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Choosing the Right Value Added Reseller (VAR)
By Sheldon Needle

Introduction
There are two models vendors follow today in selling their software. One is to sell direct to customers with their own sales personnel and training/implementation services. The other is to use VARs (Value Added Resellers) which are independent businesses that are under license from the software vendor itself to sell, implement and support that product. A good VAR can take mediocre software and make it work well for you. On the hand. a bad VAR can take good software and make it virtually unusable due to, for example, poor set up, implemenation and training.

Evaluating a VAR, therefore, is every bit as important as evaluating the software itself Here are several issues we’ve identified that will help you make the most from your VAR experience:

Beware of One-Stop Shopping Promises
If the VAR comess across as a one stop shop, be cautious. It used to be easy to call yourself a one stop shop just by selling and servicing both hardware and software. Today it is just a lot more complicated.

Your project will likely entail requirements for hardware, networking infrastructure, web design, financial software consulting, customer relationship management, business process and workflow, custom development, report writing, training, and ongoing helpdesk support.

Any VAR that claims to be able to deliver on all this within their organization is lying – plain and simple. When CRM applications came into being in recent years, many traditional ERP vendors got on board because of the inherent integration between the “Front Office” and “Back Office”. However, for all this activity there have been relatively few CRM success stories among the ERP vendors.

Here’s the point – it’s just too difficult. Now, keep in mind there ARE firms out there that have the dedicated staff and competencies to take on multiple technologies. However, typically, you will be relying on multiple vendors for your solution, or on independent companies which are subcontracted for your project in their areas of specialty.

This is not all bad, but during your selection process you need to identify who these companies are, and get them involved early on in the cycle. And when speaking to references, find out what their experiences have been with outside companies and people who were brought into the project by the VAR.

Find out About the Staff Assigned to You
Many companies try to sell their ‘size.’ You need to drill down and find out what this means for your project. For instance, of all the consultants they claim to have, how many will be working on your project or available upon demand for other services.

Most VAR organizations run lean and should one or two consultants leave their jobs while your project is underway, what will be the impact on your timetable?

You will also want to find out if the consultants on staff are independent contractors or employees. If they are independent freelancers, make sure you have a contractual agreement which binds as much as the principal vendor. And watch out for consulting agreements which provides that you won’t work with or hire their people or other consultants.

While it’s certainly not fair for them to have customers hire away their talent, many VAR organizations are “talent thin” and if their best people leave, you don’t want to be stuck with their third rate junior staff to complete your project.

This is why it is important to know who will be a part of your project, and tie this into the contract along with specifications about the qualifications and experience of future staff to be assigned in the event of turnover.

Every decent VAR has “superstars.” And they guard them very highly, placing them on the most strategic and best projects, working with the best customers. These superstars can handpick their customers, projects, and even the VAR they work for. They can do this because they are the best – and they know it. You want these guys on your project, and even if they are at higher rates you want them because they are worth it. They will get the job done first, and much faster than anyone else.

Make the Project a Win-Win
Paying for the best talent is great and it might be easy to write a check. But let’s suggest a different approach – one that creates in the VAR organization a passion and personal investment in the success of your project. This starts with having a relationship with and the involvement of the person at the top.

When software sales reps attend seminars, they are taught to sell to the highest levels of your organization. Take this advice for yourself, and use it to build a strong bond with the one person at the VAR firm who is most invested in your long term success – the person at the top!

One of the greatest benefits of working with a locally owned VAR organization is that the owner is usually personally involved. If your needs require a larger VAR behind you, make sure you know who is the top manager responsible for the overall success of your project.

Make it a point to build a relationship early on with this individual, because he/she will likely be in for the long haul. Remember, through no fault of the VAR, it’s a fact that staff in this industry rarely last in a position for more than a few years. In building this relationship, you want to impress upon this principal that you want a long term partnership where you can help their business grow while they help you. More to the point, you want them to look at your company as one of the most attractive companies that they could hope to have for a client. What you want to establish is an expectation of your becoming the “showcase customer” that they are going to need in the next 12 months or so. Show as much of an interest in their business and personal goals as you would want them to do for you.

You are more likely to be successful with a VAR if their customer profile fits yours either by size or industry or degree of sophistication. We have spoken to many disappointed software buyers who were so focused on the wonderful brand name product they were buying that they forget to find out if the vendor really had expertise in their industry. By the time you realized the VAR did not really understand their business and industry it was way too late to anything about it. The same thing goes for specialized applications such as CRM, e-Commerce (both B2B and B2C), EDI, work flow and BI (Business Intelligence). There is no substitute for experience.

Ask for a profile of their customer base and see where you fit in. The key is to select a VAR where you are somewhere in the middle or upper end of their target market.

Getting the Most from References
Most VAR’s will be happy to provide you with several references. It stands to reason that they will not be likely to give you names of unhappy clients. Nevertheless, you can learn a lot if you approach the references with the right questions. You will want to speak with at least three references. When you ask for references, ask for one who has been a customer for several years using the same software you are considering.

Also ask for a reference who is in their first six-twelve months of implementation, understanding that they will probably only be part way through the project. That’s okay, because you want a feeling as to how the VAR is currently performing on jobs in process. Finally, ask them for the name of their most self reliant customer. This is what is commonly known as a Class A customer.

When speaking to the references, you want to ask whether the projects were completed in the defined time frame and at the estimated project cost. What is especially important is to know how the VAR handled changes to project scope. For a long time customer, you want to know what the original proposal looked like, and what the actual costs were over the years for ongoing support, maintenance, etc.

