A VAR, or Value-added reseller, is a company that adds features or services to an existing product and then resells it as an integrated product or complete “turn-key” solution.
VARs can add value to both software and hardware acquisitions. For instance, you might know that you need a PC but do you know if you need 32-bit or 64-bit? Do you need a “home” operating system or a “professional” operating system? What about the same-day-onsite warranty versus the next-day-onsite warranty? These questions, and tons more, are easily answered by using VARs. The reason is because VARs specialize, both in technology and, at times, in the legal industry. This specialization allows a VAR to know what will best suite your needs and ambitions, giving you the best bang for your buck.
Here are a few benefits of working with a a VAR:
- VARs offer specialization. In other words, they’ve made the investments in location, infrastructure, systems, training and personnel that allow them to research, test, and implement technology solutions more efficiently than your firm can do independently.
- Some VARs specialize within certain verticals like, for readers of this blog, the legal industry. This allows a VAR to reallocate spending from, say, manufacturing, healthcare, financial services, etc., and instead focus those scare resources on just the legal vertical. This specialization allows the VAR to eliminate unnecessary costs (costs that don’t offer you value, such as investments they might have made in the medical vertical) and translate those savings to you.
- VARs have advantages in economies of scale, which drive savings to you. For more about this topic, read our post about economies of scale here.
- VARs transfer the burden of needing tons of IT knowledge from your company to theirs. This means you don’t need to spend your time researching the solutions available, getting trained, attending conferences, and so on. They absorb this burden and cost and you are provided with quick, detailed and accurate knowledge on-demand as a service. Want to know what server is right for you? A thirty minute meeting with your VAR might save you 30 days of research and lost billables.
- VARs have a more thorough understanding of all of the moving pieces in your office, not just the piece you’re buying today. A thorough understanding of the hardware, software and services in place, and how each complements the other, is especially vital for large projects such as practice management or accounting software suites. Here, you don’t lose a couple grand with a poor decision, you lose a couple hundred grand.
Aren’t VARs just “middle men”?
Some people think of VARs as the “middle man”. It is true, in a sense, that VARs are middle men related to the sale of business software products like Amicus or Time Matters or hardware products like Dell servers. That said, however, middle men play an essential role in both the software acquisition process and the economy as a whole.
Think about a writer who enters into contract with an agent of some sort in order to represent his or her interest in a publishing deal; some agents can charge up to 15% of all royalties and yet, despite this, writers still enlist the services of agents. Why? Or take, for instance, the average homeowner who enters into contract with a realtor, at a cost of 7% of the entire gross selling price of a home; here, the homeowner, as in the case of the writer, is utilizing a middle man. Why?
In a market economy, “…goods tend to flow to their most valued uses, and goods are more valuable to those who can handle them more efficiently at a given stage… the end result is a more efficient economy, where goods move to those who value them most. Despite superficially appealing phrases about ‘eliminating the middleman,’ middlemen continue to exist because they can do their phase of the operation more efficiently than others can. It should hardly be surprising that people who specialize in one phase can do that particular phase more efficiently than others.”
In other words, if a writer has the choice between $1.0 million in publishing royalties if securing a publishing deal personally, or $2.0 million in publishing royalties if contracting with an agent at the cost of 15% of total proceeds, the most favorable route is the latter, since 100% of $1.0 million is less than 85% of $2.0 million.
VARs have numerous advantages that firms can leverage to their benefit; these advantages add value to the transaction, meaning that while you pay some money for the advice, you’ll still make more money than you would have pursuing your initiatives independently of that resource. For instance, one of the most direct advantages of a VAR is that working with a local company, who has an onsite presence, versus working directly with some national or international software vendor who does not. This is usually preferred by small to midsized organizations because there is local accountability, faster support, and specialization (in knowledge of local rules, regulations, best-practices, etc.). Here, a law firm can get better value from their software purchase by using a company specialized in their region rather than “eliminating the middle man” and purchasing directly, which does not provide any cost savings anyway!
VARs add value in a number of ways. Ultimately, if a law firm leverages specialized talent (i.e., a VAR), they will spend more effectively and operate more efficiently as a whole. The end result is a more efficient use of scarce resources and a better bottom line.