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Posted On: 1/5/2010

What Will End Users Want in 2010?
By Lisa Terry, Contributing Editor, VSR
Credibility, reliability, quality of service, professionalism: the Retail Solution Providers' Association was looking for a way to promote VARs offering these characteristics when it announced its RSPA certification program earlier this year. A core goal is to help end users distinguish fully qualified VARs from the casual dabblers or the install-it-and-disappear types -- an issue retail VARs share with those in other vertical markets.

And with good reason. According to our 5th Annual End User Survey, VARs have made some progress in enhancing their reputation among their customers, such as becoming better communicators. But there are still those out there earning the industry some black eyes, including failing to fully deliver on their promises.

Responses to the survey were generated through readers of VSR's sister publications, RIS News, Hospitality Technology and Consumer Goods Technology. These VAR customers had a lot to say about how they use VARs, what they like, and most important, how VARs can win their respect and their business.

The Ratings Are In
So how do end users rate their VARs? End users continue to give IT resellers the highest ratings for their general technical knowledge, with 76% describing these skills as "good" or "excellent." Ratings are nearly as high for VARs' ability to understand the needs of their customers' businesses. This year, VARs most improved in their ability to communicate; earning a 10-point rise in excellent ratings, to 28%, with another 43% calling VARs' ability to communicate as "good."

"It is important for us that resellers are very clear in communication and speak in layman's terms to that we understand the full capacity of new hardware and software," one respondent commented.
More good news came in VARs' business process engineering services; this year 65% rated VARs' skills in this area as excellent or good, compared with 44% last year. The strengths of VARs' relationships with manufacturers continue to earn end users' appreciation; 67% call these excellent or good.

But here is where VARs part company: in the following four areas, the number of end users calling their VARs excellent or good is similar to ratings in past years; each earns the excellent or good ratings of 60% to 65% of end users. The four are cost versus other channels of supply, timely systems delivery/installation, delivering on promises about system capabilities and support after the sale. However, they're also the four most likely to earn the largest numbers of fair or poor ratings (others tended to get higher numbers in don't know or not applicable). End users are justifiably upset when VARs over-promise and under-deliver.

The area VARs were most likelyto be rated "fair" or "poor" is a tie between cost versus other channels of supply and delivering on promises about system capabilities (26%), followed closely by timely systems delivery/installation (24%). Respondent comments include: "more honesty, knowledge up front on actual capabilities/performance of software," and "don't promise unless they can deliver; it wastes everyone's time and money."

"Be open, honest, and don't tell e-marketing stories," asks Jim Brown, owner of JnR Hotel in Cedarville, Calif., whose newest install has faced delays and gaps. "When they first told me the system, they told me it could do anything."

It's just these sorts of bad habits that VARs favoring certification programs are seeking to distance themselves from; to earn customers' trust, it's essential to know what your solution can and can't do, price it correctly, and then deliver within realistic timetables. Over-promising kills customer confidence.

Why End Users Seek Out VAR Partnerships
End users' appreciation for VARs' general technical knowledge is borne out in their reasons for selecting VARs. IT resellers' variety of skills (55%), specialized skills/knowledge (47%) and the expertise that end users' lack in house lead the list of reasons for seeking out their help.

New York City-based Sentinel Real Estate Corporation, for example, didn't require a VAR's help for a network appliance, but called in a VAR to help with a virtualization, de-duplication and SAN project. "This is where VARs have a leg up, in implementation and support" says Emile Rashkovich, senior VP and CIO for Sentinel. "We like a VAR that is stable, well-run, priced right and whose services are good. I enjoy the continuity of service, having the same people do the implementation and support."

Resellers' ability to provide managed services ranked near the bottom of the list with just 20% citing this as a reason for IT selection, followed by a match between the end user and reseller's geographic coverage area.

Track record/market expertise continues to outstrip price as the most important factor end users employ to choose an IT reseller. Price trails by a full 11 percentage points.

