Stop dreaming about channel transformation

There are hundreds of people trying to help technology resellers and VARs to transform from selling traditional IT to SaaS, lately to Cloud Computing or other new tech topics like social media or Web 2.0 solutions. The SaaS industry tried since 10 years and failed badly. Here is why I believe it just doesn’t make sense:

Selling to IT

A typical customer of a VAR is the IT department. Customer connections, relationships, contracts – all is done with IT. The new technology (SaaS, Cloud, Social Media…) however is consumed and actually purchased by departments. It is just a monthly service, no capital expenditure. A VAR would have to build new customer relationships from ground up, hire a different breed of sales people and most likely end up having a big trust and relationship conflict with their existing customers.

Implementation Services

Service and support teams within a VAR are highly skilled and trained to perform system setups system configurations, installing operating systems, databases, applications and help the IT organization to administrate those systems. In the new technology world – none of those skills are needed. Instead the service portfolio would require business process savvy application experts who help the users in the departments define their needs and processes and bring this in alignment with the capabilities of the software services. A VAR would need to hire new people, create a new service offering and approach a different set of customers.

No Transformation

As selling and implementing are the two primary functions of a VAR (simplified speaking) and the new technology requires fundamentally different tools and people – a transformation is not likely to happen.

Business Directions

Many of today’s VARs are owned by people who started their business in the 80’s and are somewhere between 50 and 60 years old. Being able to sell the business or keeping it alive a few more years is their highest priority – definitely not investing a Million $ or more to start an all new branch of new technology solution sales – with a risk of failing, no clear ROI model and only a vague perspective for the future.

There are many lists showing all the advantages. I wrote one myself in 2007 and I trust it is still very accurate. But I have to admit that I overestimated the bandwidth and the long term perspective of a VAR.

New channels can do only one thing – be prepared to support a new breed of implementer that has yet to be motivated to come to existence.


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