"There are still a lot of product-focused solution providers out there," Okun says. "And you just don't see that growing. In the old days, a client came to us and asked for 100 IBM desktops. Boom, you took the order and made your 10 or 15 percent. But, today, the average selling price of a PC is under $1,000, and the profit margin is under 6 percent. You are not going to stay in business doing that."
Cyclical Changes
It's hard for Laurie Benson to curb her enthusiasm on the subject of partnering. As CEO at Madison, Wis.-based Inacom Information Systems, a $62 million-a-year business solution provider that specializes in technology consulting, education and procurement, she is finding it "an awfully interesting time to be in the industry." One of the main reasons? Partnering and subcontracting are on an upswing.
Benson has been around the industry long enough to see the cyclical changes in business. In many cases, it just makes better sense to subcontract and partner to reach customers in remote locales than to fly staff and other resources to these areas. "This is a fundamental shift in how customers are served," Benson says. "And it's all about what is best for the customer. That is what is so awesome."
In addition, more VARs are taking Cisco Systems' advice to become specialized in certain technology areas and vertical markets.
"What they are finding is, instead of trying to be all things to all customers, let me do the one or two things that I am good at or have the most knowledge in," says Justin Crotty, senior director of channel development at Ingram Micro. "And I can partner with VARs for parts of the solutions that my customers are asking for, but I am not going to spend money to adopt."
Discover the benefits of scalable backbone and network services for application and cloud providers.
Network automation is gaining momentum. Here's how you can drive this powerful technology to its full potential.
Subsea cable alternatives can provide a level of comfort for those concerned about disruptions. Realistically, they will continue to play a small, but critical role in the short term.
