From The Editor | August 15, 2018

A Call For VAR Innovation

Matt Pillar

By Matt Pillar, chief editor

Instant Innovation 2

There’s a repetitive scene that plays out each month as my team sits down to review and plan our and Channel Executive magazine editorial content. Our modus operandi, in a nutshell, is to feature executives who apply innovative solutions to often complex problems associated with being in the IT services business. With that M.O. in mind, we struggle to strike a balance between our coverage of traditional VARs and that of managed service providers.

There are several factors that play into the struggle, but I think the imbalance is primarily a product of operational maturity. Put simply and to paint with a broad brush, more MSPs have more going on. They’re selling a wider variety of services (RMM, vCIO, help desk, cyber and network security, in addition to traditional network, hardware, and software) into a wider variety of verticals (take your pick). They’re generally larger companies that have a stronger tie to the strategy, management, and oversight of their clients’ IT environments. They’re generally growing at both ends of the spectrum, so they’re hiring, acquiring, and expanding. They’re more vocal, more enthusiastic about what they’re doing, and they’re more optimistic about their business futures.

In the VAR channel this kind of activity is—again, painting with broad strokes here—much more limited to those finite resellers who are selling into fortune 1000 companies, and the even fewer with the stomach and resources to move beyond hardware, beyond payments, and beyond SaaS into true management of IT services.

To be clear, this observation isn’t meant to bash the VAR model, though I fully expect it will ruffle some feathers. That’s okay, because I’d like to hear from and write about some excitable VARs who are doing innovative things – things more interesting than bankrolling payment or HaaS/SaaS residuals to fund a lifestyle business with few, if any, strings attached to client care. It’s not that there’s anything wrong with that, it’s just not that interesting.

We write a lot about the operational aspects of running an IT service business. For the bottom half of the VAR market, that’s hard to do. Generally, those limited-offering VARs s aren’t growing, so there’s no hiring challenge to overcome. They’re not selling new services, so there’s no unique value proposition to navigate from a sales perspective. They’re not looking to buy competitors, nor are they attractive acquisition targets, so there’s no M&A story. They’re not reaching into new geographies or verticals, so there’s no expansion story. It’s no wonder the talking heads in the channel are often down on the VAR model – the most dramatic story there is to tell about them is the risk they’re exposed to. Most of the staffed-up MSP businesses I know could handle the support of the typical VAR install with their two leftmost fingers while the other eight are busy managing HQ-level enterprise IT for $225 per seat, per month.

I had a conversation with the leader of one of these “lifestyle” POS VAR businesses not long ago. He’s doing well for himself and supporting a handful of implementation, administrative, and sales associates on the sale of POSaaS and payment residuals. He outsources depot support and his SaaS vendor manages software support with an iron fist. He’s a great guy and he’s happy to be leading a lucrative, albeit limited cable-pulling and installation business that’s easy to manage. But when I asked him if he’d be running a successful service-based business if not for the POS vendor he owes his livelihood to, I heard crickets.

He doesn’t have a story to tell. Do you?