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This month, Terry takes on niches, expertise development, and the value of the term VAR itself in this regular series of targeted questions, relevant to today’s accounting and ERP software partners and technology consultants.
AT: Vendor partners state they’re looking to “dig deeper” into niche areas and “develop expertise.” How and why is this happening?
Petrzelka: I believe you have to look at this through a couple of sets of eyes: through the eyes of the client and through the eyes of the publisher.
The Eyes of the Client: It is basic and simple. Clients expect expertise beyond the software they need for their business. They need partners who know their business and the issues that they are facing and will face.
Clients are looking for proven business partners who have the expertise not only in the technology but even more so they are selecting business partners who understand their industry and business issues. The days of the generalist VAR were over three to five years ago as businesses came out of the stressful financial times and found more and more reliance on the Internet to find answers.
Clients are more informed than they ever have been and they, via the Internet, have more exposure to what their options really are. It is paramount that in order to ‘win the client’s heart’ you have to: a) demonstrate that you know their business, b) challenge them as an advisor as you learn more about their business by using your industry expertise, and c) educate them once you earn their trust on the right direction to take. The only way to do this is by being 'very deep' in both industry expertise/knowledge and technology expertise/knowledge.
The Eyes of the Publisher: The publishers realize that this is a maturing market that they have to sell their products into and the specialists win a high majority of the competitive battles, and the generalists do not even make the filter. Yes, having the technical depth to understand the complexity of today’s technical solutions is a key item which causes a partner to spend more and more on training and certifications, however, publishers know that the only way to win is by having a channel partner that not only has the technical depth, but as important and maybe in some cases more important, has the industry experience, depth and references. That is why you see publishers narrowing the number of real managed channel partners that they are working with -- they have to focus on their ‘blue chippers.’ And where the ‘blue chippers’ are strong in technology and strong in industry, they match them to the prospects in the priority of industry first and technology second.
AT: How can a firm go about developing what they are not just “good” at but “great at?”
Petrzelka: First, a partner needs to step back and realize they cannot be great at everything. They have to get their heads squared away that to win in the future you have to be great at a very limited set of things and this goes for industry as well as technology. A partner has to become industrial strength, not just technology skilled.
Secondly, take a hard, honest look at where the industrial strength really lies. Once you know this, the real courage and faith that a partner must possess has to come to the forefront. Why? Well, that leads to what comes next.
Next is where the ‘rubber meets the road.’ A partner needs to open up the check book and start investing in your people and realize that if you build it, they will come! The ‘they’ are the publishers and clients. The natural thing that happens is that as you begin to be known for your technology skills and your industrial strength, both publishers and clients will come your way. Now, an even more difficult time has to be dealt with, that is as a partner takes this path, things will take time, like a good wine, so while you are getting nervous avoid going after business that does not fit.
Finally, as important as it is to realize where you need to invest, it is a ‘must’ that you identify what you need to stop and take actions to stop what is of no value. Plan the ‘stop actions’ in a measured fashion where it make sense and stop immediately things that are really of no value to your long term business.
AT: At what point, if at all, do you feel VARs (and the term itself) will evolve to become professional service businesses (PSBs) or some other term?
Petrzelka: I have always, always, always hated the term VAR. To me it was almost a four-letter word, even though it is only three. It reminds me of the many years past of someone selling hardware, not solutions. Software publisher channel partners have always delivered solutions to clients so, to me, it was always out of place and it was never right.
The channel partner of the future for those that make the transition to the new norm will be known as a ‘solution provider’ or a ‘solutions partner,’ where the partner brings the technology skills, expertise, and methods and couples this with the industry knowledge, experience and acumen to truly become a client’s ‘trusted advisor’ as a ‘solution provider’ or ‘solutions partner.’ Which name will win out? Which one will carry more weight? At this point I do not have a clue, but I hope for all of us that the term VAR is dropped as soon as possible and lost forever.
Got a question or concern Terry can address? Send it to firstname.lastname@example.org for our next column.