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News/Events Articles
Small net gain
The clamour for bandwidth may be huge, but you don't need to be a giant integrator
to cash in on networking opportunities. it is the small agile VAR that is taking
the risk and scaling the heights.
When former Xerox PARC researcher Bob Metcalfe invented Ethernet in the early 1970s,
he probably had little idea that his pioneering computer network would lead to a
business revolution.
He went on to found 3Com, which shipped the first commercial Ethernet product at
the beginning of the 1980s. Almost a quarter of a century on, networking has grown
into one of the world's biggest industries.
Hot wire
Organisations' need for fast, reliable and secure networks has never been greater.
Across vertical markets, the demand for bandwidth shows no sign of abating. More
companies are running networked multimedia applications, such as streaming video,
that require very large files to be transferred - fast.
The convergence of voice and data networks continues apace, making innovative applications
possible and putting even more pressure on corporate networks.
At the same time, we are witnessing a shift to centralised application management
with increasing interest in ASP services - the effective operation of which depends
on high-bandwidth networks free of bottlenecks.
And, as workers demand fast network access from the boardroom to the bedroom, there
is a corresponding growth in high-bandwidth wireless networking, from short-range
optical and radio LANs to global satellite networks.
Then there's the current explosion in fixed high-bandwidth connections to the home
via such technologies as ADSL and cable, which offer the potential for new business-to-consumer
products and services, as well as allowing forward-thinking organisations to offer
staff flexible teleworking options.
Not to mention the spread of metropolitan area networks and associated services
being driven by the appearance of low-cost, high-bandwidth technologies such as
10Gb Ethernet.
Small advantage
While most large enterprise networking projects tend to be sewn up by the big integrators,
there are still plenty of opportunities for smaller VARs to get a piece of the action.
"The largest ten integrators probably account for 70 per cent of UK business," says
Allan Scott, convergence business manager at networking supplier Avaya.
"However, any new technology provides a break point which smaller, more focused
companies can take advantage of.
"For example, large data integrators have limited skills in convergence or voice
applications and will find it difficult to refocus their sales and engineering teams
in new directions, simply because of their size and embedded skills.
Smaller VARs, on the other hand, can quickly retrain or recruit staff with new skills
and attack new markets."
And although the size of some projects puts them out of the scope of most VARs,
Scott points out that most new technologies are initially adopted by corporates
on a pilot basis.
"Such projects suit the smaller VAR better than the large integrator," he claims.
"And once the VAR has learnt the skills, larger integrators find it more difficult
to catch up. Network security and wireless were all niche technologies which are
now widely accepted. Many small companies have secured large market share because
they were willing to take a risk and invest in them."
Danny Williams, head of product management at systems integrator Telindus, also
thinks investment is key.
"There are loads of new technologies and markets you can mention, from 10GB Ethernet,
through content delivery, to application-specific service level agreements for corporates
with wide area networks," he notes.
"But they'll be of limited value to VARs unless they can match those technologies
with their own skills capabilities and a real need within the enterprise."
So how can the average VAR tap into these markets? "Investment - in their people's
skills, in their processes and infrastructure and, mostly, in something different
- a diverse proposition at a time when it seems more sensible to retrench," insists
Williams.
"The catch is, you need to invest in these areas before they become mainstream and
in so doing succeed by keeping a constant eye on the future."
Deal clinchers
Johnny Rollett, technical director of Unified Networks, believes that in terms of
being able to adapt to the available opportunities, it pays to be David rather than
Goliath.
"There has always been space for the smaller resellers," he reports. "We are by
nature more adaptable and quicker to respond to our customers' needs. We often go
head to head with the big integrators and win because smaller VARs can offer the
one-to-one relationships which the big integrators cannot. Personal relationships
are the deal clinchers: no red tape, no waiting around for an account manager to
sign off resources."
And while there are undoubtedly 'hot' high-end networking technologies (see box),
it is this personal focus on customers' business needs that really sets smaller
VARs and integrators apart from their large competitors.
"We put together specific teams for each customer and we match the personalities
and style of the team to the customer," claims Rollett. "People buy from people
they like - it's human nature.
Customers see us as an extension of their own IT departments. By making them feel
important, we not only win accounts against the bigger players but we retain them
as well. That's where the real return to smaller VARs like ourselves is realised."
Chris Alberry, sales and marketing director of networking VAR LANkind UK, agrees.
