AIDC: More Than Just RFID

1 Aside from RFID (radio frequency identification), what are today's hottest opportunities for VARs with AIDC (automatic identification and data collection) experience?

Nimax, Bill Shaw: From a technology standpoint, switched wireless networks are coming on strong. They make sense because of their cost and their ability to offer increased security, management, IT integration, and scalability. Also, this technology meshes well with verticals like healthcare and government that are faced with legislation and mandates such as HIPAA (Health Insurance Portability and Accountability Act), EHRs (Electronic Health Records), and FIPS (Federal Information Processing Standard) 140-2.

ScanSource, Mark Morgan: One important application is voice mobility within a business environment. Mobile devices with Wi-Fi connectivity are easily adapted to allow for VoIP (voice over Internet Protocol) connectivity back to their corporate phone switch. Find me/follow me technology is becoming more available to corporate users. The same devices allow for data mobility. Furthermore, mandates from the federal government are driving healthcare to a paperless, universal IT infrastructure. This trend will ultimately bolster sales of enterprise mobility solutions not only in that vertical, but as the technology becomes more familiar and the ROI is demonstrated, in other markets as well.

Tech Data, Karl Werner: We see the greatest opportunities for AIDC technologies in the government, healthcare, financial, and logistics verticals. Demand in the healthcare and financial markets, for example, is being driven by compliance with government regulations such as HIPAA, the Gramm-Leach-Bliley Act, and the Sarbanes-Oxley Act.

2 How often are you seeing non-AIDC VARs starting to try to sell AIDC products? Why is this happening?

Shaw: We're seeing more and more non-AIDC VARs taking a hard look at AIDC opportunities. The reason is quite simple -- margin erosion in their established markets.

Morgan: Interest should be high among IT VARs for AIDC technologies. Enterprise mobility is the obvious bridge between the two customer sets. Wireless Ethernet is the common backbone. Some companies are integrating Wi-Fi into their switch fabric. But, it's the AIDC vendors who have the mission-critical hardware and software to complete the application. IT VARs must cross the bridge into the AIDC vendor set if they are going to be successful in the mobility marketplace. We expect to see more of these crossovers this year and next.

Werner: We are seeing hundreds of new resellers entering the AIDC market every quarter. Resellers are leveraging existing relationships with customers they may already serve as networking VARs or imaging solution providers. These VARs are able to sell additional products by approaching their customers with complete data capture solutions that offer a clear ROI.

3 What would be your advice to an AIDC VAR that wants to grow its business? How could it do so quickly?

Shaw: Take advantage of the programs offered by your value-added distributor. Distributors have a lot to offer beyond fulfillment. Presales/postsales support, demo/eval programs, market knowledge, custom marketing programs, and creative financing all can help VARs tackle large opportunities they may have shied away from in the past due to lack of resources.

Morgan: Our advice is to connect to the technology drivers. For instance, the FDA's (Food and Drug Administration's) bar code mandate and Wal-Mart's RFID mandate are clear technology drivers. Prior to the FDA's mandate, only about 5% of hospitals used bar code technologies because most products don't have bar codes on them. The mandate creates opportunities for VARs.

Werner: First, choose one or two vendors to focus on. Second, choose a distributor and gain the necessary training and product support. Then, choose a vertical such as warehousing, healthcare, or legal in which to sell your solution. Finally, replicate your successes, learn from failures, and expand to additional markets.

4 How can a distributor help a VAR close a deal?

Shaw: If the application involves unfamiliar technology or business processes, by all means make use of your distributor's expertise for presales support. We recently collaborated with a reseller working with a government agency looking to spend budgeted dollars before the end of the fiscal year. The problem was that the government's part numbers were not only cryptic, but they also included discontinued product and manufacturer's part numbers that differed from descriptions for those part numbers. Because of our expertise in this vertical, we were able to work with the VAR and government procurement agent to unravel the mystery. We then repackaged the products to meet the federal specs, all while staying within the project's budget. The reseller gained credibility with the agency by leveraging the expertise and resources of its distributor, and within a week, the VAR had an $800,000 purchase order.

Morgan: Distributors should drive costs out of the channel for VARs by offering presales support that includes live sales support to spec the right product to fit the application, business development resources for product training and support, capable and available tech support, and deal financing.

Werner: One of the many challenges facing resellers is the issue of special-bid pricing, in which manufacturers offer their products directly to end users at substantial discounts. Resellers have lost contracts due to the enormous complexity associated with processing and verifying these special-bid prices. To help resellers earn the high-value support and installation contracts associated with these sales, Tech Data has partnered with IBM to ease the special-bid pricing process. Through secure electronic data interchange (EDI), we have reduced special-bid turnaround time on IBM products from days to minutes.

5 What is the best distributor service an AIDC VAR should take advantage of?

Shaw: Many AIDC VARs use our pool of evaluation equipment. We have an extensive inventory of the newest hardware products available for VAR testing and end user demos. In addition, our professional services group, RF Express Mobile Solutions, is there to make sure the AIDC VAR is evaluating the appropriate product.

Morgan: Systems integration is a very valuable service for resellers, and they are able to take advantage of this service without investing in their own infrastructures. This service allows resellers to add memory to their POS (point of sale) workstations, load application software to portable data terminals, assemble total telephone systems, integrate computer telephony platforms, or custom configure their equipment. Having their products configured and tested before sending them to their customers allows resellers to achieve cost savings and quality control and provides flexibility and scale advantages for project management in customer rollouts.

Werner: A distributor's e-business infrastructure is a valuable tool for VARs. For example, we offer live transaction processing, electronic data interchange, XML (extensible markup language) functionality, and hosted Web storefronts.

6 Give an example of how a VAR did not provide good customer service and how it affected his customer relationship.

Morgan: An example of failure to deliver good customer service is a VAR who won a large deal based on his ability to execute on a 100+ location rollout. The VAR's business could not scale to the requirements of the deal (e.g. systems integration, installation, and rollout deadlines). He lost the deal after 20 installations and lost local business from the customer for good.

Werner: VAR X sold an AIDC solution to a small end user. The client had additional locations for the solution. The end user had priced the product with a direct marketer and chose to buy the product from that supplier. VAR X gave up the business without asking for special pricing and support from the distributor, which could have enabled the VAR to continue to serve the customer.