Partner Spotlight: How These 4 Tech Brokers Made Their Pivot
See why two agents chose to leave the VAR model in the past.
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Kyle Hall is the president of New York-based Resourcive.
Many of Resourcive’s customers operate under private equity, and Hall said those clients have seen their need for technology guidance rise.
“There’s a macro trend happening where the multiples are going up for what they’re buying them for, which means they need to drive returns,” he said. “So there are a lot of growth objectives, and also the need to reduce expenses is still there. That only increases as multiples and valuations go up.
Hall said he saw the pandemic significantly alter the way customers purchase SD-WAN. Most importantly, he said they’re moving away from a product-focused consumption model.
“From my perspective, I’m seeing a lot fewer clients choose to buy and deploy a box. They seem to be really interested in procuring it as a service. Maybe the financial model is an upfront versus a recurring, but getting it as a service and having having that overlay of management.”
Moreover, he said customers have jumped at the concept of SASE, which brings together networking offerings like SD-WAN with next-gen security capabilities.
“It’s an immediately compelling business case, because you’re taking all of these point solutions and getting them into one or two solutions,” Hall said.
MR2 Solutions is a great example of a business model pivot. The Irvine, California-based firm moved from a VAR model to a brokerage model. Ron Salazar, general manager of MR2, said the company initially sold data center solutions from all the big vendors, such as HPE, Cisco and Dell. However, Salazar and his team noticed that these vendors were decreasing their focus on VARs and increasing their focus on MSPs. MR2 needed to pivot.
Fast-forward to the Channel Partners Conference & Expo, where MR2 struck up a relationship with Avant and moved into a commisions-based model.
MR2 saw its technology buyers evolve following the pivot. When it operated as a traditional reseller, it typically talked to customers at the manager level.
“Our compensation was not really strategic; it was more of a product levels,” Salazar.
But moving away from a “widget” focus helped MR2 land bigger opportunities.
“Having this ability to talk strategy, initiatives and such allowed us to really talk at the board level,” Salazar said.
How does the average enterprise technology purchaser typically engage?
Salazar said these buyers do their due diligence in scoping out products and vendors. He said the standard approach in the industry is to evaluate at least three different solutions.
And brokers/consultants can help guide them through this selection process.
“They [the customers] have to look at multiple providers. But the problem is that in technology today a business outcome can be solved by different technology solutions,” Salazar told Channel Futures. “That’s where the confusion is.
Jim Campbell is the co-founder and managing partner of North Carolina-based Opkalla.
Campbell and his team formed the company in 2019, not long before COVID-19 hit.
“It was a scary time when the world shuts down and you don’t have sustainable income for the year. So for us, the pivot was really just focusing on what customers needed,” Campbell said.
He said the pivot included a focus on cloud communications and cybersecurity. And both areas have led to solid growth for the firm.
In addition, Campbell said the brokerage business model has paid dividends for Opkalla. And that’s huge for a group of people that came from traditional data center infrastructure backgrounds.
“Our general pivot is we did not go the traditional reseller route. We partnered with master agents [service distributors] to afford us a little bit more flexibility in our vendor portfolio and shift to more cloud-type business,” Campbell said.
Phil Hugus is a partner at networking research and sourcing firm ISG. ISG is well-known in the carrier space and has helped aggregate networks for various customers. However, Hugus said ISG recently entered the channel in order to increase the scope of its services.
He said more and more vendors that deliver emerging technologies are appearing. That includes mobility management and cybersecurity. The desire to access these providers drove ISG’s decision to sign with a service distributor [master agent].
“We weren’t seeing that every day in the fashion that we needed to in running these large network transactions,” he told Channel Futures.
Avant president Drew Lydecker last week predicted that an agent would land a $5 million MRR deal in the upcoming year.
Hugus said he also sees potential for a big deal.
“Those customers are out there,” he told Channel Futures. “We have some clients that are nine-figure yearly network spends. The challenge is getting one of those big spends to recognize that there’s a better solution from a channel partner than with the traditional embedded carrier strategy they’ve been doing for 100 years.”
Avant president Drew Lydecker last week predicted that an agent would land a $5 million MRR deal in the upcoming year.
Hugus said he also sees potential for a big deal.
“Those customers are out there,” he told Channel Futures. “We have some clients that are nine-figure yearly network spends. The challenge is getting one of those big spends to recognize that there’s a better solution from a channel partner than with the traditional embedded carrier strategy they’ve been doing for 100 years.”
Technology brokers continue to pivot to stay successful in a competitive market.
For MR2 Solutions, pivoting meant moving away from a VAR model. For ISG, pivoting meant expanding its technology portfolio.
These are some of the major investments partners have made to survive and even thrive in a digital world. In some cases, they weren’t just making the pivot in a digital world, but in a world severely affected by COVID-19.
It’s important to ask, how are you pivoting to add value?
“The days of selling just on relationships are over. You need to add value. You need to do things that other people aren’t. If they do not evolve with this business in the trends and security, cloud and whatever else comes down the road, they’re going to be left behind,” said Jim Campbell, managing partner at Opkalla.
We chatted with four technology brokers about their pivots, COVID-19, SASE, enterprise trends and business models.
Scroll through the images above to see takeaways from high-performing agent firms.
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