Resellers, Integrators In Demand

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January 5, 1998

Resellers, Integrators In Demand

IT buyers will seek top-notch partners for their '98 projects

By Robert L. Scheier, VARBusiness

e millennium-ready. Be global. Work closely with others. Those are some of the keys to success for businesses making their technology spending plans for 1998. These are also some of the key strengths to look for in value-added resellers and systems integrators as IT managers look for help in planning technology purchases and implementation in 1998.

IT customers and the resellers,systems integrators, and consultants who serve them agree that the strong economy, relentless competition, and the need to repair or replace systems endangered by the year 2000 software problem offer plenty of opportunity for IT customers and resellers to partner.

In an InformationWeek/VARBusiness survey of 250 senior IT managers, 36% of respondents say they plan to rely more on the distribution channel for products and se rvices this year, compared with 1997. Another 35% say they'll do about the same amount of business with the channel, while 29% will reduce their reliance.

In-House Support Is Tops
But while more than 70% say they'll rely as much or more on the channel, corporate customers still believe that their own experts provide the best return on investment when it comes to services. Despite the sales increases reported by many in the channel, only 9% of the 250 users surveyed say systems integrators and VARs deliver the best ROI. So it's in specialized areas of service and support that corporate customers are turning their attention to the benefits of properly qualified VARs and integrators, particularly with year 2000 conversions. That ranked at the top of the list as customers' most strategic IT investments for 1998.

The Lutheran Brotherhood, a not-for-profit insurance and financial services firm in Minneapolis, plans to spend about $6 million this year with Computer Horizons Corp. in Mountain Lakes, N.J .

Lutheran Brotherhood assistant VP Ed Stang says the firm has 25 to 30 Computer Horizons consultants on site fixing year 2000 flaws in the company's accounting, marketing and administrative systems. Lutheran Brotherhood's internal staff will perform year 2000 repairs on core insurance services systems, as well as the more-complex testing of the repaired code.

As time and internal staff for year 2000 testing grow shorter, consultants, VARs, and systems integrators may be tempted to bid on the work. Experts on the subject say they expect testing to take up 50% or more of all year 2000 resources, and that such testing can be a complicated process of coordinating which interlocking modules of code get tested at a particular time.

"We're just getting into testing with some of our clients, and we will only do [billing] on a time and materials basis" rather than for a fixed fee, says Michael Poehner, president and CEO of DMR Consulting Group Inc. in Montreal.Poehner estimates year 2000 work will represent 2 0% of DMR's projected $900 million in revenue this year. "We have a feeling that testing will be a major challenge," he says.

Year 2000 opportunities aren't limited to comparatively large resellers such as the $230 millionComputer Horizons. Information Technology Specialists, an AS/400 software and services VAR in Covina, Calif., expects its year 2000 business to boost revenue from about $800,000 in 1997 to about $2 million this year. Information Technology Specialists not only performs year 2000 services for customers; it has also adapted its SuperVisor toolset for AS/400 software maintenance for use on the project-and it sells that tool to other VARs, says managing partner Richard Watson.

More Bundling
Many customers are looking to channel partners to help them implement new technology, while they do their own year 2000 and other legacy systems maintenance in-house, says Gordon Brooks, senior VP of Cambridge Techno logy Partners in Cambridge, Mass. Additionally, some VARs are getting more demand for bundled, ready-to-run combinations of hardware and software from new customers rather than for systems-integration work done for existing customers.

John Woolsoncroft, VP of marketing for Concepts Dynamic Inc., a VAR in Schaumburg, Ill., says his company is not only doing more business with new customers, but "we're probably doing more service, more bundling work, more integration work at the beginning of a project, rather than providing a lot of follow-on services" after the sale.

Other customers, however, want channel partners to handle the gritty details of asset management-ordering and installing PCs so their IS groups can focus on more-strategic projects.

"A lot of our large accounts want to get out of the business of managing the technology," says Jay Scott, VP of product services at CompuCom Systems Inc. in Dallas. "They'd like to have us manage the technology, set up specific service-level agreements, and hold us accountable to those agreements."

Digital Equipment is finding a "very strong market" for guaranteeing mainframe-type reliability, uptime and performance even for client-server networks, says Larry Trichel, director of channel sales for multivendor customer services at Digital's Shrewsbury, Mass., facility. "Whether it's a mail-messaging business-critical solution or a data-warehousing" application, customers are willing to pay for guaranteed uptime, he says. And they're buying performance guarantees from Digital through a reseller.

With IT spending up for 1998, and business issues becoming more complex, the number of partnerships between corporate customers and VARs is likely to increase as well.

VARBusiness is the magazine for value-added resellers, systems integrators, and consultants. It has a circulation of 105,000 and is published biweekly by CMP Media Inc., which also publishes InformationWeek.

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