On The Record with Robert Cohen & CharTec's CEO Alex Rogers 10 June, 2010 By Robert M. Cohen, president and business editor, Integrated mar.com

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The IT industry is confused and psyched by all the new buzz words, recurring revenue models, new service models, and a whole new way of selling technology to the SMB marketplace. Like a super hero out of comic book, Alex Rogers, the CEO of ARRC Technology and of CharTec® seems to have the winning solutions and he is willing to share his formula with VARs.

I met up with Alex for an On The Record interview. I strongly urge everyone in the channel to read what he has to say. More importantly, I urge every reseller, MSP and Trusted Business Advisor to take notes. In my opinion, Technology as a Service is the way of the future. Alex can help you get there.

Robert: What does ARRC Technology do?

Alex: ARRC is a managed service provider of technology solutions. Since 1992, the company has specialized in the design and maintenance of computers, networks, phone systems and data cabling. Our target is the SMB market with a concentration on ag, oil and manufacturing. We've been listed twice on the INC 5000 and MSP Mentor Top 100. Channel Insider also named ARRC a Master MSP in 2009.

Robert: What is CharTec?

Alex: It is a Beyond HaaS (Hardware as a Service) program that helps VARs easily obtain custom equipment and licensing for their clients, provides the necessary sales training for the VAR, and continues to support the VAR organization after the sale is complete with warranty and technical support. Bottom line, we help VARs increase their annuity agreements, create client loyalty and improve their profits through hardware and education.

Robert: From a VARs perspective, how do all the new services fit together (managed services, virtualization, virtual infrastructure, data centers, convergence, private and public clouds, managed services, SaaS, HaaS, Infrastructure as a Service, software licensing, managed print services, etc.)?

Alex: All these new services allow a VAR to truly offer a complete solution for their client. The best part is a VAR doesn't have to specialize in all these areas-- they can build relationships by outsourcing with whomever they feel is fit. By offering all these solutions with a onetime flat fee to the end user instead of a la carte, the client will have a different perceived value on each piece of the offering. If the right outsourcing relationships are established with the correct vendors, the VAR can concentrate more on the trusted advisor role and take the time developing business solutions for their clients that will save efficiency, make profit, solve issues.

Robert: If VARs are outsourcing the hardware and software, why will customers still want to work with them?

Alex: Everything is invisible to the Client with CharTec. All hardware arrives private labeled with the VARs' logo. So, in essence the client only sees the relationship with the VAR. I would suggest that all your outsourced solutions have that same option. Also remember if you are truly taking on the role as a managed service provider, your Clients never have the need to talk to the outsourced vendors. You are managing the technology relationship.

Robert: What is Hardware as a Service (HaaS)?

Alex: Generally speaking, the MSP provides all necessary technology services including the hardware and builds this equipment cost into their total monthly fees. This turns what is normally a capital expenses into operating expense. The biggest issue most MSPs have delivering HaaS is acquiring the hardware and its associated financial strain.

Robert: Alex, how did CharTec get started?

Alex: The birth of CharTec came as a need for a client in 2002. This client was our first Flat Rate relationship. We were so excited to sign the agreement, we made a fatal mistake. We failed to take into consideration the crappy state of their network. Total failure for us. Fifty plus tickets a week on a 20 user network. Long story short, the Client wouldn't buy anything new and I didn't want to lose the contract. So I just brought in machines to replace the dying ones, and increased the monthly commitment a bit for taxes. Bingo. Everyone was happy. CharTec was born. We then took this model to our sales team and became very successful over the next five years with our MSP practice, ARRC Technology. In 2007, we took the idea to the Channel as a product and in 2009 CharTec became its own entity.

Robert: Why is HaaS a great opportunity for VARs?

Alex: There are many reasons. I would say the top three are:

1. VARS eliminate one more "deal killing" objection when presenting a managed service deal--The "Upfront Project Costs". The hardware can be part of the entire solution now.

2. Client retention and Stickiness. With HaaS, it is a little more difficult for a client to leave you for a less expensive competitor. The hardware is part of the relationship.

3. Standardization of clients' networks. This is what we preach. The main key to running a more efficiency managed service practice is supporting the equipment you know works and not just taking on old hardware because the client cannot afford the upfront cost.

