VARs unite against Dell? Maybe

Brampton, Ont. — Many topics were bandied about at Tech Data Canada’s annual roundtable, this year held at the Terrace on the Green in Brampton, Ont. While all members of the panel acknowledged that training, certification, special pricing and selling solutions were important issues, the trouble

with Dell’s direct strategy again became front and centre.

Ken Killin, the new president of Ram Group, called Dell the dead moose on the table in reference to an old IBM term used for meddlesome competitors.

“”We need a co-ordinated effort to spread out the communications to the market,”” Killin added.

His argument against Dell is that somehow the direct vendor convinced customers to stop acquiring IT-related solutions for business needs to buying on price only.


“”We need to work together to beat Dell, who sells a low-quality solution. Dell is masking solution selling as commodity selling,”” he said.

Larry Noble, president of Evron Computer Systems Corp., said that Dell is never part of the solution equation and is merely a supplier of hardware.

At RAM, Killin ensures the Toronto-based VAR offers incremental value for all customers. There have been times, he said, where customers who bought Dell based on price only have turned to RAM for help.

“”Trust me, we get the calls and there is a cost to repair the mess (for companies buying Dell). We need to set our own rules in the market,”” Killin said.

Another prominent VAR, Carlos Paz Soldan, the president of Tenet Computer Group, agreed with Killin and suggested that an association of the top resellers in the country should be formed similar to Tech Data’s TechSelect program and Ingram Micro’s VentureTech program.

Turf wars

Paz Soldan also suggested that vendors should help resellers in protecting their turf better by developing registered leads programs.

“”We should not have a fear to call an HP for help,”” he said in reference to the concern VARs have that a vendor may take the deal direct.

“”We work well with channel groups, but there are other groups with their own objectives,”” Paz Soldan added.

Derek Smith, executive vice-president and former head of channels at Hewlett-Packard Canada Ltd., acknowledged his company could handle direct vs. indirect better. “”The next hurdle is services and how we carve that out better, but we are now in the infancy stages,”” he said.

Denis Vance, group vice-president, products and services research for IDC Canada, was a part of the panel and said 60 per cent of the hardware sales are through the channel today.

“”Services carry the marketplace with $17 billion worth of services revenue rapidly growing at four per cent compound annual growth,”” Vance said.

Gary Isaacs, channel manager for IBM Canada, agreed with both Vance and Smith on services. He added that no one is buying point products anymore, which increases the selling solutions sales cycle, making it more of process.

Vance said there are several drivers for growth for 2004 and next year. The replacement cycle for Y2K is continuing, there is pent-up demand, decision-makers today believe they can be more competitive by investing in their IT infrastructure and the Canadian economy is doing well.

The hardware market is growing, however, it’s at 0.8 per cent, Vance said. Software is doing better at a compound annual growth rate of four per cent.

Ken Lamneck, president of the Americas for Tech Data, was hosts representative at the panel. He also agreed about solution selling. “”Resellers need to do more solution selling, but there is a big issue in terms of skill sets. Sales organizations are still too hardware-driven,”” Lamneck said.

Noble concurred with Lamneck, adding that successful sales people today are consultants. “”Hardware is just a part of the whole solution. Finding sales people who are consultants, however, is very difficult,”” he said.

Smith suggested vendors invest more in VAR training. “”Partners who are successful are those who develop services on their own. SMB is a pot of gold and the only way to get to them is through the channel,”” he said.

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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