Vlad Mazek – Vladville Blog

Summer months tend to be dead for us, and with the tougher economy out there I’m checking our KPI’s every day to see dip in either services or subscriptions. As bad as things seem, we going to have our strongest month on the books even for god knows what month in a row and with Shockey Monkey 2.0 and ExchangeDefender 4.0 online launching in August things are looking remarkably good indeed.

So why the paranoia? The bottom of the market is eroding. That’s about as politely as I can put it. The SPFs have long disappeared and riff-raff is on it’s way out as well. As I have written many times, with very very very few exceptions, being small is rarely a choice. It reflects in the service dropoffs and client quality of the bottom tiers as the service losses aren’t to a competitor of ours (Postini, MessageLabs) but back to the server or more commonly just null routing (as in company gone). And as the bottom client base disappears, so do the solution providers. We’re seeing a lot of people teaming up with other smaller IT shops but by far and large most people are out getting jobs.

That in a nutshell is my greatest going concern with OWN. We have worked very, very hard to leave SMB and count on our partners but not a day goes by that we do not get a former partner account call in direct and say that their consultant simply vanished. This forces our hand – if we cannot find a partner to refer to, we have to decline and lose a client to retail-based services organization. There is some talk here of providing direct support though I am not sure how we can figure out the numbers for level 1 staff around the clock and maintain our service levels where they are. So that’s a problem.

 So far we haven’t figured it out. Smallbiz disappearance is something that I’ve written here at length, much to the dismay of many of the people that self-identified with the SPF term I coined a long time ago watching the MAPS resellers at TS2 events that called themselves consultants. But apparently the choice to focus on small business for a lot of the shops we work with has been a wrong one. When you are small you cannot reach a significant diversity in the verticals, and most of the time geographic bounds are insurmountable (though I know a lot of people that will fly around the country to service all the branches) so if you are bringing in $50 – $75K a year you’ve got a pretty good life, but when one or two out of ten clients go south and your cost of doing business skyrockets you are facing pressure on margins as well as account loss. So much for a lifestyle, eh? I had a guy call me last week and lay out his “lifestyle” business plan and his challenges… and I felt like crap because there was just nothing I could tell him. I have degrees in business and engineering, I’m programmed to seek diversity, grow and solve problems. What this guy saw as his competitive advantage is turning out to be an Achilles heel to a lot of partners who in a tough economy have to face reality, partner up with the others in the marketplace and take a good look at their business processes and reevaluate direction. From talking to a number of them, it seems looking at the EBS/SBS launch didn’t quite resonate with their clients and they figured they could make more money working for someone else.

As for us, we keep putting more money in talent, equipment and services and people are lining up around the building to sign up. Remarkable growth with ExchangeDefender which with 4.0 enhancements will pretty much decimate everything else on the market (thats just my unbiased opinion), the offsite backup business is growing insanely and with 5.5’s addition of continuous data protection available now and hardware independant restores expected around Thanksgiving, with the global demand for Exchange+SharePoint $10/10GB combo.. our biggest issue is finding a direct compromise and how to deal with the small business partner attrition. I wish it was as simple as if ($revenue > $level1_support_salary) count_de_money();

Advice? You know the #….

You have never been in charge of data center ops if you have never turned to your staff and said: “Can we just burn all this s#it and start over?”

What a messed up day. Everything crashed today. Including a Linux server that has been up and running for over 500 days without a restart. Everything from a $399 server to servers with $399 network controllers.

And then people look at me sideways when I say we will not support EBS/SBS. I will no longer approve purchases and deployment of single point of failure solutions. It’s 20-fn-08, overpowered hardware is dirt cheap and we are designing infrastructure like we just got out of the great depression and are trolling up and down the L looking for coal rocks to trade for parts. Come on, who needs this stress!!!

Drinking it away at Chillis and blogging from my iPod.

I originally started typing this as a comment on Karl’s blog but realized that it would probably read better with some formatting. To save you some reading time, Karl’s general thesis is that vendor loyalty goes both ways and in order for VARs to be loyal to vendors, the vendors need to be loyal to the VARs. Please read it in its entirety before you consider my response:

From someone that is both a vendor and a VAR, I will tell you that most VARs do not see the venue as a two way street or a partnership of any sorts. Most VARs see that they are the ultimate trusted advisor to the client, with complete control and brand representation to the end client. Many do not even consider themselves to be a business but we’ll just keep this a single absurdity post.

VARs on one hand believe they are agents of the vendor and as such entitled to same or better perks than even the vendors employees, after all the VARs do bring in money while employees just collect it, right? VARs also like to pretend they are a trusted advisor, someone that is completely impartial to the solution being offered and only interested in their clients best interest. Again, please play along for a moment and don’t point out how the two clearly conflict.

I am VAR, hear me roar:

As a VAR I contribute to your company:

• Revenues
• Renewal fees
• Reduced support costs as I usually handle Level 0 support

Consequently, I expect:

• Everything your company makes, free of charge, without limits or restrictions of any kind.
• Free support. Free escalation. Free direct escalation to the top support team.
• Free sales assistance and marketing assistance $$$
• Discounts on everything I sell so I can choose my markup
• Bonuses and commissions on everything my clients buy
• Free training, free conference passes, free branded training for my clients
• Complete and total branding that removes the vendor out of the loop
• Full legal protection from any software malfunction (bug) but do not dare enforce your licensing or legal terms on my clients.
• No barriers to entry, no paperwork requirements – but keep all my competitors from getting into the program too.
• No committments
• No minimum sales to obtain any benefits

Basically, VARs expect to eliminate everything that makes the vendor profitable.

VARs demand, but are unwilling to commit.

From the vendor standpoint, if a VAR is unwilling to do any of the above then what exactly separates a VAR from a direct account?

You see, unless you are not willing to see the relationship as one that should drive higher profits to the vendor as a result of your relationship, you should not expect to see any higher benefits of being a VAR as opposed to being treated as a customer.

You can’t have it both ways. Either it’s a partnership, or you’re just an unreasonably needy customer. And we have a partnership program for a reason, so we can avoid unreasonably needy customers.

You want to keep a scorecard on your vendors, but many VARs get upset when the vendors keep the scorecard on them.

I’d love to see this as a two way street. But it’s not.

We all run greedy, profit oriented organizations. We all have to meet our needs which come before the needs of everyone else. We then look for people that see it our way and are willing to work hard on the same goals. We then look to the mission of our business, to serve our clients. From time to time we find a solution and a company that helps us achieve our mission, and we work with them.

The difference between the top 10% and the rest is that the top 10% sees the vendor as a direct company asset. Most people understand that this is a business and in business you are either making money or losing money. If you are making money, you are an asset, if you are costing money, you are a problem. Top 10% of partners sign extended support contracts, they get priority support plans, they come to conferences, they get staff trained, they get staff involved, they champion the products and their use, they help others get introduced to the solutions.

The 90% stick their hand out and say “gimme” and expect us to prove to them that they should be our partners. I am *not* kidding you. The 90% are the reason you get stuck in India on a support call, because you are no different than the consumers, customers, the IT janitor, the SPF. You have all produced the exact same benefit to my company and spent the exact same amount of money, that is why you aren’t treated any better. You don’t see this as a partnership, you chose to only expect benefit traffic coming in only one direction – towards you.

Thats the ugly truth behind business plans, products, partners, employees and everything else. And if that prompts an emotional response, then it’s probably a good indication you are not cut out to run a business. Sorry. Karl offers you the same conclusion, though delivered in a much softer blow. My goal is to help you understand it.

This is not a game.