The role of a VAR cannot be undermined – neither in their contribution to the development of the economy nor in the process of sourcing and staging products for customers. A solution provider's business has always been stigmatized as "box pushing" and relegated to some shadowy corner of an organization. But with the passage of time that has changed. A change in the business models of channel finds them moving up the value chain, adding value to the traditional IT procurement process of the reseller business instead of “pushing” just a boxed product to the customer.
Resellers shedding “Box-Pusher” tag...
“We are definitely not cocooned as Box-Pushers with the emergence of our business. Amtrak has always dealt in providing a solution to its customers. Our recent emergence in the Device market can be rightly quoted here," says Sandeep Arya, Managing Director, Amtrak. Product like a tablet PC can be easily “box-pushed”, but Amtrak chose the path to integrate the device with some unique features which are hand-designed. Not just with its tablet PC business, but in all its lines of working, the target customers are rightly understood of their requirements and a customized product is created. "So here, Box-Pushing is generally not followed,” reiterates Sandeep.
"In the era of wafer-thin margins and absurd pricings by Online Retailers, a Reseller has to really work hard to survive in this business. Maxnet Computers as Value Added Reseller bundles customized service support along with the box," says Arvind Singh, Founder - Maxnet Computers.
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| Sandeep Arya Managing Director, Amtrak | Manish Kamdar, Director -Rincon India Solutions Pvt. Ltd. | Shiv Sharma, Director – Strategy & Alliance, Go IP Global Services | Bhavyan Kothari, Founder, Infinity Systems |
In today’s marketplace, customers expect the resellers to understand their requirements at a deeper level and to offer cost-effective solutions to suit their needs. With a team of specialized professionals in each area of IT solutions, Go IP provides its associate channel the best comprehensive portfolio of products and business support, from business and technical training to organization and sponsoring of demand promoting activities. “At Go IP, we believe in a value- added distribution model. Instead of box pushing, we work on a solution-centric approach,” explains Shiv Sharma, Director – Strategy & Alliance, Go IP Global Services.
Box-pushing is slowly becoming history with most of the partners today, with the concept getting diluted and VARs starting to look at it from a different perspective. “We don't sell box at all. We sell the entire solution or else we do not do the sales at all. We do not want to tag ourselves as a box seller,” opines Bhavyan Kothari, Founder - Infinity Systems.
“Once simple software is integrated with Line of Business (LoB) applications through customization, the reseller becomes a value adding partner for the customer and not just a box- pusher,” says Manish Kamdar, Director - Rincon India Solutions.
"As clients are well aware of what Box they need to buy, or in better words they have already made up their mind before coming to us of their priorities on Box. The only way to enter or push in the business is to show them the solution instead of Box and pick up the deal," observes Sunil Doultani, Founder - Classic Systems & Services.
"Trident has never limited itself to being a box-pusher. Rather, they have been the value-added reseller where each and every software product addressed and solved some of the customer business problem. Our solutions around ERP/ CRM/ BI/ IBM software always had a licence and services and without Trident Services, the licence would have limited value," informs Anita Jain, Director - Trident Information Systems.
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| Sunil Doultani, Founder, Classic Systems & Services | Anita Jain, Director - Trident Information Systems Pvt. Ltd. | Keyur Jathal, Executive Director, Ishan Infotech | Prashanth GJ, CEO, Technobind |
"We do not identify ourselves as a Reseller, but we project ourselves as the client’s solution partner. It is not difficult once you have identified yourselves as a solution provider to impress the same upon a prospect," replies Manish Kapasi, Director, Avion Electronics. He further adds, “Pushing a box will soon be passé as the new-age customer is quite tech-savvy and understands his requirements better than the legacy customer who relied on VAR’s biasness to finalize his purchases.”
While the focus is on solution selling, one cannot deny the existence of opportunities where the role is just to be a facilitator by giving better credit terms or logistics support. These opportunities are managed by an inside sales team in most of the companies so as to service the customer requirements better and at the same time keep the cost per transaction low.
Having said this, the role of a VAR is transforming from that of box-selling to solution designing to system integration and to Managed Services. "While the price of the product can be determined from other sources, the price of a solution is to be valued by the customer. And that is where the VAR now steps in," observes Manish Kamdar.
"I have seen big transformations happening in the last 18 years of my business. I am sure today my client listens to me or believes me more in selecting the vendor as compared to earlier where BRAND name use to play bigger role in procurement of IT," muses Sunil Doultani.
