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How ISVs, VARs Can Make Joint Partnerships Work

By  Regina Ciardiello, Editor, VSR — October 13, 2009

It's true that services have become a common theme within the channel, especially as it relates to what end users currently want. In fact, when VSR conducted its annual End User Survey late last year, 76 percent of those who responded stated that one of the top reasons why they work with VARs is because they "offer a variety of services (systems design, recommendations, installation, training, etc.) that they cannot get anywhere else." So how is a traditional hardware expected to get into the services arena? Many probably question the fact that they should either jump in head first, going for the traditional vertical deep dive, while others might remain cautious. Another concern is that a traditional hardware VAR, who decides to take on services head on, may feel that they have the expertise to do this, but when tasked with providing such services (for instance, software), they might not be aware of all of the current compliance/regulatory/encryption issues that go along with writing a safe and secure software program.

So what is traditional hardware VAR to do? Instead of sitting back and thinking: "How am I going to get into services, when I don't have the time and/or experience to do so, but I really want to remain competitive?" They can instead form an alliance/partnership with the Independent Software Vendor (ISV) community. This group of channel partners has the expertise and industry knowledge when it comes to helping traditional hardware VARs offer the complete package that today's end users want. Oftentimes they have written their own software programs, in addition to selling it, and they too, could be looking for a hardware VAR who can complete their offering to their respective end users. Either way, the partnership is one that suits both parties, especially because it fosters a relationship that furthers both the VAR and ISV's respective positions in the channel, and can also enable each to offer more competitive pricing, packaging and margins to customers.

Where the Partners Are
Companies such as Boston-based Merchant Warehouse already have their plan mapped out when it comes to building VAR partnerships. In fact, the company's BinSMART product, a software solution that analyzes each incoming payment transaction to determine the lowest-cost way to conduct each individual transaction and then guide the transaction appropriately, is already being offered through the company's VAR partner program.

BinSMART communicates with Merchant Warehouse's secure server to evaluate each transaction and quickly responds with the method that provides the estimated lowest cost to process the transaction. It also provides further guidance when a corporate card is used by prompting the clerk to ask the customer for the information necessary to keep the transaction from downgrading. Merchant Warehouse offers this solution to VARs to add value to customers and, if they choose, reap an up-charge from customers for this additional service.

Henry Helgeson, CEO of Merchant Warehouse, explains why it makes sense for ISVs and VARs to work together when it comes to offering the complete solution package. "The reason why a VAR would want to partner with a credit card processor is that it allows them (the VAR) to focus on what they do very well," Helgeson says. "While it's a true that a VAR could become a processor, there is a big expense that's involved, so therefore it makes sense to form a partnership to ensure a seamless, secure and cost-effective integration."

Merchant Warehouse did just that earlier this year when the company announced a formal partnership agreement with pcAmerica, a Pearl River, N.Y.-based VAR, in order to further their services package. The agreement called for Merchant Warehouse to integrate its MerchantWARE solution with pcAmerica's Cash Register Express and Restaurant Express POS systems. The joint offering is designed to significantly reduce the possibility of cardholder data loss, in the event of a network security breach.

"It is extremely important for us at pcAmerica to supply our customers with the highest quality and most secure products," says David Gosman, CEO of pcAmerica. "After careful consideration and research, it was obvious Merchant Warehouse has the right technology and is the partner that can help us deliver the next-generation solution for our customers."

As it relates to the channel's distributors, services are being recognized as what's needed to meet end user demand. Therefore, companies such as Ingram Micro have begun to offer their channel partners "bundled" packages that will virtually provide a "one-stop shop" for their customers. Earlier this year, Ingram Micro announced its new SecurePOS (Point of Sale) SMB Bundle -- a unique, all-in-one POS solution that provides retailers with complete, end-to-end data encryption of cardholder information beginning at the swipe of the consumer's credit card. Currently available through the distributor's Data Capture/POS Division, the new SecurePOS SMB Bundle is sold exclusively to Ingram Micro channel partners in the U.S., the new bundle is comprised of several in-demand technologies including the HP rp3000 Point of Sale System, MagTek MagneSafe Card Reader, and Uniforce Technology software. Additional hardware and software vendors featured within the new bundle include Cherry Electronics, Citizen, Planar, Motorola, MMF Cash Drawer and Payment Processing, Inc. (PPI).

