Resellers stick to basics

There was a time when "reseller" was a dirty word. During the Internet boom of the 1990s, many corporate resellers sought to distance themselves from their product-selling origins. Services held sway as resellers recast themselves as Web integrators, network architects and the like.

But the flood of Internet services wannabes soon diluted the market. In the ensuing shakeout, names such as Inacom and Vanstar disappeared.

Federal resellers, perhaps owing to the general conservatism of the government space, never pursued the services transformation with the same abandon. As a consequence, they are still in the game and optimistic about this year's prospects.

For the first time in a decade, GTSI Corp. is forecasting to either break even or turn a profit in the traditionally slow first quarter, according to Dendy Young, GTSI's chief executive officer.

Other reseller executives are similarly upbeat, citing homeland security-inspired federal spending and the potential for a surge in spending on equipment to replace aging computers. "We may be in for a good year," said Alan Bechara, vice president of Comark Government and Education.

Focus is the key to reaping the benefits of the anticipated spending boom, experts say. To that end, resellers are focusing more than ever on product-based solutions. Companies are boosting their expertise in individual product lines and narrowing the number of solutions they will emphasize to customers. They also are carving niches in such areas as enterprise storage and information security.

Some observers add another reseller success factor: flexibility.

"As the market changes, I think vendors have to be aware and ready to change," said Victor Powers, director of the National Institutes of Health's Information Technology Acquisition and Assessment Center. He cited the large number of companies that have quickly added security offerings to NIH's Image World 2nd contract. "They have to upgrade and package offerings to meet the customer's demand at the current time."

Product-Centric Services

Resellers' emphasis on product-based solutions is a reassertion of what they've been doing for years: bundling hardware, software and networking gear. It is a matter of "recognizing the product business as the core competency," Bechara said.

"Know what you do well and don't stray from it," said Brad Mack, vice president of sales at, noting that some resellers dove headfirst into services, only to retrench in the hardware business.

Many companies that ventured into services found that the expected lift in profit margins never materialized. Resellers offering low-end maintenance and support services, for example, found plenty of competition and little differentiation.

"Some folks thought they would...wrap some services in and be able to get the margins richer," said Rene LaVigne, president of Northrop Grumman Corp.'s Computing Solutions business unit. But offering "break-fix, deskside support is not going to get it done," he concluded.

In contrast to grafting a services operation on top of a reseller, the current philosophy is to provide services to complement product sales. "Services support the sale of solutions," Mack said. "Our model is not to let the services drive the solution."

GTSI, meanwhile, builds expertise "just in the areas that support the products we supply," according to Young. "So services are very tightly tied to support the successful installation of the solution set the customer wants to buy." Such services range from pre-sales consultation to post-sales installation assistance.

But what happens if an agency's needs go beyond product-centric services? Partnering is the answer federal buyers can expect. Resellers say they are linking with integrators and niche players to obtain the services they themselves don't provide. On one portal project, GTSI is supplying hardware, software and project management, but relies on a teammate — in this case, consultant Appian Corp. — to do the portal design.

"We partner with a handful of...service companies," Mack said. He noted that likes to handle pre-sales consulting, but will seek partners to take on other services, such as designing a storage-area network.

In some cases, partnering occurs within companies. LaVigne said his reseller organization — formerly Logicon FDC — has been part of Northrop Grumman for about 16 months and is teaming with other parts of the company on bids.

Boosting Vendor Investment

In keeping with the product focus, resellers are forging stronger bonds with vendors. Indeed, resellers will "need to be proactive in finding strategic partnerships" to offer product solutions to agencies, said Payton Smith, an analyst with market researcher Input Inc. Resellers are boosting their expertise by getting certified in various product lines — often by sending staff members to product training sessions. The resellers believe that deeper knowledge is a key value they can offer federal customers.

"You have to be positioned to make investments," LaVigne said. He cites Northrop Grumman's relationship with Cisco Systems Inc. as an example. The company in 1996 launched its Cisco alliance, which LaVigne now calls a "multihundred-million dollar" partnership. "We've done that by investing in their technologies and in our people," he said, adding that Northrop Grumman is a Cisco gold-certified partner.

Most resellers are brimming with certifications these days. Bechara observed that the number of product specialists in his company has increased in recent years. "On the personnel side, 5 [percent] to 10 percent of the talent is going toward [product] specializations," he said.

Resellers are generally making this level of investment in a few key suppliers. They simply don't have the time, money or personnel to devote specialists to every product. Accordingly, federal buyers may find resellers emphasizing a handful of product lines.

"Gone are the days when you have a [General Services Administration] schedule with six, seven or eight full-line" original equipment manufacturers, Mack said. He said resellers can't be expected to thoroughly understand that much technology. Consequently, resellers are "paring the schedule down to productive lines." As for, it focuses on IBM Corp. as a hardware supplier.

Resellers are attempting to strike a balance between providing a reasonably broad product set and possessing in-depth know-how in a few lines. Bechara likens the resellers' position to that of a retail store, which may carry hundreds of products but chooses to highlight a couple of items in a display. "You're going to lead with a few," he said.

Resellers aren't alone in trimming rosters. Their government customers are going through a similar winnowing process. Government purchasing vehicles "must narrow the field in order to get the best pricing and quality," said Col. Neal Fox, head of the Air Force's Commercial Information Technology-Product Area Directorate.

"If this is not done, the incentive for vendors to work hard to bid on work is reduced, since the odds of success go down when the field is too broad," Fox said.

Focus is a virtue these days, and the lessons from industry and government sound a bit like parental advice. Cultivate a couple of close friends. Invest in your relationships. And stick to what you do best.

Moore is a freelance writer based in Chantilly, Va.


What buyers can expect

* Resellers are concentrating greater expertise on a smaller set of products.

* Supplying high-end services may not be economically feasible for low-cost resellers. Look for resellers to partner with integrators and niche services players.

* Technology practices or teams have become focal points for resellers' product knowledge. Enterprise storage and security are among the typical practice areas.


  • Workforce
    White House rainbow light shutterstock ID : 1130423963 By zhephotography

    White House rolls out DEIA strategy

    On Tuesday, the Biden administration issued agencies a roadmap to guide their efforts to develop strategic plans for diversity, equity, inclusion and accessibility (DEIA), as required under a as required under a June executive order.

  • Defense
    software (whiteMocca/

    Why DOD is so bad at buying software

    The Defense Department wants to acquire emerging technology faster and more efficiently. But will its latest attempts to streamline its processes be enough?

Stay Connected