The role has, indeed, become more refined. He has come to don the role of a consultant, guiding its customers in choosing best technology available from various platforms and the right vendor. Customers too expect a frank opinion to suit his requirements, given his budget constraints and expect the partners to negotiate on their behalf with vendors to get the best price or performance equipment.
"In recent times, small customers have grown to the level of an SME, but they still cannot afford or do not want to keep an in-house IT Manager. So they totally rely on your suggestion and solution offering for small to big purchases. In that case, you have evolved yourself with new technologies and cost-effective solutions which can enhance customer's business and help them beat competition," says Bhavyan Kothari.
Purely from a procurement process, there is a clear shift that has been observed in the past couple of years. "Initially, the customer was expecting the VAR to help in price discovery, product availability, product explanation, installation and support. This has undergone a change. The customer now expects VAR to focus more on design, cost optimization and integration of the new set-up to the existing environment. Implementation and support continue to gain prominence. Since customers now have access to a vast amount of information through social media, etc, the role of the VAR now is to provide a neutral view to the customer in the context of customer’s business scenario. The VAR is now expected to know more about the business processes of the customer and provide relevant IT solutions around the same," explains Keyur Jathal, Executive Director, Ishan Infotech.
From a “Box-Pusher” to a “Value Added” Reseller – Not-so-smooth transition…
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| Arvind Singh, Founder, Maxnet Computers |
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| Jiten Mehta, Director, Magnamious Systems |
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| Manish Kapasi, Director, Avion Electronics |
Value addition is what defines the new-age reseller today. This comes over and above selling just products and services and extends to areas like customer satisfaction, solving service-related queries, understanding and taking customers’ feedback and suggestions for creating new lines of products. Value addition is, however, achieved after having some personal levels of interaction with the users and the markets.
“Definitely, we do believe in value addition because we understand that the relationship does not just end at selling, but it begins there and it must be rightly taken ahead at all levels. For example, there are after-sales services to our customers. Our customer support centre is in great connection with all our users, our strong sales force is highly knowledgeable of the markets, and our business-to-business interactions help us to understand the new requirements in the markets. We think that giving a product to the virtual imaginations of users is the best value addition to offer, again differentiating us from the box-pushers," says Sandeep.
At Maxnet Computers, it all starts with Pre-sale support of the product. “We provide free technical consultancy to choose right product and right technology. We bundle customized solutions along with Service Support Guarantee and promise of a standby support thus offering zero downtime. Our major chunk of revenue comes from the service we provide for our products," says Arvind Singh.
When it comes to value addition, Ishan has a three-pronged approach towards it – a focussed GTM, Investments in Certified resources and building technology showcase facilities –
I. The GTM (go-to-market) at Ishan is focussed on addressing the IT infrastructure and services requirements at a holistic level as opposed to a transactional engagement. It takes ownership of the project by engaging in solution design, deployment and support. This way, the focus stays more on solution selling where one has the scope to add value and differentiate.
II. Since customers engage with Ishan at the solution design stage, Ishan has invested significantly in certifications related to Compute, Storage, Virtualization and ITIL-related processes. As of now, Ishan has certified resources on HP, IBM, Cisco, EMC and VMware.
III. In order to give a first-hand view of how newer technologies are deployed, Ishan also has a Development Centre set up at Rajkot where customers do visit for a POC/Demo. Having seen positive results, Ishan has invested in building one more technology showcase at Ahmedabad in a prominent area.
For Rincon however, integration with the LoB applications of customers is the best way to get in. "Once the customer announces his pain areas, we need to be willing to develop customized applications so as to address the pains. The revenues then are steady as we are no longer offering box solutions but customized solutions to address their process needs," says Manish Kamdar.
Go IP, along with its partners pan-India plan and implement activities focussed on market development in the region. "We provide presales and post-sale support and offering Implementation and professional onsite/Remote support services and AMC services to our valued customer. Apart from hardware selling, our other revenue stream is Implementation services and Managed and AMC services," explains Shiv Sharma.
"Value additions depend on the project, like we value add security/backup solutions/ connectivity/training /domain hosting/server hosting, we have expertise in each field with us. Revenue generation depends on the time spent or how complex is the solution for client. We charge accordingly,” opine Sunil Doultani.