In addition, Ingram Micro is creating an ISV network, and their approach has already garnered interest from some of the channel's well-known vendors that currently work with ISVs. "We are in the process of implementing an ISV network, and we are reaching out to best in class ISVs that are interested in distributing through Ingram Micro," says Marc Rachiele, director, Marketing and Vendor Management, Ingram Micro's Data Capture POS Division. "This will enable our ISVs to sell their products through Ingram Micro and it will also allow our solution providers to sell the software and load that software on the system through our configuration center.

In fact, Honeywell Scanning & Mobility earlier this year announced that it launched an ISV partner program to aid in the development and promotion of software operating in conjunction with the full line of Honeywell Scanning & Mobility (HSM) products. The new program is designed to enhance the level of support provided to ISVs and to stimulate increased demand for software solutions.
"Honeywell's goal in partnering with ISVs is to contribute to the creation of integrated solutions that better meet the needs of our customers," said Mark Bunney, director of global alliances at Honeywell Scanning & Mobility. "We created this program to form long-term strategic connections with ISVs and support them in areas that truly add value. We believe in investing in relationships with ISVs, and it's these mutually beneficial relationships that will help drive success in key markets including retail, healthcare and transportation and logistics."

The program has two main levels of participation designed to meet the specific needs of ISVs. Depending on the level of participation, ISVs will receive benefits such as technical support, discounted or free demo units, web-based or on-site training, and marketing materials and funding to drive increased visibility.

As an Ingram Micro partner, Honeywell is positioned to tap into the distributorÃÆ'Æ'ÕÂ.ÃÆ'Â.Ã.Ã.•¬Ã…¡Ãƒ•Ã‚¬ÃƒÆ'Â.Ã.Ã.•¬Ã…¾Ãƒ•Ã‚.s well-established group of VARs who might be looking to be "matched" with a suitable ISV. For instance, Honeywell ISV partners such as Z-Space Technologies are able to integrate their Ready-to-Go applications within Honeywell's Dolphin 6100 mobile computer, offering a "turnkey" solution.

"The real value comes from both companies being able to leverage each other's expertise to provide the best possible solution for the end user," says Ingram Micro's Rachiele. "ISVs and VARs often look at an end user with a different set of obstacles and challenges. Working together, they can ensure that not only will the software serve the end user's needs, but it works with the hardware and the environment in which it is being implemented."

What's Available?
In 2009 alone, several companies, aside from Merchant Warehouse, Honeywell and Ingram Micro, announced that they were forming new partnerships to connect with the ISV community, so that their VARs could offer additional services packages.

Touch-screen manufacturer Elo TouchSystems, announced its new Elo Elite Partner Program. The new program is designed to further strengthen strategic relationships and collaborations; it has been designed to provide specific business support for VARs and ISVs when facing the challenges of the current economic climate. The goal in mind is to align Elo's technologies, channel proficiency and support with channel suppliers that can deliver comprehensive solutions.

Elo Elite VAR and ISV partners will receive support in addition to the program's value-added benefits such as our industry expertise, product innovation, and global reach and capabilities. Plus, a dedicated team of channel professionals provides on-going support. After enrollment, Elo Elite VAR and ISV partners receive full access to the program tools, marketing and sales contacts plus other significant advantages that help their businesses grow.

This past June, Fujitsu America established its RetailReady(TM) program for the retail industry, providing benefits for ISVs that validate their applications with retail hardware from Fujitsu. After becoming Fujitsu RetailReady, ISVs can market their solutions as compatible with Fujitsu retail hardware such as the recently announced TeamPoS(R) 3600 POS system. The partnership also exposes the ISV's brand and solutions to potential Fujitsu clients, and offers unique, unparalleled access to Fujitsu product marketing and technical information through a secure partner Web portal. Each RetailReady partner will also receive a Fujitsu POS unit for customer demonstrations.

Aside from the retail and hospitality verticals as outlined, ISV-VAR partnerships are also talking hold within health care, especially since medical facilities in need of electronic medical records require affordable, easy-to-implement, secure, and user-friendly systems that can transform paper records into an efficient digital workflow. eHealthFiles, Inc., a member of Kodak's Independent Software Vendor (ISV) Program, is currently collaborating with physicians and software engineers to develop effective applications for meeting regulations, driving efficiency and providing cost savings. KODAK Scanners and Software will be used with eHealthFiles Clinical and Practice Management Software to provide hospitals, doctors' offices and clinics with a comprehensive technology solution to manage patient data electronically.

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