Relying on a small number of alliances could be hazardous to the health of vendors and resellers, the head of IDC Canada has warned a group of VARs.
“”It definitely pays to have friends,”” Michael O’Neil, managing director of IDC Canada told Ingram Micro’s annual national reseller sales conference
in Toronto last month.
The industry market analyst firm came to that conclusion after a survey of 435 large and medium-sized Canadian companies found more than 40 per cent had used only one bidder — not competitive bids — in their recent IT purchases.
In some categories of products, 60 per cent said they used a single source.
Those who think it was an all-or-nothing game would be wrong: Between 50 and 60 per cent of solutions were packages that included products or services from more than one supplier.
While the data suggests these companies prefer to deal with one trusted source, O’Neil said, it also shows the importance of vendors and resellers having widespread alliances with industry leaders.
“”If you’re going to gain access to opportunity, it’s much better to do that by being wrapped into other companies’ approaches to solving customer problems than it is to take them on in competitive bid situations,”” advised O’Neil.
The survey showed the overwhelming majority of purchases by respondents had been of IT infrastructure (52 per cent by large companies, 63 per cent by mid-sized companies), followed by software applications (28 per cent of
the purchases by large companies, 16 per cent by medium firms), with about 10 per cent of purchases in networking infrastructure.
Most bought infrastructure
The study also shows how important it is for vendors and resellers to stay close to their customers, O’Neil said in an interview after his address.
“”The investments [IT] suppliers have made in extensive customer relationships have positioned them to be preferred sources of supply in a significant number of opportunities.
“”This is consistent with what we’re finding in SMB research as well,”” he added. Typically companies have a trusted supplier who is asked first to help solve a problem, and if the company can’t then they look for other suppliers.
“”Access to market is not your ability to compete effectively in RFPs, it’s your ability to compete for mindshare within the companies that already have [a large portion] of the market and to work with them.””
Asked what Canadian companies who don’t have extensive partnerships should be doing, he replied: “”They can either figure it out or die.””
Top resellers
Ingram invited its top 140 resellers to network and hear vendors outline their Canadian strategies at the two-day conference.
In his opening remarks, Greg Tobin, the distributor’s senior director of VAR sales, said that with the economy picking up “”there’s no better time to deliver business solutions.””
“”Your customers have never needed you more than now,”” he said, pointing to the privacy and document retention demands governments are placing on businesses.
But first, he said, VARs have to stop shrinking.
They can do that by protecting their existing customer base, looking for adjacent business growth, acquisition and showing up in growth markets such as security and home entertainment.
The opportunities in this latter market are large, said Tobin, claiming that on average people are spending more on IT-related home entertainment systems than some small businesses are putting out on computers and software.
He told the gathering there are five strategies for leveraging growth: Creating distinctive value to differentiate themselves from competitors; offering valuable solutions to business problems; strengthening partnerships; pursuing new opportunities; and, ensuring staff go through continuous learning and personal development.