A few years ago, two different groups of business people who sold computer hardware headed conferences in Bermuda. One group, members of the Computer Dealers Lessors Association, sat in first class. The others, top resellers of IBM PCs were in coach.

The CDLA folks were older and on top of the world financially. The PC resellers were the aggressive up and comers.

The age of both came and went very quickly. The CDLA members remarketed used IBM mainframes. The PC resellers operated what were then widespread computer specialty stores (chains like ComputerLand and Entre are examples.)

But changing products and changing patterns of distribution diminished the roles of both. As far as I can tell, the CDLA is no longer around, probably a result of the diminishing market for mainframes. Computer stores largely became Value-added Resellers and saw the box business shift to superstores like CompUSA as PCs became low-margin commodities and companies like Dell computer turned to telephone sales.

The history is worthwhile repeating for those who resell and implement accounting software packages because it demonstrates that distribution channels are not static. They change with product and pricing. Channels can disappear in the face of new ways of doing things.

Frankly, the accounting software channel has been surprisingly stable for nearly 20 years. There is always pressure on smaller VARs to become bigger in order to handle more complicated packages and meet certification requirements.

And software VARs always worry that vendors may switch to a direct sales model. That’s probably one of the things that has Great Plains and Solomon VARs nervous about the Small Business Manager. It can be sold via a toll-free telephone call and via the Web. What if Microsoft figures out a way to make the package suitable for a wide range of the market without VAR intervention?

Certainly, the VAR market is not unchanged over the last 20 years. It continually moves away from supporting full-service resellers (at least small ones) and toward a sales agent model in which the vendor provides many of the support services. The goal is to avoid the sell-install cycle in which VAR purchases rise and fall as VARs turn their attention away from sales while they implement the last deal.

Vendors want partners who produce a predictable stream of software purchases. The model that has emerged is a hybrid model. Vendors do provide implementation and fulfillment for big deals that small VARs could never handle on their own.

The more likely threat to things as they are comes from the Internet model, if it ever really catches on. When no installation is necessary because the software is completely hosted, the implementers roll changes considerably. In fact, there’s probably a greater need for accounting skills, rather than technology skills.

Of course, we all expected the Internet to sweep the field a couple of years ago. So the view from the trenches doesn’t have to be glum. It just needs to be informed that things do change.

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