IT budgets are tight, in fact SMB’s are only reporting a 5.6% increase in budgets (before inflation) for the next 4 years (2009 to 2013). The situation for enterprise class customers is even worse with a contraction in IT spend in real-terms for the next 4 years (according to a recent IDCB Market Analysis and Forecast).

In addition to constrained IT budget allocations, IT managers must manage networks with extensive staff-shortages in their departments. Not only is there a people shortage, but a shortage in the skills and experience required to manage and implement solutions. Hardware and software providers are increasingly bringing complicated solutions to market – virtualization is a very good example of this, with a high demand for professionals with Hyper-V and Citrix experience; security is another good example with providers such as Checkpoint and MacAfee, bringing more complex solutions to bear on what are, complicated threats to networks security and company data.

It is the responsibility of an IT manager to protect the network, ensure performance meets the needs of the business and deliver real ROI to the bottom line. Turning to VAR’s and system integrators is one way in which IT departments can manage their budgets and meet their objectives. The issue becomes, how do you choose from the large number of companies vying for your business in the VAR/SI marketplace?

First of all, VAR’s should have the appropriate certifications and provider partnerships in effect to deliver the solutions and services a company is looking to source. Their staff has to be current and up-to-date in the specialized areas which are relevant to the delivery and management of the solutions into the client.

More than this, there should be a distinct transfer of knowledge from the VAR to the client’s staff – it helps enormously with staff development and in the reduction of operating costs if in-house staff can be “brought-on” in new techniques and how to manage the on-site aspects of a solution implementation.

A secondary issue is what a VAR can do to shift capital expense to operating expense. This is crucial because the vast allocation of an IT budget (at least 80% in a typical company) is dedicated to operating costs which leaves little budget to implement solutions and new projects. IT management has an uphill task of convincing boardrooms to allow even microscopic upgrades unless the financial equation adds up. VAR’s with Software as a Service (SaaS) offerings are increasingly in demand because this achieves a straight shift of expense from the capital caption to the operating alternative, making an IT manager’s life that much easier. It is this financial/management skew in terms of what can be done to alleviate an IT manager’s budgetary constraint and yet achieve positive improvement to the network and business functionality which can differentiate a VAR.

Thirdly, ask what enterprise-class continuity partners a VAR has. Most of the solutions which are being deployed today require fully “on” web capability; email, web access, intranet based business processes, hosted applications, and of course, Saas solutions, all demand a very resilient and high-availability solution. VAR’s as stand-alone companies are not likely to be in a position where they can deliver this themselves and in turn must rely on an enterprise-class provider. If they don’t have one, you have to question the viability of their service offering.

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Value Added Resellers (VAR’s) come in all flavors, shapes and sizes – they provide a vital service to IT departments who are suffering from severe budgetary constraints, staff and skill shortages and issues in implementing and managing increasingly complex solutions. Successful VAR’s are those who are delivering skills, customer service, bottom line improvement and are cost effective, but unfortunately, customers frequently confuse “cheap” with “value added”.

Cheap isn't necessarily bad - in fact it can be excellent! Cheap is not a good thing when it places constraints on future development and adaptability of the network. It is a definitely bad thing when the “cheap” solution subsequently incurs excessive management costs or worse, a serious management issue because the solution is failing users and business expectations.

No IT manager likes to be in the situation when they are called in to explain why a solution implementation is over budget or worse, considered to be a failure!

Frequently, cheap means that the solution cannot be scaled up if it is a success or simply to meet the needs of a growing company. The VAR usually is the constraining factor in these instances because solution substitution is rife in the IT market – it is not fair to say security solutions are like commodities but it is not a far stretch to make that conclusion from the lofty heights of the boardroom. In practice, it is the VAR you choose to work with who is the constraining factor in exploiting or upscaling a solution for your business.

Typical reasons for this include the fact that the VAR is cheap. Cheapo charging VAR’s do not usually have the financial foundation to continue with developing their own skill sets which you rely upon to be delivered into your own operation. They usually do not have the breadth of support from solution providers – particularly watch for a VAR with only a couple of certifications but who claims to provide a wide range of services.

Cheap also means sub-standard or no realistic SLA when it comes to customer service.

Imagine a solution that the users love where adoption is widespread and the application becomes mission critical to the board and the staf. Unfortunately, the application is hosted online somewhere in the clouds by the VAR who is unable to afford enterprise class connectivity. Now you have the telephone ringing incessantly as everyone from the VP Sales closing a deal in California to the customer service reps in your NJ call center suddenly find they can’t do their jobs.

In turn – you make the call to your VAR – ask yourself what you are going to get, a voicemail or a person?

Ask yourself the same question except it is 3am on Christmas Day and the application is delivered over the WAN to 4 continents and every time zone?

This is where “cheap” simply means “bad”. The answer is to focus on cost-effective solutions which demonstrate clear ROI and are backed by a VAR which has the substance to deliver the SLA you need and can afford. In these instances it is better to consider a VAR which is charging “appropriately” as a better measure of whether it is itself, delivering “value-added”.

