I know you’ve noticed what we see… you must… you likely represent more than one vendor. If you see what I’m seeing, the game is afoot in the technology VAR marketplace. Dramatic shifts in strategy are happening as old models for competing die off and new models or new upstarts win.

More importantly, consolidation has arrived. Those who formulate and consistently execute on a Strategic Business Value Plan will thrive and monetize their efforts over the next 3-4 years. Those that don’t may be left, like an abandoned old Edsel, wondering what happened to their quality product as their value plummets and revenue is harder and harder to come by.

A wise person once said, “Never waste a good crisis.” Loosely translated – there’s nothing like a crisis to motivate change and action.

Here’s the bad news – there’s nothing like a crisis to demand a response.

Respond to What?

Channel Masters (leading product companies like IBM, SAP and leading master VARs like Avnet, etc) are being forced to do business differently. Quite simply, they must deliver greater results on lower budgets, with a faster pace of innovation. 3 things that don’t necessarily do so well together… They’re responding because they must, or their shareholders will force an uncomfortable change in leadership. They’re focusing their scarce resources on the fewest most predictable players in their channel, concentrating personnel, MDF, and lead flow to maximize returns. Larger players are getting greater access. At the same time, mid-sized firms, and smaller specialty or newer partners are being left to fend for themselves.

Here’s how you know the game has changed, quotes like:

  • “We need VARs who can hunt their own meat.”
  • “We’re now focused on VARs who have a solid balance sheet and can invest in growth.”

These are euphemisms, like “quaint” in real estate, for “I need larger more profitable VARs who can invest in growth, build some of their own leads, and absorb the pace of change.” So… they’ve kicked off the consolidation game. Soon, we’re going to hear that they’re recruiting fewer new VARs and concentrating on helping successful VARs grow and prosper.

All still euphemisms…. The Game is afoot! Technology VARs must respond effectively to the transition over the next 4-5 years or they’ll be left holding a business with declining value with all the money spent in the consolidation. In short, the time is now. There’s nothing like using a good crisis to get to another level of performance.

Those who concentrate and execute a plan stand to profit handsomely. Trading multiples for high growth, proper EBITDA companies can be 3 times higher than those who have marginal results, up and down years or one good last year. The trick is how. Is it just EBITDA? What else drives value? How do I respond?

Respond How?

Over the coming weeks, we’re going to be sharing real practices, not fancy theories, practices that will make the difference. But, we must start at the very beginning – it all starts with a Strategic Business Value plan.

Watch for our next blog post, or, if you’re just too interested to wait, call us… or if you want to disagree, give us a call. We’d welcome the argument….