The vital VAD role

Vendors selling more than just a box need a network of skilled value-added distributors (VADs) to educate, support and drive the development of their resellers in the Middle East. For second tier channel partners to truly begin selling and implementing service-led solutions to end-users, the VAD will play a vital role.

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By  Stuart Wilson Published  June 19, 2004

Vendors selling more than just a box need a network of skilled value-added distributors (VADs) to educate, support and drive the development of their resellers in the Middle East. For second tier channel partners to truly begin selling and implementing service-led solutions to end-users, the VAD will play a vital role.

For many resellers, investing in the skills and certification needed to deliver value-added solutions to customers is a difficult expense to justify. The return on any investment is not guaranteed, and they are typically venturing into uncharted territory. The average 25-strong local reseller with an SMB customer base may love the sound of double-digit margins from selling storage solutions and performing IT security audits, but any enthusiasm is quickly tempered by the daunting challenge of internal restructuring and ramping up in-house professional services capabilities.

This is where the true VAD steps in. Typically dealing with multiple resellers, these VADs are in a position to build up their own professional services capabilities and contract these out to resellers interested in selling value-added solutions but wanting to test the water before they dive in. Think of it as a ‘try before you buy’ scheme for resellers. The VAD can hold the reseller’s hand for the first few installations and provide the necessary support and skills. Once the reseller has had time to assess demand in the market, gained experience in specific sectors and realised the true extent of the opportunity, it can then make a decision on whether or not to start building up its own skills internally.

One distributor convinced by this particular VAD model in the Middle East is Mindware. With vendors such as Citrix and Veritas already on board, managing director Jacques Chammas wants to take the distributor’s sales split to 60% volume distribution and 40% value distribution during the next few years.

“We have to educate the resellers,” explains Chammas. “First of all we will help them to do their job by providing services with them. If they make money, they can start investing in the skills that allow them to take over this service provision themselves. We have to help them and encourage them on the first few installations. We also have to realise that some of the smaller resellers will never truly develop the high-level services expertise. We need to be in a position to support these players for a long time.”

For the VADs themselves, any temptation to start selling their skills and services direct to end-users needs to be carefully weighed up against the long-term damage such an approach will do to their relationship with resellers.

“Any distributor that starts competing against his resellers will lose the game,” explains Chammas. “We are a distribution company and even in the value-add space we play by the rules of the game. Mindware will never directly invoice an end-user. The post-sales support belongs to the resellers. We contract out our post-sales services to the reseller who then contracts it to the end-user. Mindware may be there physically but we never have a direct contract with the end-user.”

Vendors pumping out a Middle East marketing message promoting value-added opportunities for end-user focused channel partners need to first take a step back and analyse the VADs they have in place and the services these partners can provide. Resellers will not be interested unless a vendor has the right VADs on board. This means VADs committed to educating the second tier resellers and building market reach for the vendors they represent — not VADs with a hidden agenda of picking up lucrative direct work from juicy customer prospects and only letting resellers feed on the leftover scraps.

For now, it is very difficult for vendors selling value-added software and solutions to engage directly with their second-tier resell partners. The economies of scale are not yet in place to justify such a high-touch relationship in the Middle East. Vendors are right to pursue pull marketing techniques to highlight the value-add opportunities for resellers in the region. But they must remember this is only part of the equation and it needs to be backed up by a network of focused VADs encouraging and supporting skills development at a grass roots level.

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