It’s no secret that smaller companies get far less attention from technology giants than the Fortune 500 crowd. And in a sense, it is perfectly understandable. The vendor has the choice of speaking to a powerhouse that could place a $100 million order versus a few thousand dollars from a small business — it’s a no-brainer. But that doesn’t ease the pain of being on the receiving end of the cold shoulder.
Harold Ray, principal engineer at ACSEAC the LLC, a small-business IT consultancy based in Murrieta, Calif., says that the big tech vendors (also called OEMs) feel that it takes way too many sales people to deal efficiently with the SMB market. So they just skim the cream from the top and ignore the rest.
“Publicly traded companies don’t care about anything except their stock price,” he says. “That’s why you can’t talk to the likes of EMC or Hitachi. They either don’t return your calls or pass you on to someone else,” he said.
Getting shoved over to someone else, in some cases, may not be such a bad thing. When it comes to dealing with the big boys, working with resellers can be a winning strategy.
“We work with VARs and put them to work,” says Patrick Copeland, a technical specialist with Integrated Waste Management Department (IWMD) of Orange County, Calif. “VARs have proven they can win the day for us and come through. We trust them and end up with smart products that are low cost and easy to use.”
Mike Karp, an IT and storage analyst with Enterprise Management Associates, agrees that small businesses have a distinct problem getting any face time with big vendors. Further, they tend to experience poorer return on investment (ROI). “Historically, the SMB space has been perceived as small but when you tally it up, small business accounts for about one third of the entire storage market,” says Karp.
And that’s not taking into account the small- and mid-sized enterprise (SME) part of the market, which extends beyond the traditional SMB limit of 500 employees by including enterprises with less than 1,000 workers. The combined SMB/SME market is now larger than the enterprise space.
The big boys are slowly getting wind of this and attempting to improve the ways they interface with small companies. But there is a problem. “Big OEMs have no idea who you are,” says Karp. “They expect to reach small businesses through the reseller channel.”
The successful line for small businesses, then, is via SMB-oriented resellers. It’s almost like a co-op where a good VAR can command more attention because it has so many customers that — collectively — have the same muscle as a Fortune 500 powerhouse. “I will buy more QLogic, Brocade and EMC gear than the average small business will ever will,” says John Wade, senior engineer at InterVision Systems Technologies Inc. a VAR based in Santa Clara, Calif.
In addition, VARs tend to have a better insight into the internal operations at the likes of Sun, Microsoft, Symantec, Brocade and HP. “One of the reasons SMBs complain about poor service and lack of return calls is that there are typically heavy turnover rates among OEMs,” says Chad Cardenas, a manager at Trace/3 Inc., a VAR based in Irvine, Calif. “This hinders the building of long-term relationships.”
Richard Bocchinfuso, CTO of MTI Technology Corp, an IT consulting firm in Irvine, Calif., explains that the SMB market is tough for big vendors due to their inherent structure. While a few salespeople may be appointed to work with small businesses, they often lack specific product knowledge. At EMC, for example, they bring in the EMC Clariion disk array overlay — an overlay is a term meaning a level of a company’s product hierarchy.
“Overlays are compensated based on selling one specific product,” says Bocchinfuso. “Thus the small business will only hear about that one product as the answer to his existing problems.”
Cost is another reason why a VAR may be the right way to go. Apart from the fact that they can generally negotiate better discounts than an individual small business buyer, they have already faced the integration and management headaches of particular technologies, which means they get the job done faster. “It costs six times as much to manage storage as it does to buy it,” says Karp.
A good portion of the time, it’s actually cheaper to bring in outside experts than it is to muddle along yourself. “It is costly and time consuming for SMBs to do their own integration work,” says Bocchinfuso. “Not only is it cheaper in the long run to pay a VAR to implement a system, you also end up with something that works instead of more shelfware.”
David Browning, executive vice president of Advanced Systems Group (ASG) of Irvine, Calif., brings up an additional selling point — loosening up the purse strings. A lone IT staffer in a small business — or more usually a staff member who has inherited IT as an extra duty — doesn’t have the time to put together a really convincing argument to tempt the boss to pay what appears to be a large sum for new technology.
“If you call in a VAR early, we can help you decide what technology will be best,” says Browning. “We can also use our expertise to help you sell that solution to your management using professional ROI analysis and other tools.”
What to Look for in a VAR
|• Get Recommendations: Talk with colleagues, friends and family. Check with peers within your industry or call your local chamber of commerce|
|• Check Major Manufacturers: The Web sites of companies such as Microsoft, Dell, HP and Intel usually list local certified partners|
|• Contact ITSPA: They can help match customers with providers|
|•Ask for References: Ask each VAR for two or three clients for whom they’ve done similar work. Ask the client if the work was done on time, on budget and whether it met expectations|
|• Ask For: A proposal that describes the economic benefit (i.e., a cost analysis that includes the ROI)|
|• Ask For: An upfront assessment plan outlining the current state of your company’s technology and a road map that details what will be accomplished|
|• Ask For: The proposal, assessment and road map written in business terms — not in tech jargon|
The ITSPA is a national, non-profit group established to help SMBs understand how local technology providers can help them grow.
Copeland concurs. He feels that VARs play an important role in helping businesses to evaluate tools — if they do their homework well before making any purchases. “Don’t screw up on due diligence,” he says. “You can save if you work upfront with resellers far in advance of purchase.”
The way it generally works, however, is that companies need to buy quickly to solve an immediate problem. Purchasing — or the boss — demands several quotes. Approval is usually done based on the right spec for the right price, which is not necessarily the best way to go. Browning says he has frequently worked with the IT guy at a small business to lay out clearly how the low cost solution will be far more expensive over the long haul.
To his mind, SMBs lose in several ways by buying direct. As well as price, he says, they also lose out on a wealth of potential services that can be thrown in to sweeten a deal. This might mean free training for staff, extended service contracts and other types of support. “Since we know what is available, we can extract more value from the OEM,” says Browning.
With so many VARs to choose from, however, small businesses may struggle to determine which one is right for their needs. For some, it makes sense to go to a VAR specializing in a particular vendor’s gear. Say you like HP servers — going to a reseller that works mostly with HP servers is a smart move. Similarly, if you prefer IBM gear, there are VARs who work exclusively with multiple IBM technologies and are skilled in their execution.
But there are also times when it may be better to find a VAR that targets a specific situation or technology area — such as storage, networking or wireless. When you decide to opt for that type of VAR, what factors are important in partner selection?
“Look hard at the sales reps commitment to long-term success and also their technical competency,” says Wade. “I also recommend you check into the VAR engineers to see if they are keeping up with current technology.”
Chosen well, the right VAR can make implementation relatively painless and can make tight purse strings stretch further. “Historically, SMB dollars have bought less technology than the dollars spent by big business,” says Karp. “VARs can help SMBs compete on an equal footing.”
Drew Robb is a Los Angeles-based freelancer specializing in technology and engineering. Originally from Scotland, he graduated with a degree in geology from Glasgow’s Strathclyde University. In recent years he has authored hundreds of articles as well as the book, Server Disk Management by CRC Press.