Anita Jain says, "Our value addition is in terms of providing solutions which will solve some of the customer challenges. This is possible by selling software by the leading organizations such as Microsoft, IBM, SAP and services which not only implement the software but also provide support and enhancements."
TechnoBind is a Specialist Distributor – focussing on DATA. As one would realize, Data Treatment and Data Handling challenges are something which customers are still grappling with. "TechnoBind&rs quo;s charter is to provide the reseller and the SI community and hence its customers with cutting-edge and emerging/niche technologies which will solve customer’s challenges around Data. And this, we believe, is here to stay as these challenges related to Data is real and is growing, thereby providing Specialist Distributors like us who focus in this area a huge upside in terms of the revenue model," explains Prashanth GJ, CEO, TechnoBind.
"We propose a whole solution around the customers' pain point and architect for them. Then, we bundle all the products around this design and add to it with the service charges. We go one mile ahead by taking a contract to even run that infrastructure deployed by us by deputing the person at their premises. So our revenue becomes recurring in nature," says Jiten Mehta, Director - Magnamious Systems.
"Transparency – that’s the best policy we feel that works. Buy from wherever you like including me. And for shortlisting the product, either you do the legwork or I do it for you. If I do the same for you, you need to pay me for that – is our mantra," says Manish Kapasi.
A reseller should, however, attempt to scale up in terms of his value addition to his customer. Box-pusher is a stereotype or rather a “misnomer” that restricts a reseller to easily brush the tag off. However, with the changing dynamics in the market – Cloud, Mobility, Big Data, Constricted Budgets, Customers pushing to get more out of existing budgets – it provides the resellers an opportunity to really scale up in the eyes of the customer as someone who is providing true value.
But there are challenges involved in the VAR business – the most prominent being the lack of Training and Post-implementation support from Principal Companies. The support system though seems good on paper, the ambiguity surrounding DOA and warranty replacement system still continues to confuse the Reseller. If a VAR is supporting a product, he expects the principal to support the warranties and provide replacements/backups within reasonable time to enable the former to service his customer better.
"Stocking and selling is the biggest challenge we face in the procurement of IT goods as it holds up a good amount of capital. There is also risk involved as models and technologies keep changing fast," says Sunil Doultani.
"The biggest challenge is the procurement team who believes in getting multiple vendors and negotiating against each other. Especially at this time if we want to involve a vendor, we really need to work with them from the beginning or else they might position someone or you need to have a customer control who will tell vendor to work with their preferred SI. So sometimes working closely with a vendor is an advantage while sometimes it is not," recalls Jiten.
In an ever-changing and dynamic industry, there is always a fear of technology becoming obsolete. Constantly growing and adapting to meet the market demands have, thus, become a critical factor for the VAR to succeed in the business.
Future of VAR business
With the penetration of IT in different market spaces, VAR has definitely transformed by trying hands at experimenting on bringing out various solutions into the market – new advancements, better technologies, new techniques of production of products. It will, no doubt, act as differentiators in automating businesses.
"It is just that the customer needs to have faith that the VAR will be able to deliver, as promised. Also, the principals have to be willing to listen to ideas and not slam the door on partners. Only then can we arrive at solutions. Sometimes, principals throw in the towel too easily,” advises Manish Rincon.
VAR business will sooner or later move from licence selling to pure services where most of the principal companies would provide licences on SAAS model. Resellers will be the trusted advisors and business partners to end-customers, enabling them to be more agile, competitive and cost-efficient using technology and services. They will be the first point of contact in case something goes wrong.
However, what India needs at this moment is a Good IT Policy reform system and good measures for economic revival. “Hopefully, this will start happening after the general elections. I am very positive and confident on VAR business in India which is going to stay and will thrive and be successful. The key to survival in the current business scenario is to keep oneself upgraded all the time with the new technology. I personally believe that personal ethics and professional ethics play a big role in a successful business and so do hard work and perseverance,” opines Arvind Singh.
At a higher level, owing to the vast expanse of the country and the growing urbanization as a result of industrialization, the significance of a VAR to address the geography would continue to remain important. The VAR would do well to be cognizant about the changes in the buying behaviour of the customer and tune its offerings accordingly. The VAR would be required to have a relook at newer brand alignments in the nascent technology areas such as SaaS, Mobility-related offerings and security. They will continue to play an important role in the years to come. However, customer expectations from the VAR will keep on changing and so would the revenue models.
samrita@varindia.com
