This is a response to the recent article “‘As a Service’ Means Risk, But Great Rewards for POS VARs” by Mike Monocello, chief editor of Business Solutions magazine.
By: Adnon Dow, Vice President, Global Mobility Solutions, SYNNEX Corporation
As discussed in Mike Monocello’s recent article “‘As a Service’ Means Risk, But Great Rewards for POS VARs,” a VAR’s decision to shift to an “as a service” model requires serious thought and planning. The first step for VARs is to determine whether this model complements their current service offerings. Prior to the shift, it’s also important to ensure that the needed funds and staff are available, especially during the initial boarding process. The shift shouldn’t be seen strictly as a technical staff investment, but rather as a long-term commitment that will impact the entire company. VARs need to train their teams on how to appropriately sell and market the new offering upfront. It’s also important for management staff to engage the appropriate vendors and position their short-term and long-term goals to align with the “as a service” model.
One of the biggest hurdles is dually mitigating risk and exposure to finances while leaving credit lines as much room as possible to allow business to continue on a day-to-day basis. Once this is overcome, there are two keys to successfully funding the shift. First, VARs should utilize Market Development Funds from vendor partners who will be involved in the “as a service” solution they will be offering, which will benefit both the VAR and the vendor partner in a number of ways. In order to utilize these funds, VARs need to provide their vendors with a plan outlining how funds will be used and determining the approximate projected sales outcome. This will encourage the VAR to map out goals and how they plan to get there. Also, it’s important to keep in mind that vendors tend to push leads and opportunities to those VARs who are working to grow sales and move their vendors into new fields outside of the standard sales model. VARs who make this transition earlier will be better positioned with their vendor partners and will see the immediate and long-term benefits of working together to move into new markets.
Second, VARs need to consider available funds for shifting to the “as a service” model. The shift requires a combination of on-hands capital, as well as a limited utilization of available credit. When proper financial planning is considered, there is a greater focus on ensuring that the correct training, infrastructure, and resources are put in place for the investment to pay off. The investment also reiterates the VAR’s commitment to growing their business, which usually means their vendors will lend other resources, such as internal technical support. It also raises the likelihood of a vendor providing “extra” funds towards the end of a funding period (month, quarter, year, etc.), since the VAR is making a serious investment.
VARs who act now will be seen as pioneers in the field and will likely be able to capitalize on offering consulting services to vendors and VARs who make the decision later on. A year from now, VARs who have shifted to the “as a service” model will reap the benefits of having experience, an installed base, and customer referrals, while others will have just begun building out their plan. With the right planning and strategies in place, making the shift is truly a win-win for all involved: the VAR, vendor, and, ultimately, the end user.