract review, would be a special case approved by the VAR system/component/services suppliers to have a VAR act as a Prime Contractor and have all the other VARs sell through the Prime Contractor VAR to the end-user.
If you would like assistance in forming strategic VAR alliances, contact us at Alliances@PrismBusDev.com or call us at (720) 352-3407, and we will assign one of our Alliance Specialists to ensure your success!