The Evolution (or Extinction) of the “Traditional” VAR
In biology, evolution is described as the “change in the heritable characteristics of biological populations over successive generations. Evolutionary processes give rise to biodiversity at every level of biological organization, including the levels of species, individual organisms, and molecules.” (Wikipedia says so.)
When a species fails to adapt to the changing circumstances around it, it will, over time, be rendered extinct.
Let’s apply biology to the devolution of “traditional” VARs, in the wake of the evolution of the cloud.
Over the last few decades, VARs survived by pushing “big boxes” to their customers. They happily grazed in the rich, fruitful pastures of margins produced by server, storage, collaboration and networking hardware. Until a drought, brought about by the cloud, fell upon them, and the land as they knew it dried up.
Sales of server and storage systems quickly declined, eroding their profit margins and reducing the amount of recurring professional services revenues tied to data center-related projects. This forced many VARs to eliminate the engineering talent in their herd, and push the surviving sales teams to the breaking point. The imperative for the herd’s survival became a continual grind to forage more business from a shrinking pond of customers still buying on-premises hardware solutions.
But, then there came a bit of hope.
Just before the sales of legacy converged solutions dropped to a point that would have made VARs completely rethink their dependency on hardware sales, hyper-converged and flash storage solutions gained market acceptance. VARs embraced the idea that hyper-converged and flash storage would be the saving grace of data center sales, and they raced these solutions out to their customers in hopes of delaying their customers’ inevitable adoption of a cloud-first approach to consuming IT.
And, yes. Many businesses adopted the hybrid-cloud model, leveraging hyper-converged products. But (unbeknownst to short-sighted VARs), they did so as a stopgap measure, while they evaluated their cloud strategy.
For “traditional” VARs, hyper-converged and flash solutions yielded only a fraction of the product and services margins that their “legacy” converged infrastructure systems had…but at least they were able to sell something.
Many times, the smart members of the VAR herds tried to explain to their leaders that a landscape shift was taking place, and they should all move to a more fertile cloud-centric approach. But, their views were often dismissed as detrimental to the VAR’s current way of life, causing the brightest of the herd members to leave, in search of more promising opportunities for their survival in the cloud- and SaaS-provider camps.
The industry transition to cloud and SaaS services happened more rapidly than anyone predicted. It’s still happening and expanding at lightning pace. The VARs that were not out ahead of this change are late to the game, and are now facing immense pain as they scramble to adapt their business model, while still trying to preserve their existing business. It is the evolutionary equivalent of replacing the engine on a plane in mid-flight.
How do we know all this? Because we were the herd members who tried to tell the cautionary tale to our former VAR leaders, and we were met with deaf ears.
So, we left these herds and formed our own, Pinnacle Technology Partners: a “born in the cloud” solution provider devoid of the weight of the old VAR ways; completely unafraid of the cloud disrupting our business; embracing the cloud as the way IT will be consumed for years to come.
We are confident in our mission to help businesses throughout their cloud migrations, guiding them effectively and safely through their journeys.
Now, here’s a question: Where are you in your own cloud evolution?