Top VARs end-user research: The VAR's the star

As part of Top VARs 2018, we quizzed over 250 end users about their relationships with resellers and IT budgets. Read the results here

This article forms part of Top VARs 2018. View the full report here.

Aside from being one of the biggest injustices in football history, the handball that eliminated Ireland from qualifying for the 2010 World Cup may have irrevocably altered the course of the IT channel, or at least its lexicon.

Thierry Henry's undetected wandering paw is said to have helped fuel the case for the introduction of the VAR, or video assistant referee, a technology that is currently being rolled out across Europe's top leagues.

But the incident is also, arguably, the genesis of an identity crisis within the IT channel, where another group of VARs has happily existed for decades.

Google the term ‘VAR' five years ago, and the top results would all have been about Softcat, Computacenter and SCC. But today ‘VAR' will for most people conjure up an image of Mark Clattenburg sitting in a video suite with a headset.

Whether the term ‘value-added reseller' will eventually fall out of common parlance is unimportant (although if it did we'd certainly have to review the name of this report). But the development could be seen as symbolic of a market facing multiple new threats and challenges, including the rise of new consumption models, margin pressure, Brexit and GDPR.

Few would argue with the contention that the IT channel, and 100 firms profiled in this report, are undergoing a period of intense upheaval, perhaps more so than at any time in decades.

Against this backdrop, this year's Top VARs end-user research has gone back to basics and addressed the very foundations of the value-added reseller model.

How widely is the term ‘VAR' actually known among end users? Do they prefer to buy through the channel, or direct from manufacturers, and do they believe the tier of hardware, software and IT services suppliers that sit between them and those that actually make the technology have become more or less relevant in the cloud era? What tips do end users have for how VARs should grab their attention in a post-GDPR world?

In fact, this year we have completely overhauled what questions we put to the more than 300 respondents who took part in the research.

VAR visibility

The term VAR has always sat uneasily with many firms that sell, integrate and provide consultancy, managed and professional services around third-party hardware and software, but this January detractors were given an added reason to call its death as video assistant referee technology made its UK debut in an FA cup tie between Crystal Palace and Brighton & Hove Albion.

The questions is, will there be room for two breeds of ‘VAR' in the public consciousness (even if one is a synonym and the other is sounded out letter by letter)?

We put this poser to the respondents of our annual Top VARs survey, these being IT decision makers at end-user firms. Respondents worked for organisations of a range of different sizes, from micro-businesses to large organisations with 10,000-plus staff, and across the full gamut of verticals spanning public sector, education, finance, telecoms, manufacturing and legal.

Drawn from the database of CRN's sister publication Computing, the respondents were offered a £3 Amazon voucher if they completed the survey, and 276 did so. Some 435 started the survey, with 79 screened out because they weren't IT decision makers. We grabbed their attention with an email asking them to open up on their dealings with CRN's core audience of IT suppliers.

It may surprise many to learn that a whopping 87 per cent of the 315 respondents who answered this first question were at least somewhat familiar with the term VAR, with 46 per cent confessing they are ‘very familiar' with it (see below).

Video assistant referees may well be muddying the waters for IT resellers, but for now, it seems, the term has a surprising degree of resonance among the majority of IT decision makers.

Direct threat

Next up, we quizzed respondents on how brand loyal they are when it comes to which VARs they work with.

The vast majority demonstrated at least a degree of brand loyalty (see below). A devoted 11 per cent said they tend to use the same VAR/IT supplier for all their IT needs, while the largest proportion - 49 per cent - said they use a small group of trusted VARs.

Some 31 per cent said they shop around, but also take into account past relationships.

At the other extreme, five per cent of respondents said they tend to source products and services simply on the basis of price, with a further four per cent saying they aren't at all brand loyal to any VARs because they tend to buy direct.

Although in practice only the largest enterprises and government organisations are in a position to demand a direct-only relationship with most mainstream IT vendors, that's not to say most end users wouldn't choose to buy direct if they could.

Resellers can claim several advantages over vendors, most notably their unique ability to bring together multi-vendor solutions, and their closer proximity to the customer.

But when we asked respondents whether they would prefer to buy direct from a manufacturer/OEM, or indirectly through a VAR, nearly two thirds (65 per cent) plumped for the direct option (see left).

It may come as little surprise that most end users - at least in theory - would want in a perfect world to cut out the middle man.

More intriguing are the results for the next question, which asked respondents if they felt VARs had become more or less relevant in the cloud era.

A few years ago, concerns were raised that resellers would struggle to muscle in on the nascent as-a-service world as more spending shifted off-premises and into the cloud. Predictions that a new breed of cloud vendor would find it easy to bypass the channel abounded.

But spool forward to today, and resellers generally seem to have found a role in the cloud era, with many billing themselves as expert and impartial hybrid cloud consultancies. Others have built datacentres themselves.

This was borne out in the survey findings, with only slightly more respondents feeling cloud has rendered VARs less rather than more relevant (see below). The majority (55 per cent) plumped for the middle ground of "roughly the same". In the eyes of end users, resellers are holding their own in the cloud era.

Waxing war chests

Next up, we asked our IT buyers about their tech budgets.

IT suppliers should lick their lips at the spread of responses, with significantly more respondents saying their kitty for IT goods and services had risen than fallen in their current financial year (46 per cent versus 14 per cent). Some 34 per cent claimed their war chest remained flat, while five per cent weren't sure or didn't want to say.

When we posed the same question last year, the spread of responses was very similar (48 per cent up, 18 per cent down and 30 per cent flat). But the results contrast with two years ago, when only 41 per cent reported an uplift in their budgets.

Digital transformation is normally the first bullet point in the slide deck of any vendor or reseller executive who is presenting on market drivers of IT spend.

But we wanted to know how real this trend is in the eyes of end-user customers, and whether we as an industry have got carried away with the idea that every firm is following in the footsteps of Uber or Airbnb by putting technology at the heart of their business to disrupt their market.

This question (see above) drew a mixed range of responses, but slightly more respondents (24 versus 18 per cent) said they saw it more as "meaningless buzzphrase" than a "tangible and important trend". The majority, however, plumped for the middle-ground option, saying that DX is "real to a certain extent, but it is overhyped".

GDPR you compliant?

GDPR is normally the second item in the fictional slide deck cited above, but unlike DX is a double-edged sword for the channel. Although it will fuel an extra $3.1bn in IT security software and services spending in Europe in 2018 alone, according to IDC, many resellers view GDPR as a legal or business assurance, rather than a technology issue, and therefore one outside their domain.

GDPR has also forced the channel - like any other sales-driven industry - to tread more carefully when it comes to unsolicited sales calls and emails.

Despite this, when we asked respondents to estimate how many unsolicited cold calls they receive from IT suppliers per week, the average (mean) response was 19.8 (see below).

On this note, we next asked respondents to tell us in their own words how VARs should go about winning their custom in a post-GDPR world. Their tips, which include sending colourful socks and flying from England to Belfast for an office tour, form the basis for the next section of this report.