"The challenge for VARs and smaller systems integrators is to get away from focusing
on selling more IT to their clients and start addressing their business needs,"
he argues.
"This is not a new idea, but it is one that suppliers are going to have to start
taking more seriously. IT on the whole has had its image tarnished in the last two
years. Customers have had enough of the hype - they want to see that the money they
spend on IT is actually helping the way they do business."
Targeting skills
Agreeing with that sentiment is all well and good, but smart VARs know that to truly
be able to focus on customers' business needs, they must also focus on their own
skill-sets.
A general rule is that VARs need a broad knowledge of the market and alternative
technologies, but must focus on a limited set of skills as areas of expertise -
then target those organisations to which those specialisms can deliver genuine business
and cost benefits.
Adrian Holcombe, sales and marketing director at Abilitec, a specialist network
management systems integrator (SI), also echoes this need for focus.
"The small SI or VAR can become a hands-on partner, offering practical solutions
to supplement and enhance the skills and resources within an organisation," he suggests.
"This adds value to individuals and increases their personal value. The large SIs
want control of strategy and to operate at a senior level, so the operational management
can become threatened and defensive. Small SIs can offer ideas and experience and
work in tandem with the customer, but will never be as arrogant as to tell a customer
how they should run their business."
Making IT fit
There are many value-added products and services a VAR can sell. As well as driving
forward companies' pilot projects in various high-end networking technologies, smaller
VARs are ideally positioned to offer additional services such as network consultancy,
security and management (see below).
But in the current climate - where excitement about the opportunities of high-end
networking technologies is offset by the risk of making bad investments - the way
to succeed is not by repeating vendor hype.
LANkind's Alberry sounds a note of caution. "How can smaller suppliers outshine
their larger competitors? By talking sensibly about technology," he says.
"For example, if you listen to some of the manufacturers, you could be led to believe
that Gigabit Ethernet to the desktop is a must-have for corporates and a great opportunity
for the channel.
"But in reality, it's just an opportunity to sell something that few people will
see a real benefit from. If instead you can help your customer to improve the performance
of their existing network without convincing them to spend yet more money on new
hardware, you begin to address their real needs.
"The major players in the market have seen the bulk of this business go their way
in the past, but things are definitely changing. And I would caution against anyone
jumping on the latest product bandwagon - far better to make the technology fit
customer needs than the other way round."
Cutting-edge networking technologies
Wireless networks - wireless radio LANs (802.11b) are finding their way into more
and more businesses. Early adopters include companies in listed buildings and organisations
with warehouses that require staff to be mobile. Speeds are set to increase from
11Mbps to 54Mbps with the release of faster 802.11a product later this year. For
smaller footprint devices, Bluetooth wireless solutions may be more appropriate,
while optical links are often best for wireless building-to-building connections.
Gigabit Ethernet
- 10GB Ethernet brings Ethernet all the way from the LAN to the WAN for the first
time. Early adopters will be network service providers and organisations with large
campus networks, followed later by corporates needing to reduce data centre complexity.
The key business benefit of the technology is that it dramatically reduces the cost
of transferring data across the metro and wide area, since bandwidth can be allocated
on an 'as needed' basis.
Satellite networking
- likely to remain a relatively niche technology but two-way satellite is an ideal
solution to high-speed Internet access for organisations in remote locations, where
other forms of connection would be impossible or ridiculously expensive.
Value-added opportunities in high-end networking Security
- a major concern with all networks but especially with wireless LANs and networks
connected to the Internet. 3Com marketing manager Mark Lewis says: "Right now, the
key to selling security technology is persuading your customer that it is an investment,
not a cost. Also, a feeling of trust between the reseller and its client is very
important and this is one area where smaller VARs can excel."
Services network auditing, consultancy and management - all key areas of opportunity
and, as technologies such as 10GB Ethernet offer low-cost bandwidth on demand via
MAN and WAN service providers, skilled VARs are ideally placed to help customers
reduce the cost and complexity of their networks.
Applications
- your imagination is your limit. The plummeting cost and increasing availability
of bandwidth offers VARs the chance to develop innovative networked applications
for specific vertical and horizontal markets, or even bespoke applications for specific
customers.
In addition, convergence of voice and data is blurring the lines between previously
separate disciplines and again offers the chance for a whole new raft of applications
to be developed. "Those in the channel that can prove they can truly be a one-stop-shop
for converged voice and data solutions are the ones that will ultimately see their
sales rocket," says Lewis.
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