If possible, when speaking to the reference, rather than attempt to gather all your information via telephone, ask for permission to visit their office or meet them for lunch. Having a chance to see someone else’s system in operation can shed a whole different ring software demonstrations. And you appeal to the human nature of them wanting to brag about the new system, etc. It would be best if the software sales rep was not present during this visit, so the customer will be more free to share their feelings.

Remember that all projects have challenges, and if a customer reference comes across like there was no significant problems of any kind, it’s unlikely you are hearing the unvarnished truth.

Finally, you can often locate “hidden references” with a little creativity. For example, the local newspaper classifieds often advertise positions for individuals with skills in a certain product. Pick up the phone and ask these business owners and managers who they used to install their system, and about their experiences. Find out if there are user groups you can attend where you can learn more about the "good, bad and ugly".

The Value of VAR Certifications
Every VAR pushes their certifications during the sales process. However there are several different types of certifications you should be looking for. Professional certifications, such as CPA, provide a level of credibility of the individual consultant. There are also industry wide certifications provided by well known and respected associations, again usually directed towards individuals.

Most VAR’s certifications are vendor driven, and many are based upon sales volume, attendance at training classes, and performance on tests. We’ve always had a problem with the vendors that awarded their certifications based upon class attendance, because this is no guarantee of capability. On the other hand, certifications from companies like Microsoft are based solely upon ability to pass difficult tests which require extensive experience in products and technologies.

Also, many organizations display certifications based on achievements of staff who are no longer in the company. That’s why it is important to have agreement on who the individuals assigned to your project will be and what level of training, certification and experience they possess. The last thing you want is to get wowed during the sales process with the best and brightest of the VAR’s staff, only to have your project conducted by lower level consultants or trainees who are learning on your dime. Beware of the consultant who seems to be only a step ahead of where you are on the project. On the other hand, it doesn’t hurt to establish a relationship with the VAR as someone who will allow junior staff to become closely involved in your project – as long as there is strong supervision of their efforts and at rates commensurate with their experience.

Your Readiness to Deal With a VAR
Think about it for a minute from the VAR’s perspective. Selling software is a very difficult and time consuming process. There is clearly a limit as to how much time they can spend learning about your business and demonstrating their solutions and expertise before you make the investment decision to buy.

During the sales process, many VAR’s will attempt to gain your commitment early on and hire them to do needs analysis and requirements definition services. The quality of these services ranges from excellent to terrible, and unfortunately most are on the less than excellent side. The best way to defend against this is to have a clearly defined set of objectives and business requirements before you ever call a VAR to meet with you. The more you demonstrate your preparedness, the more the tone of the ensuing sales process changes in your favor.

Request (or Pay for) a Prototype
We still have the issue of having to often make a decision on a product, vendor, or technology before all the facts are in. So before you sign that proposal, negotiate an implementation project that calls for the VAR to set up a prototype installation (also called a “Proof of Concept Workshop”) of your system, using your data, and with sample screens and business logic which mirrors your desired outcomes. Be prepared to pay for this service, and demonstrate an eagerness to do so, but insist it be done before you contract for the entire implementation and especially before you order and license software. Most VAR’s have the ability to load software into a customer’s environment in a "pre-sale" manner as a part of the sales process. If they tell you they can’t do it, contact the product vendor directly. This is a reasonable expectation that most quality VAR’s would not have a problem meeting – especially if they are being paid for their staff time to create the prototype project.

Taking this approach may seem to increase your total project cost because not everything that happens during the prototype project will transfer to your actual project. And that is exactly what you should expect. The difference is that if you were to just proceed and sign the traditional software and services proposal, that you will undoubtedly encounter surprises and changes in your requirements and the ability of the software to handle them. This will force you to extend the project scope and budget – and now your right back to where you would have been with the prototype approach – only now it’s reactive rather than proactive in nature.

You certainly stand the risk that the prototype will result in failure, and you can be assured that the VAR will work diligently to make sure it is a success – after all, he stands to not make a sale otherwise. The prototype approach also takes pressure off the VAR since he can move forward with greater confidence that the solution really fits your needs. And, believe us, for those who skip the prototype approach - it is very difficult to force a software return (usually months after the initial purchase date). Thousands of lawsuits have been filed by users and vendors involving returns of software or refusal to pay. You don’t want to be in one of those situations.

There are situations where consultants try to salvage failed projects where the software very clearly should never have been purchased in the first place. It’s a difficult and miserable process to turn these around, and most of the time it is impossible.

Beyond the prototype phase, in many cases, you can defer the entire software licensing expenditure until just before going live with the software. This keeps the VAR committed to the project and timetables, and of course they have no reason to object as long as they are getting paid for their services. They will make the big sale eventually, but not at your expense.

Look at the prototype as buying cheap insurance. When you add up all the hard and soft costs of buying software, you will find that it might just be the best business investment you ever made!

Summary
Choosing and working successfully with a software reseller is not something you can take for granted. A lot of thought and management must go into selecting the right reseller and making the project work for everyone. Once you are aware of both your rights and responsibilities, you stand a much better chance of having a successful software installation.

About Sheldon Needle
Sheldon Needle CTS President, has been evaluating construction software vendors since 1983. Your free 10-15 minute Smart Shortlist Consult™ with Sheldon is your opportunity to find out latest information about accounting software and get all of your questions answered. Download the Accounting Software Selection Kit now.

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