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Tips for building a viable VAR business for the digital transformation era.
January 16, 2018
In the era of digital transformation are value added resellers (VARs) relics? Is picking the bones of this classic partner type of a bygone IT age inevitable? Not according to a new whitepaper, “Digital Transformation & the Future of the Reseller Channel,” from market research and analyst firm Techaisle.
In fact, in the firm’s latest thought piece, Techaisle contends that digital transformation may actually provide an upside for traditional partners and deliver new opportunity for traditional VAR businesses.
Talking over the chorus of naysayers, we ask, how is that possible? It’s possible because VARs know how to put things together, to integrate, deploy, and manage solutions. “All they have to do is figure out the business outcome that the customer needs, be vested in their success, and architect a solution for that end customer,” Anurag Agrawal, CEO and analyst at Techaisle, told us.
Naïve, you say? Agrawal, explains. He begins with the misunderstood and wildly popular term, digital transformation.
He defines digital transformation as the use and integration of digital business processes across an enterprise. In this context, digital transformation is the extension of digitalization, which in turn is the business use of data generated through digitization. Digital transformation, then, is a multistep process—three steps to be precise.
Digitization is the simplest step. Paper, i.e. spreadsheets, documents, get digitized, thereby changing the form of delivery. Stated another way, it’s the conversion of manual/paper records, data or processes into a digital format.
Digitization enhances manual processes, it doesn’t change them. Digitalization uses digital technologies to automate processes using the resulting digital information for better business outcomes, inserting technology into existing processes to optimize value.
The actual transformation of existing processes may be viewed as the endpoint for digitalization and the starting point for digital transformation, according to Agrawal.
Digital transformation integrates digitalized processes to achieve enterprise-wide automation spanning multiple functions, including the modernization of current processes and supporting infrastructure to achieve previously unattainable or unimaginable outcomes.
Now consider the partner ecosystem participants vying for a place in the digital transformation era. This includes MSPs, VARs, SIs, ISVs, and what Jay McBain, principal analyst of global channels at Forrester, calls “shadow channel companies,” including born in the cloud partners, SaaS ecosystem consultants, industry-based professional services firms such as accounting, legal, and marketing, or those companies trying to get into the room by disrupting traditional markets by providing business leaders with a competitive edge.
Some of these players, such as traditional MSPs and SaaS suppliers, may offer their customers advanced and highly-efficient solutions to solve current problems, but they’re not customized offerings for individual clients. While these MSPs and SaaS suppliers may digitize a process or two or three for their customers, what happens when a customer asks to integrate a CRM application with other business applications, such as ERP and inventory control?
“They’re not focused on the customer’s success, and they’re falsely thinking that they’re partaking in the digital transformation journey,” said Agrawal.
Digital transformation comes into the picture when a partner asks about a customer’s existing infrastructure, the outcomes they’re looking for, etc. If the customer is looking for a particular business outcome, they’ll need to modernize their infrastructure. This may include a PC, server, IoT device, artificial intelligence, software-defined network, etc.
“So, you’re modifying your business processes on a modern infrastructure solution to be ready to compete in the world with much better business outcomes—that’s digital transformation,” Agrawal says.
VARs and SIs are equipped to do that, he contends. VARs have pursued “trusted advisor” relationships that reflect deep understanding of client needs and objectives, reflected in technology strategy, planning, deployment, integration and management. And, even though this model doesn’t perfectly address digital transformation requirements, which begin with a vision of the business rather than technology outcomes, the [VARs] core commitment to building solutions appropriate to a client’s specific needs may well be better suited to support digital transformation initiatives than the centralized, supplier-driven model at the core of MSP and SaaS business/delivery strategies, Agrawal writes.
In his white paper, Agrawal talks about the twin ladder view of digital transformation, and that includes the business outcomes ladder and the technology ladder. The business outcomes ladder includes: augmented tasks, modified processes, and reinvented practices. The technology ladder includes modern, flexible infrastructure, and advanced IT capabilities. When the two meet connected businesses flourish.
On the technology ladder, the interwork platform is the connected cloud, connected edge, connected applications, connected security, connected collaboration, and connected workspace. On the business outcomes ladder, capitalizing on the interwork platform means connected insights improve quality of decisions by targeting immediacy or broad corporate impact.
And, when talking about the technology ladder building blocks such as mobility, converged infrastructure, virtualization, SDX, etc., MSPs, SaaS suppliers and other partner types, aren’t equipped to handle this.
“Clouds need to be connected, i.e. Amazon, on premise private cloud, Azure, Google cloud, to provide an enterprise-wide view. Who can do that?” Agrawal asks, pointing out that IT consultants have expertise to do some of it but they don’t have expertise in deployment to modernize the infrastructure.
This is where partners have a tremendous opportunity to figure out where they’re able to participate in digital transformation, and build a digital transformation practice.
However, there’s work to do. Techaisle makes some recommendations for VARs looking to improve their stakes in the digital transformation era. They include:
Find a place in the digital transformation journey and get familiar with the digital transformation framework.
Look at your customer base to identify which of those customers you can help in their digital transformation.
Decide what type of incremental technology investments are needed for these customers.
Examine the skill sets you have to architect, deploy and manage a solution. Fill in the gaps either by augmenting existing staff or finding other partner firms to work with, building your own ecosystem. Another avenue, invest in vendor relationships that offer help.
Look at your current vendor partners to see if they provide the end-to-end solution for the customer, or have the roadmap for the future.
Identify those customers open to go on the digital transformation journey because those initial implementations will provide an education for you.
Decide how you’re going to measure customer success, such as providing them the metrics and KPIs.
If you’re comfortable enough, build an outcome-based revenue model. It will allow customers to see how their investments are paying off.
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