VAR-Agent Partnerships Growing as Businesses Move to Cloud

In recent years, the VARs hawking hardware, and the telecom agents accustomed to selling phone, data and Internet services, have been identifying strategies to team up, both formally and informally.

September 17, 2012

3 Min Read
VAR-Agent Partnerships Growing as Businesses Move to Cloud

By Josh Long

This wont come as a surprise to most of you telecom and IT geeks: The telecommunications and IT channels are converging, thanks largely to the revolutionary forces of cloud computing and mobility.

Still, Larry Walsh of The 2112 Group, a technology business advisory service, maintains there should be more collaboration.”

What we do see now, because there are still so many barriers, is there are a lot of missed opportunities and a lot of channel conflict that is happening,” said Walsh, a straight-shooting consultant during a roundtable discussion Thursday, Sept. 13 on convergence at the Fall 2012 Channel Partners Conference & Expo in Orlando, Fla.

In recent years, the VARs hawking hardware and the telecom agents accustomed to selling phone, data and Internet services have been identifying strategies to team up — formally and informally — as an increasing number of U.S. businesses move IT and communications infrastructure offsite thanks to hosted services and cloud computing. Its common knowledge that businesses and their employees increasingly demand access to information at any time, from anywhere and on any device. 

Some VARs are looking to become the cloud provider whether white-labeling or adding their own level of services,” said Greg Praske, founder and CEO of ARG Inc., a voice and data consulting agency. Others are looking at how to optimize their business base, some how to get new customers. Were finding more downstream those VARs are looking for someone to work with. To build it out is a process.”

Adoption appears to be much more rapid. Can you afford to wait and build out a practice? You might miss the market,” Praske observed.

The realities of business undoubtedly are changing for VARs.

A year or two ago, hardware sales professionals were very comfortable saying, Call your carrier for the bandwidth. You cant do that now” because many of the carriers own data centers, said Michael Shonholz, who oversees the telecommunications services business unit at CDW, a Fortune 500 company providing technology products and services. You call your carrier and you just inserted competition.”

Those data centers, such as Verizons Terremark, offer the infrastructure and managed services that could supplant the hardware and related offerings of traditional VARs.

Some VARs have been criticized for continuing to rely on hardware sales in spite of the thinning margins. Jeffery Ponts, executive vice president of Datatel Solutions Inc, a master agency with mostly non-telecom partners like VARs and cloud aggregators, said his company sells commodities — possibly referring to hardware — for a very legitimate reason: customers are still using them.

They are consuming it but they are continuing to consume it at a lower price,” interjected Walsh of The 2112 Group.

Still, expanding into new territories as a VAR either directly or indirectly through a partnership with a telecom agent presents its own unique challenges.

Praske of ARG pointed out that a Cisco VAR may be entirely dependent on the networking giant for leads and business; if a VAR started marketing a hosted voice product that competed with Cisco, how would Cisco react?, he asked.

That VAR could white-label Ciscos product but thats only for customers with 100 seats or more,” Praske said. And so what do you do? Its not a clean place for VARs to be.”

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