Combine ECM And Storage To Grow Sales? Maybe.

From a technology perspective, ECM and storage technologies have a natural synergy. ECM software requires a place to store the data it manages, and tiered storage provides a hierarchical system of storing that data. Therefore, it makes sense that ECM VARs would sell storage, and storage VARs would sell ECM products. However, that’s rarely the case. We asked four distributors why, and we asked them about the opportunities for VARs in combining ECM and storage technologies.

Joel Port is the VP of sales for NewWave Technologies, a VAD selling imaging, storage, and duplication products. Port says, “The typical reseller is selling either ECM solutions or storage solutions. Only a limited number of resellers have the bandwidth and expertise to address both. We have seen some VAR success with specialized storage products that are focused around content archive applications, but those VARs are rare when compared with most that concentrate on either ECM or storage products.”

Steve Cohn adds, “Storage integrators are finding more opportunities to sell ECM applications.” Cohn is the VP of sales for Optical Laser, a VAD that provides IT software, hardware, and services. He continues, “The individuals who manage a company’s infrastructure are now tasked with managing applications such as e-mail archiving and content management — and they also must find partners or vendors that support those technologies. Customers are asking ECM partners for recommendations and solutions to address the added storage required to run ECM solutions.”

Todd Hartung, VP of sales for ProMark Technology, agrees with Cohn. “As a VAD serving both markets, we are seeing more opportunities with our resellers that require solutions involving both ECM and storage products,” he says. Our experts have established that the opportunity exists to sell combined ECM/storage solutions. So, why aren’t more VARs selling both?

“Just because the opportunity is there doesn’t mean that all ECM VARs are going to be able to sell storage,” says Scott Slack, VP and general manager of Cranel Imaging. Cranel Imaging is a VAD that specializes in both imaging and storage solutions. “Many ECM VARs don’t have the bandwidth to digest another technology such as storage,” says Slack. “Adding storage to a VAR’s solution can be costly and requires a big investment in time and money.”

Port adds, “Typically there is fee of $2,000 to $10,000 or more to become an authorized reseller for most ECM solutions. It also requires a minimum of two to five days of training. Hardware sales almost never require authorization. Some hardware vendors do have certification programs that can require the purchase of a demo unit and a minimum annual sales achievement to be eligible for additional rebates.”

Another important point is that the sales models for each technology can be different. For instance, a storage sale typically takes place at the IT level, whereas an ECM sale takes place at an administrative level — sometimes at the CFO or CSO (chief security office) level. VARs most likely will be unsuccessful if they try to sell an ECM compliance solution to the IT management, and vice versa.

“The decision to combine storage and ECM technologies is one that should not be taken lightly by VARs,” says Slack. “This is a business investment decision that can be very expensive. In order for VARs to win more business, they must be prepared to invest captital, and they must be dedicated to training both technical and sales employees.” Hartung adds, “This is certainly a market where VARs can prosper. But for new VARs entering the race, there are some hurdles to get over, including an understanding of the ECM market.”

Understand How Vendor Consolidation Will Affect You

One of the biggest causes of concern and confusion among VARs is the industry trend of vendor consolidation. The recent frenzy of acquisitions makes it hard for VARs to understand where they stand today and nearly impossible to plan for the future. On the storage side, companies such as EMC, NetApp, SUN Microsystems, and IBM have all been gobbling up companies at a rapid pace. The ECM market is no different, with EMC’s acquisition of Documentum and Captiva and IBM’s acquisition of FileNet. EMC and IBM made those acquisitions because both companies recognize how the combination of ECM and storage can help them grow revenue. It’s easy for VARs to take a wait-and-see position. But is that the right thing to do? Probably not, considering that acquisitions will most likely continue indefinitely.

“There are a lot of things still shaking out on the EMC and IBM fronts,” says Cranel Imaging’s Slack. “We have discussions with our VARs about vendor consolidation from time to time. Right now, it’s just a guessing game for VARs. They are concerned that as vendors continue to consolidate, some VARs may be consolidated as well. I recommend that VARs look at their business relationships with vendors and ask, ‘Is this a relationship that will stand up for a long time?’” Slack thinks it may be wise for VARs to carefully assess partnerships with bigger players such as IBM and EMC. “VARs must understand that the big players may be harder to work with, but by having the relationships with those organizations, VARs may have a better chance of succeeding in the long run.”

Hartung agrees with Slack. “Those acquisitions could be a concern for VARs, depending on how the products will be channeled in the future, since both EMC and IBM have large direct sales forces,” he says.

Vertical Markets May Provide The Best ECM/Storage Sales Opportunities

Optical Laser’s Cohn says a VAR’s vertical focus may be the key to succeeding with a combined ECM/storage solution. “If VARs are selling other technologies into the healthcare market, there is definitely an opportunity to provide line-of-business and ECM solutions to that customer base,” he says. “If VARs are selling primarily to financial organizations, there would be additional storage opportunities present there as well. If you can ask the right questions and do some investigative work with your customers, you can be successful adding sales in a complementary technology.”

Cohn’s point is a good one. By concentrating on current vertical-market customers, VARs can remove one barrier to ECM/storage success by already having trusted advisor status in those accounts — accounts that can serve as valuable references for other opportunities in the same vertical market.

As VARs look to add sales, the combination of ECM and storage technologies certainly provides great opportunities. Cohn advises storage VARs to build on their core strengths and focus on selling one or two ECM application solutions to start with. He tells ECM VARs to look at their areas of expertise and become familiar with the different types of storage technologies. Before you jump headfirst into adding either storage or ECM technologies, contact your VAD and have a frank discussion about what you’ll need to succeed.