Doubt over mid-market application VARs

Technology One boss Adrian Di Marco raised doubts about the viability of VARs in the enterprise application mid-market in a statement issued on Tuesday.

He said the market was "being swamped by over 100 VARs competing against each other to sell overlapping or the same products" from Microsoft Business Solutions, SAP Business One and Oracle.

Technology One is a public Australian company that sells applications to enterprise and government customers and competes against the above mentioned suppliers.

Di Marco said that the reseller model in the mid-market is flawed.

"It is too small for vendors to remain profitable without compromising the needs of the customer.

Di Marco said that during the sales process, Technology One comes across numerous resellers all pitching one product to the customer. "The only differentiator these resellers have against each other is price and service -- and at the end of the day it’s the customer that's going to suffer."

Unlike competing vendors, Technology One owns the customer relationship, Di Marco gloated. "The buck stops with us. In the vendor/reseller model customers may leave themselves open to finger pointing, with neither the reseller nor the vendor taking responsibility for issues," he said.

Resellers also needed to sell more than one product and, should they choose to drop a product, the customer is left to find someone else to supply it or find a new solution, he said.

"The way that resellers make their larger profits is through their services arm via consulting, implementation services, customising solutions direct for customer needs or building additional modules.

"However, each time a vendor ships a new release of their product these customisations need to be rebuilt. Great for the reseller profit margins, but an ongoing and unnecessary cost for the customer," he said.

He concluded that "resellers are great" for smaller vendors or vendors emerging into new markets where they are trying to gain market share without major overheads. "However, the major multinational software vendors are showing no commitment to the Australian market by solely selling their products through a third-party."