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The New Breed

The industry has cooled since the collapse of the high-tech bubble, but that doesn't mean there aren't opportunities. We canvassed the country to find four VARs that have carved out promising niches, demonstrating that with imagination solution providers can find new business models

At the beginning of this year CDN staff went on a hunt to find resellers who have found success in a relatively short period of time. Then we compiled profiles of firms that have carved out interesting niches in the tough IT industry for presentation in this issue.

We tried to be thorough. Team members interviewed countless solution providers at conferences here and in the U.S. Distributors and major vendors were asked to help out, and while they all did their collective best, several times the project looked futile.

Disbelief started to set in: Are there any new companies who want to be part of this great industry?

Now there are several companies that have transitioned from box-pushing into true solution providers. Companies such as FlexITy, Long View Systems, High Vail Systems and OAM Computer Group are great examples of this. However, these were existing resellers who were smart enough to change before it was too late.

But through perseverance we came up with four candidates. Each is fairly new to the industry and each has one area of strength: RFID, compliance, electronic CRM and managed services.

All of these markets are hot right now. Gartner pegs the worldwide compliance market to be worth US$20 billion. By 2010, it forecasts the worldwide RFID spending to surpass US$3 billion. Revenue for this market in 2004 was a paltry US$400 million.

Market potential

The market potential for electronic CRM is enormous.

According to Cahner-InStat Research, approximately 1,600 out of 95,000 medium to large business Web sites currently use one or more eCRM applications. eCRM is an integral part of the software as a service concept, which IDC believes will grow to US$10.7 billion by 2009.

The total market for eCRM 18 months ago was US$1.8 billion. Vendors such as SAP, NetSuite, Salesforce.com and Microsoft are looking for business partners to help further this market along.

New breed resellers such as XSM of Vancouver, Zeroedin of Toronto, Ship2Save of Montreal and Pre2Post Technologies of Montreal have been smart enough to specialize and become the experts in fields such as software as a service, RFID, compliance and computer and network uptime technologies.

As a result, customers are looking for them. That beats the old method of resellers begging vendors and distributors for leads to chase down low margin business.

These new business models carry high margins, more consultation and less inventory-type sales cycles. They also generate recurring revenue streams, which small startups need to sustain and build their businesses faster.

These burgeoning markets also help new breed solution providers invest in the type of training necessary to become specialists.

We hope readers will learn lessons from their efforts.

Here are their stories.