Ignore the 'next 100' VARs at your peril

Doug Woodburn runs the rule over the 100 resellers knocking on the door of CRN Top VARs

CRN's Top VARs supplement has served as a guide to the who's who of the UK reseller market since 2011.

I've spoken to many vendor executives down the years who say their sales staff rarely hit the road without a copy in their back pocket.

Generating a collective $12.72bn (£10.37bn) of annual revenues, this century of power players are responsible for a good chunk of all IT hardware, software and services sales into UK businesses.

Any vendor that works with the majority of them is in an enviable position, but nevertheless the next 100, 1,000 or even 10,000 could generate as much if not more sales for them.

For this reason - and because we now have more market data than ever - this time around we opted for the first time to tentatively extend the list down to 200.

We know from analysis we carried out for Top VARs 2016 that the top 100 have average operating margins of 4.2 per cent and are growing by an average of either 11.8 or 6.2 per cent (depending on whether you take the average of all their growth percentages or an average of their collective growth).

Not bad.

But the margins and growth rates of the next 100 (generating revenue of between £9m and £28m) are even better, underlining why this next layer of VARs should not be ignored.

One MSP in the second 100, Dorset-based Bistech Group, has made average operating profit margins of 28 per cent over the last two years; substantially higher than anyone in the top 100.

And one automotive software specialist, Birmingham-based Pinewood Technologies plc, boasts an even fatter bottom line, generating average operating margins of 41 per cent in its two most-recent financial years.

Average operating margins across the board for the next 100 stand at 5.6 per cent, flat year on year.

Average growth of those ranked from 101 to 200 is also substantially higher than those in the top 100, whichever way you look at it (15.4 per cent if you look at the average growth percentage and 9.9 per cent if you look at the average of their collective growth).

The other clear trend that leaps out is that this next layer of VARs tends to be more specialised than its top-100 brethren.

Where all-purpose VARs and SIs dominate the top 100, the next 100 is the heartland of suppliers with a laser focus on specific vendors such as SAP, Microsoft, or Sage; specific technologies such as large-format print, audiovisual or cybersecurity; or even specific vertical markets such as automotive, social housing or education.

This is the first time we have attempted to compile a next 100, and we acknowledge that our first stab at it is by no means a definitive list. Already, several firms have stepped forward to notify us of their absence from the list, and we hope to produce something more formal and definitive this year.

Please get in touch if you think you should be in there, or if you know anyone that should, the only proviso being that we can only include firms that formally publish their turnover.