With only a few exceptions, point solutions no longer provide any margins. It’s all about integrating products into a broader solution that meets a specific business requirement.
Most VARs discovered a few years ago that selling point products doesn’t bring in enough money to make a decent living. Selling solutions or services is where it’s at. But when distributors don’t make it easy to bring those products together it means more work for the VAR, more salespeople to deal with and more paperwork to fill out.
These are the reasons behind Arrow ECS’ move to transition a large chunk of its software distribution business over to subsidiary Alternative Technology (ATI), which it acquired last year. And it plans to sell more than US$1 billion in software next year as a result.
Big plans, but what’s in it for VARs?
Arrow likely realized it could better serve its VAR customers – not to mention its vendor partners – if it streamlined its software business, switching around product lines where it makes sense. As a VAR, it can get confusing if you’re looking for security software from two different entities of the same distributor.
ATI will gain eight additional product lines from Arrow, including Bakbone, BEA, CA, CommVault, McAfee, Novell, Oracle and Symantec, while Arrow will continue to deal with HP and IBM. Arrow’s storage business will also maintain the status quo. This transition, according to the distie, will take place in the first quarter of 2008.
What this means is ATI will have an increased focus on software and security – both considered high-growth sectors (even in a potentially slowing economy). ATI already represents more than 30 software and security suppliers, including Citrix and VMware. So not only will this provide more consistency, it means VARs can integrate products from a greater variety of vendors.
Arrow also says it will transition from selling point products into large regions to selling software lines to smaller regions – in line with ATI’s current model.
ATI will oversee these partner relationships, which means VARs will have access to the subsidiary’s professional services, including onsite engineering, security assessments and tech support services. For VARs, that means more focused support – or one throat to choke. ATI already provides pre-sales support, order management and marketing services to some 3,000 partners.
Salespeople will need to be trained or retrained on these new product lines to help VARs get a better sense of their integration options, and this won’t happen overnight.
While Arrow acquired ATI at the end of 2006, it likely needed time to go through that acquisition process before deciding what to do with various product lines. Now it’s time to make better use of that acquisition.
