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Posted Date: 1/21/2011

Success Through Collaboration

By George L . Koroneos

The editors of VSR Magazine had one goal in mind as they developed thebos1-(1).jpg content for this year’s Business Optimization Summit—Partnerships. With the recession slowly fading into the distance, solution providers must find new ways to succeed without relying solely on their internal capabilities. The old adage is true; there is strength in numbers and partnerships are the number one way to establish a network of information and business relationships. 
Close to a hundred VARs and ISVs spent two days in a not-so-chilly Chicago conference center to learn new concepts for innovation, sales and business strategy. Some speakers were ahead of the times with ideas that are just now formulating into useful business practices, while others hammered home old-school strategies for success. 
 
Motorola’s VP of global channels, Mark Kroh, gave a rousing keynote candidly explaining why his company had to undergo some major changes in the past few years, and why solution providers should consider their own changes as they move into a new era of business.
 
“The obsession for innovation is stronger than ever because it’s driven by the consumer nature of the folks purchasing our B2B technologies,” Kroh said. “People want more choices, faster, better, cheaper and integrated.”
He went on to explain that people within the company must share their thoughts with everyone in the organization in order to change the culture and the behavior of the company.
 
“If your employees believe in your purpose and the promise to the customer, your organization will clearly change, because the purpose and the promise is at the core of everything you do on a daily basis,” Kroh said. “If it doesn’t excite you to change your business, you won’t be relevant to your customers. It’s not easy, but it clearly is the way to be the best that you can be.”
 
THIS YEAR’S MODEL
Mike Stryczek, CEO of American RFID and Barcode told the audience aboutbos2.jpg AIDC’s concept of solutions as a service; it borrows from the cloud-computing concept of scalable and elastic IT-related capabilities that are provided as a service to external customers using Internet technologies—or on-demand virtual computing. 
 
According to Stryczek, about 67 percent of all organizations already use some form of IT resources that exist in the cloud, and that number is expected to balloon to about 75 percent in the coming year. 
 
“You, as a user of a SaaS model don’t have to have the server, the battery backup, the tape back up, and there’s many well documented success cases,” Stryczek said. “So it stands to reason that the next logical step in the SaaS model is called HaaS, or hardware as a service.”
 
Both models are subscription-based programs. For the end-user it’s an operational expense instead of a capital expense. And because it’s a pay-as-you-go model, it provides the end user with some benefits including a quick ROI (12 to 18 months, typically), low operation costs and a better experience for their customers. 
 
“We think this is going to open up the market to SMBs that might have been able to afford the SaaS software, but could not get the capital expense together to get going,” RedLine Solution’s CEO Todd Baggett says. “If you can give them a model that allows them pay-as-they-go and earn-as-they-go—it’s a good model.”
 
Quest for Credit
Richard Hastings, macro and consumer strategist, Global Hunter Securities,bos3.jpg finished the first day’s morning sessions, with a reality check about the challenges SMBs face when searching for new sources of credit to finance their businesses. 
 
“The small-business crisis continues to persist,” Hastings said. “Credit conditions over time have deteriorated, but are improving a bit. The residential housing market will not come back to be a source of capital to the general economy for any time in the near or intermediate future. The outlook for that for a source of credit and capital is extremely negative.”
 
According to Hastings, mobile commerce is going to be significant for the next three years. “Over a long period of time, mobility increases productivity and greatly increases sales opportunities, particularly for small businesses,” Hastings said. “And you play a role in helping them overcome the obstacles on the funding side in order to have better equipment and resources so that they can use mobility to grow sales over the next few years.”
 
SaaS Smarts
After a superb speed networking session hosted by John Wilkinson, presidentbos4.jpg of Thoughtwav, attentions turned to one of the biggest industry buzz words—SaaS. Travis Austin, CEO of Rezitech, and Chris Wiser, CEO of TechSquad, started their presentation by asking the audience if anyone currently packages a subscription-based software program with their solutions. A few hands darted up. One person said he sold a web-based backend solution, and another offered a  reporting suite.
 
“We were a break/fix shop where we came out and fix computers like a plumber would,” Austin said. “When we converted to managed services, we were able to take a 250 customer list to five customers that were recurring and we are able to make the same revenue as we did with 250.”
 
Wiser said that he doesn’t sell anything that he can’t put some form of recurring revenue model on. The big question was how to switch the paradigm of one-shot install and a big check to a recurring revenue model that allows for more profit in the long term?
 
