Thursday, August 7, 2008
In the software partner world there are Value Added Resellers (VARs), distributors and Value Added Distributors (VADs), System Integrators (SIs) and Independent Solution Vendors (ISVs); at least that’s the way the world was organized (and yes, I’m sure there are a few other partner types that I just slighted but you get the idea anyway). In general the roles that each of these partner types played were pretty clear. For example VAR’s sold software and sometimes offered basic services like installation and training; SI’s generally offered more complex implementation and integration consulting; and ISV’s developed and sold software build on a software vendor’s platform.
A funny thing started happening a few years ago and I see it happening more and more often. The traditional lines are eroding and a new partner type (or types??) is emerging. The three business models are, in many cases growing more and more alike. SI’s, for example, under considerable margin pressure over the last several years, are reselling products and also building their own software offerings to give them unique value (often vertical specific value) for their customers AND increase their overall deal margin. VAR’s are adding more and more advanced consulting capabilities to round out their offerings and we are seeing more VAR’s build and sell their own software solutions. This too was a reaction to revenue and margin pressures. the same pressure pushed the ISV’s into expanded offerings as well. The lines are continuing to blur as more hybrid business models emerge. The new partner is much more of a vertical focused 1-stop solution shop.
So how does this play in the P2P networking world that I’ve discussed in some detail? While on the surface the two seem contradictory I don’t believe that is the case. I believe that we are seeing two unique ways to solve the same issue. In the one hand some partners are building off their core competencies and establishing solution networks to provide the 1-stop solution for the customer and on the other, some partners are expanding their core competencies to include the full offering under one roof. It will be interesting to observe these two models over the next few years to see if there is a clear advantage to one or the other.