Robert: What about the number one fear of VARs & will customers abandon VARs and go direct to other sources such as direct to cloud providers, data centers, big box stores, utility providers, etc.?

Alex: VARs know their clients on a personal level. No solution will ever replace the personal relationship a VAR must maintain with a client. I have always said, people like doing business with people they like and trust. The Cloud is happening and is inevitable. But again, if you are truly a trusted advisor and MSP you should be researching, establishing and managing relationships with the right cloud vendor now on behalf of your clients. And, only move them when they {the client} are ready.

Robert: What will the VAR of tomorrow look like?

Alex: I see the VAR of tomorrow being much more holistically, future focused with each client-- focusing more on Latent Needs in Technology than just reacting to the Active Needs that are immediately apparent. Let me elaborate, by the VAR uncovering latent needs for their clients they have switched from a "Saving the Client Money" relationship to a "Helping the Client Make a Profit" focus. The side effects will be a higher demand for the VAR's unique offering, client loyalty and higher profits for themselves. These "VARS of tomorrow" will no longer be the traditional Network Salesman / Technician type people, but more of a professional that can enter into an organization by asking the right questions, focusing in on potential business profit issues and deliver unique solutions that will separate themselves from everyone else in their market share.

Solution seekers like this build confidence, trust and loyalty. And, their clients like them! Let's face it-- at the end of the day, if a client doesn't like you they will find any reason not to do business with you.

Robert: How many of the VARs do you think are capable of moving into that solution provider stage?

Alex: The investment of time and money required for education prevents many VARS from going wide open with this model. It's a big change over the traditional of way of selling. Not everyone can do it. You have to want to do it. I can see the companies that do change to this model and becoming successful at it immediately start acquiring smaller MSPs --just to tap into the latent needs and farm their clients that have yet to be uncovered.

Robert: So at most about 10% of the whole industry?

Alex: That sounds about right. It takes work to make this model work. They just have to want it and be prepared to go for it & they have to get educated. Most of them have become complacent and are going to watch the opportunities walk right by them.

Robert: So, let's get more granular, what will this solution provider look like?

Alex: This Solution Provider will be a company with a leader that leads--not work on networks. He will establish relationships with key partners to offer a solution stack that will allow them to build a client technology road map over the next two years. This Solution Provider will constantly be educating his team and changing and adding to his stack as technology moves forward. Instead of a company filled with technicians, I can see more of an office filled with advisors leveraging vendor relationships-- becoming more of a sales organization rather than a technical organization.

Robert: What are you doing to help make VARs into Super VARs?

Alex: CharTec is only successful when our partners are successful. As cliché as it may sound, it is up to us to provide them with all necessary answers. Not only hardware for any Haas Solutions or Projects, but going beyond that by assisting them with actual business acumen-- from Marketing, HR, question based selling, processes and best practices. Remember, our MSP ARRC Technology has been quite successful in our local market. So, we let our Partners have the "Keys to Our Castle." And once in, they can engage any of our team leaders with any questions they may have. We give them our entire playbook, from project management to how to compensate a sales person.

Robert: What advice do you have for VARs?

Alex:Surround yourself with smart people. Give them the power to make decisions and go out on a limb every once in a while. If they fail, let them learn from their mistakes. Get the right people in and let them do their jobs. .

Robert: Any great words of wisdom for Vendors?

Alex: If you are selling on price, you are not selling. You are bidding. My 11 Year old son Riley can sell anything with the lowest price. Learn how to ask questions and find those Latent Needs.

From here, the conversation ended with us going back to the part about the Trusted Business Advisor program and how it is ideally positioned to educate SMB end users on the advantages to them of all the new services. Naturally, it ended with a follow-up meeting to discuss how we can work together to support VARs better.

Robert Cohen, a passionate and enthusiastic channel advocate, is the founder of the ChannelLine Advisory Council as well as president and business editor of Integrated mar.com, publishers of Channel Advisor, eChannelLine and ConnectIT. Since 1980 he has worked with 350 IT vendors, distributors and resellers in developing and implementing strategic go-to-market programs, using a variety of direct, channel and hybrid models. Integrated mar.com, in conjunction with Robert has created the Trusted Business Advisor program.

Robert can be reached at 1-800-465-2059 or by email at rcohen@integratedmar.com.