I understand that cash is good, but long-term cash flow is better than a one-time check in the bank, because that one-time check in the bank usually goes away pretty quick,” Wiser said. “But if you get five or six of those together, all of a sudden you have $20,000 a month of recurring revenue coming in that you don’t have to do anything for.”
 
Partner for Success
Peer-to-peer collaboration has been a hot topic for the past few years and Amazon Consulting CEO Diane Krakora explained how P2P worked in major companies to drive partnerships in the technology world.
 
“There seems to be two different camps on the solution provider side,” Krakora said. “One camp says, ‘Yes, this type of peer-to-peer collaboration is really the only way I’m going to drive my business and grow faster.’ The other side says, ‘I’m really worried and concerned about partnering with somebody that might be a competitor.’”
 
Krakora explained the positive aspects of working with vendors to meet complimentary technology partners. It’s imperative to create a contract that explains exactly what each party stands to earn from the relationship and how long the partnership lasts. 
 
“A peer-to-peer relationship is a relationship between two people that will then flow out through their whole organizations,” Krakora said. “So you have to make sure that you are socially in line and personally in line before talking about the business aspects.”
 
She explained that the key is openness and honesty from the beginning of the relationship and transparency throughout. 
 
“This industry is very small and your reputation becomes known quickly if you are collaborative or not,” Krakora said. “Collaborative or not—if you are easy to work with or not.” Krakora said.
 
PARTNERSHIP LOGALITICS
Neil Ende, founder and manager of Technology Law Group, explained what solution providers must do to avoid a lengthy legal battle with a partner, vendor or client. 
 
He explained that the situation was much easier when a reseller would make a deal for a one-shot installation, get paid, and move on to the next client. As service-based deals become more popular, so does the need for more detailed contracts and agreements that spell out exactly what the partnership entails.
“You’re not just selling the basic hardware anymore, but you’re also selling the services that surround it,” Ende said. “Now you have to deal with more complexity and more customer interaction, which can lead to more opportunities for misunderstandings, errors, and exposure to risk and liabilities.”
 
Ende explained that solution providers must have carefully drafted, thoughtful agreements in place to protect both parties. In addition, the solution provider’s operations must be consistent with what’s being agreed upon.
 
“Contracts are really just two things,” Ende said. “A definition of the party’s relationship and, more importantly, their allocations of risk—who bears responsibility for what, and what happens if something goes badly.”
 
Negotiate for Success
Bill Garcia, managing partner at TableForce, was back this year for a two-hour workshop about best practices when it comes to negotiations. 
“You need to say ‘No’ often, you need to say ‘No’ early and you need to learn how to walk away,” Garcia said. “You can’t win every deal every time, and the younger sellers don’t understand that.”
 
He said that he spends 80 percent of his time planning what he is going to say when he gets to the negotiation table and the rest actually making the deal. 
“Where you set your opening position, absolutely affects your bottom line,” Garcia said. People place the opening position and the bottom line way too close together. 
 
“The voice inside your head tells you that price is too high and that the buyer won’t stay at the table,” Garcia continued. “If you come in with your rock bottom price, and that’s where you would have ended up, I still feel unfulfilled as a buyer. Buyers are measured by the savings made during negotiations.”
The worst case is that they say that you’re out of your mind. 
 
Don’t Forget the End Users
The event capped off with a lively round table discussion focusing on the state of the industry. 
 
“A year ago, almost 32 percent of the hospitality industry was knee deep reeling from the impact of the recession, and in just six months we’ve seen a noticeable drop in that number—down to 19 percent,”Hospitality Technology magazine’s Editor-in-Chief Abby Lorden said. “At the same time, a number of executives said that they are seeing signs of a turnaround but are proceeding with caution.”
 
Jill Kerr, CompTIA’s vice president of industry development, closed the summit with a few words about growth in the healthcare market.  
 
“The number one things doctors want is to improve patient care,” Kerr said. “That was followed by reducing costs, growing practices and improving workflow efficiencies.”
 
The key takeaway is that technology is the means to the end and not the end in itself, she concluded.
 
After two jam-packed days, the verdict was in—“This is the second year in a row that VSR has hit a ‘homerun’ with its Optimization Summit,” said Tom Beusch, CEO of Miles Technologies. “It is one of, if not the best, event of the year for a business owner.” 

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