"Lower rates don't help them or us because eventually they've got to pay their costs," says Rick Dworaczyk, POS/IT director at 69-unit Bill Miller Bar-B-Q, San Antonio, Texas. "As long as it's reasonable or not the highest price in town."

Trailing these track record/market expertise and price by a significant margin are an IT resellers' relationship with software and hardware vendors (29% and 27%) and ability to collaborate with other resellers. Most end users (63%) always or usually rely on IT resellers to recommend hardware, and 61% do the same with software.

End users were most likely to be working with ISVs (55%), followed by consulting firms and system integrators. Despite IT resellers' efforts to broaden their services, each year they consistently report the same top five services purchased from VARs as a part of their most recent technology installations. Though the order may vary from year to year, training, service and support; systems installation; custom software development; and systems design and technology recommendations again lead the list.

VAR-End User Relationships
IT is becoming more complex, IT budgets are getting tighter; perhaps these are the reasons end users are narrowing the number of IT resellers they work with. The largest number of respondents use just one (24%), followed by two and three resellers; in 2008 half the respondents used two or three resellers. The largest group (40%) reported no planned changes to their IT reseller rosters, while 32% are likely to work with the same number, but may replace some. The largest group of end users (42%) describes their reliance on resellers as about the same as three to four years ago.
All this points to the need for VARs to fulfill their role as trusted advisor; as the sole outside counselor on IT issues, end users will be even more reliant upon VARs to keep them up to date on technology. Because technology is growing more complex and diverse and therefore difficult to cover, alliances with other resellers are another key strategy to delivering diverse knowledge and skill sets through a single customer interface point.

"I gave a big company the chance to sell us customer premise equipment, but it was a big mistake," says Sentinel's Rashkovich. "It was a big mistake, they didn't know what they were doing. It was very painful dealing with them. Smaller is better with some resellers; they're more responsive."
Surprisingly, just 34% of respondents agree they expect more from their VAR partner than five years ago. The increased complexity of business and IT was the most popular reason. "We expect better answers, more involvement with business and other partners," one respondent commented.

The Bottom Line: How to Improve

This year's ratings contain some good news; VARs continue to earn raves for their technical knowledge and communication skills show marked improvement. End users continue to prioritize experience over price, and seem to be narrowing their number of VARs to fewer, close relationships.

But even the best-regarded VAR can improve. When offered an open-ended opportunity to suggest ways IT resellers can improve their overall value, increasing their understanding of the markets they cover was the most common comment. "Make sure they understand the specific business the customer is engaged in -- not just restaurant, but QSR, fine dining, fast casual, etc.," one respondent notes.

Communication was the next-most-requested improvement. Among the comments: "Listen before speaking," "more honesty," and "don't spout off about stuff you are not expert about." Price ranked third.

Year after year, end users are clear in what they really want from VARs: credibility, reliability, quality of service and professionalism. IT resellers meeting that challenge elevate the entire profession and reap the requisite rewards.

What Happened to Managed Services?
The long sell on Managed Services continues. On paper, in makes a lot of sense, particularly for SMBs, to rely on VARs to remotely manage significant aspects of their IT. But as this year's survey states, there is still great interest in Managed Services, but the business model remains little-used.
The ability to provide Managed Services so end users don't have to invest in infrastructure ranks down at 7th place among reasons end users choose to work with IT resellers. Application hosting such as software on demand or software as a service was the least likely to be a part of the end users' most recent IT reseller engagement. Most interestingly, despite these low numbers, 60% of end users have explored a managed service option for their businesses. They're just not pulling the trigger. When asked why not, respondents were most likely to say managed services were too costly or that they prefer the control that comes from handling IT in house. Several felt MS was unnecessary for their businesses.

Sentinel Real Estate Corporation, for example, has been approached with offers to manage its extensive wide area network. While Sentinel uses MS for customer relationship management, network management "is not really all that hard to do." says Emile Rashkovich, senior VP and CIO at the New York City-based company. "It does not make business sense to pay a 50 percent premium to deal with network issues."

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