Traditional VAR’s have a choice … for now

In the collaborative computing space VAR’s have a choice about whether or not they will adopt Microsoft’s SharePoint technology. This rings even more true in the Enterprise Content Management (ECM) space because of where SharePoint started.

Isn’t there always a Choice?

image Yes. VAR’s as well as customers always have a choice. In the ECM space there are competing offerings from the Legacy ECM Vendors (aka The Big Three) and from Open Source Software (OSS) vendors. However, these choices have a limited shelf life. Their expiration date is approaching.

This is NOT an indictment against the Big Three or the OSS vendors. Of the two it’s pretty clear that the OSS vendors will have a business in ten years. I’m not so sure the Big Three will. At least not in their current modes of operation. The Legacy ECM vendors are run by smart people and they will shift and adapt their business in order to stay in business. My guess is that they will adopt more of an Open Source model – perhaps even buying a few of the top OSS ECM vendors. Consolidation Happens

What does this have to do with VAR’s?

Will ECM VAR’s Continue to Thrive?

In my opinion … No! Not in their current form. Will they survive? Sure. Will they thrive like they used to in the go-go days? No.

Traditional VAR based business with Legacy ECM solutions have a high touch and high price model. This has served them well. More importantly it has served their customer base well. In business the customer is king and in the past they have chosen to open their wallet to buy traditional ECM systems. Customers will continue to vote with their wallet. I predict that customers will start to cast a different vote. I predict customers will begin to demand that their vendors help them to use the products they already own. In this case … SharePoint.

What? Why Do I Say This?

imageAccording to Gartner Group 80% of companies are expected to be using SharePoint by 2010. The definition of “using” can vary, but the fact is --- SharePoint is Pervasive --- and will continue to gain more traction in every market segment.

What’s the Tipping Point?

It’s the Deal Structure.

A typical deal for a traditional ECM VAR is in the $500K range and has a high level of customer touch. A typical SharePoint deal is in the $50K range and often requires minimal customer touch.

Of course, your mileage may vary and there are likely dozens, even hundreds, of VAR’s that have different deal structures.

Traditional ECM VAR

SharePoint Based Solutions

Deal Size $500,000 $50,000
Customer Touch High Low

So, the math is pretty simple. To achieve the same revenue 10x more deals will need to happen. Most traditional ECM VAR’s don’t have the infrastructure to support this model today. They’ll need to change the way they sell, the way they offer service and support and probably the way they compensate the teams.

Is this the right model?

image That’s not for me to decide. Customers are already making the decision and will continue to do so. My point is that traditional VAR’s have a choice. They have a choice to embrace the SharePoint storm or be pushed aside by the surge of up and coming SharePoint partners.

Go Hybrid or Die

Can they survive? Sure. My prediction is that the traditional ECM VAR will need to either go with a hybrid engagement model or by going wholly into the SharePoint world. Customers are asking for it. So, it’s not a huge leap of faith to start looking at SharePoint as a Business Platform. I suggest baby steps. There are plenty of training options to get started.

It’s just a matter of time. There might be a five year window for traditional ECM VAR’s to do nothing. However, they have a choice to make. Whether they make it now or whether they allow their customers to make it for them … they do have a choice.

What do you think?

  • Do traditional ECM VAR’s have a future?
  • How do you think they will morph to new markets?
  • If not SharePoint then what?

I’d like to hear from you. Please add your thoughts and comments here or contact me via any of the channels below. I look forward to hearing from you.

Sources: Gartner Group

clip_image002About The Author:
I have spent the better part of the last 20 years working in various aspects of the ECM industry. I am currently with Kodak as a Director of Business Development. In my past I have spent time at
Kofax, Microsoft, FileNet, K2, and at Captaris (which was acquired by Open Text in Nov 2008). Prior to that I was a Unix VAR running my own company. Follow me on Twitter, check my blog, send email or find me on Facebook or LinkedIn.