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An IDC Market Analysis and Forecast for 2009-2013 has been released and the results demonstrate a modest increase in IT spend by SMB’s worldwide – gross IT spend is predicted to rise by a mere 5.6% per annum and after inflation is taken into account, this is practically a static number. For enterprise class customers, the situation is even worse with financial spending contracting by 3.1% pa and in real-terms, this does represent inflationary contraction.

The recession has certainly taken its toll as companies seek to cut costs but the scope for further IT development is constrained even more than this budgetary forecast demonstrates. The vast majority of typical IT budget is spent on maintaining infrastructure and financing the operating cost – typically in the range of 80% of the total IT budget.

This leaves a mere 20% of the total IT spend to buy new equipment, but even this number is not available for “projects” and new initiatives. Included in this slice of total IT budgets is the requirement to buy replacement equipment for that which has failed and cannot be repaired or if it can be repaired, failure requires a new swap-out simply because of the high reliance levels required.

This constraint on IT managers and budget decision makers makes it imperative that they focus on the core issues confronting the networks they manage and also, ensure that capital investment projects deliver very real benefits in financial terms to the organization.

Common core issues focus on the traditional chestnuts:

· Security – data theft is increasingly of concern not only because of the loss of proprietary data but also, the compliance issues which are increasingly ensnaring businesses as regulation mindsets of government agencies kick-in after the recessionary fall-out. The banking and financial sector is particularly hard hit and sensitive In this regard;

· Sarbanes-Oxley – since the introduction of SOX, the need to ensure data can be recovered has taken on far greater significance to companies across all industry sectors. SOX has had a far-reaching impact in terms of the industry sectors it has ensnared but also where companies are doing business. Legislators probably had little inkling that their work would mean billions of dollars of cost for overseas companies doing business with US consumers, and this has helped continue the growth in storage and data retrieval solutions backed by DR fail-safes.

· Outsourcing – increasing complexity of all solutions, both hardware infrastructure and software, combined with short-staffing of IT departments has led to increased demand for the services of VAR’s (Value Added Resellers) but tight control must be exercised.

Overall, it is the partnerships which are forged with VAR’s , especially those that can deliver solutions subject to the tightening budgets of IT managers, which is the greatest hurdle facing both the industry and companies today. VAR’s must be imaginative and specific in delivering solutions for clients and prospects. Solutions must demonstrate significant positive financial benefits with decreased payback periods if they are to stand any realistic chance of being considered by IT managers. IT managers must also continue to chip away at the large operating element of the IT budget if they are to release chunks of the total IT allocation to keep their networks abreast of developments, particularly risk exposure and performance expectations.

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Selecting a Value Added reseller (VAR) is crucial and requires pain-staking assessment of their capabilities and track record, including those who are already delivering services into a client, even when the relationship has subsisted for many years. IT times have changed significantly, in fact, they are changing fast – let’s use the correct tense!

With all the change there is a further factor – IT budgets are under exceptional fiscal pressure due to the adverse economic circumstances many companies are facing. There are several reactions to this environment – budgets are being severely curtailed; staff shortages in terms of actual body counts and skill shortages are widely reported; implementations are restricted to those solutions with very tangible financial and ROI benefits, typically with much reduced payback periods.

So we have increasing complexity, increasing rate of change and not enough money, staff or skills to manage the situation.

In a nutshell, this is why VAR’s are important, and for a company, how to select an appropriate VAR is crucial.

What are the VAR’s Redundancy and HA Capabilities?

Mission critical applications live online in most business environments. Any VAR or Systems Integrator (SI) who is offering to implement or manage an online business critical application must demonstrate that they have the capability to provide enterprise class HA and secure infrastructure. Consider how much business would be lost if the company’s CRM goes down – and that would be business not likely to be replaced!

A VAR is unlikely to be the provider in this instance, so you need to look behind them to ascertain who that provider is in reality.

Sarbanes-Oxley and eDiscovery

The day of the regulator is with us – and in the aftermath of the worst financial crisis in 60 years, the regulator of everything from paperclips to hedge funds are placing greater pressure upon businesses to deliver failsafe data protection and retrieval functionality. Federal law changes have multiplied the effect of Sarbanes-Oxley, and now any company, large or small is captured by legal rules which can break a company if it falls foul of them.

A VAR must be able to provide the infrastructure to ensure data backup, retrieval and storage will ensure the highest possible security and DR potential. Almost good enough is not good enough.

VAR Location and Operating Footprint

Remote management is fine when it all works but there are times when it simply will not do. You cannot ignore distance or the limitations on connectivity imposed by physical and Murphy’s Laws.

If you operate in North America and the Far East, your VAR must be able to demonstrate an ability to provide on-site capability in those areas too, or you are going to be severely constrained at some point in the future.

The Importance of Customer Service

When email goes down, users don’t want an answer tomorrow, they want an answer now! You can ignore user requests for so long but when the VP Sales is in Hong Kong closing a deal and his Blackberry isn’t working, you’d better have an answer yesterday. You know the situation because you’ve experienced those calls already on numerous occasions.

It is vital that you assess the customer service standards to be expected and whether they can be delivered by a VAR. VAR’s simply providing a voicemail are missing the point of delivering “value added”, and they must provide you and your users with greater choices that are cost-effective not only in delivering customer support, but in removing the help desk nightmare from your shoulders.

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