VARBusiness 500: New To The List

There's a common thread that binds this year's 100-plus VARBusiness 500 newcomers: exceptional customer service. For FishNet Security, it means developing expertise in best-of-breed security solutions. For B2B Computer Products, it's about giving customers face time. These VARs are playing to win, and it shows in their numbers.

NTT Data Group (VARBusiness 500 No. 16), the biggest newcomer on the list, generated $6.15 billion in 2006. In its annual report, company execs said NTT aims to be No 1. in customer satisfaction "by anticipating future developments and adroitly responding to changes in market conditions and customer needs."

NTT has set its sights, too, on balancing its customer portfolio, which has typically consisted of a disproportionate number of public-sector players. Now the VAR's going after the industrial and financial-services sectors with a vengeance.

And if you think discipline and good old-fashioned hard work can't take you to the stars, think again.

It took B2B only three years to get onto the VARBusiness 500. Born in 2004, the VAR has been growing more than 150 percent every year since its inception. At No. 425 on the current roster, and with $34 million in 2006 revenue, the solution provider is on target to grow at that same pace in 2007, says Mike Theriault, president and CEO.

Column Technologies (No. 477), whose financials didn't even put it on the VARBusiness 500 map just 12 months ago, boosted its year-over-year revenue by 120 percent, from $12.4 million in 2005 to more than $27.3 million in 2006.

And some of these VARs don't even need high-profile advertising campaigns to make their marks. B2B's Theriault says the Addison, Ill.-based solution provider gets season tickets to all Chicago team games--the Bulls, Bears, White Sox and Cubs. "We spend a lot of time with customers outside of the workday. We bring them to games and take them golfing," he says. "We have a good story to tell and get the customers to listen. We're definitely not where we are because of a lot of one-time hits."

Gary Fish, CEO of FishNet Security (No. 186), lives by the same credo. The solution provider taps new accounts by forging expertise in best-of-breed security solutions, then working closely with customers to do business by the AIME acronym--assess, implement, manage and educate.

"What makes FishNet special is our services and support. We don't just push boxes," Fish says. "Sometimes when a VAR talks about focusing less on product and more on services, vendors cringe. But that doesn't mean we're selling any less. It just means that we're building vital services around those products."

FishNet's vendor partners certainly aren't worried. The solution provider has reaped accolades from several of its top-tier vendors--among them, Blue Coat Systems, Secure Computing and Check Point Software Technologies. (For more, read our profile on FishNet.)

"FishNet can go anywhere in the United States and help any customer out there," says Mike Valkar, area manager for the Midwest at Check Point.

Services comprise about 20 percent of FishNet's business today, Fish says, and the solution provider's goal is to raise that number to 30 percent by early 2008.

FishNet's story should be an inspiring one for anyone in the channel. Starting with barely two coins to rub together and a dream, Fish worked solo for awhile to build the business he started in 1996. In working with ISPs, he discovered the security problems inherent in providing Internet service to the masses. Fish met a Check Point rep and started selling the vendor's firewalls. The rest, as the saying goes, is history.

"I got in on the ground floor," Fish says. "Back then, you really had to sell security. Today, everybody knows they need it."

NEXT: Equally inspirational is the story behind Shared Technologies.

In 2004, when Shared Technologies (No. 148) spun off from Allegiance Telecom, president and CEO Tony Parella was adamant about building a solid cost structure under the new entity. He operated Shared debt-free, "instilling discipline" in his workers, he says. "My motto was, 'If you don't need it, don't buy it.'"

Then, when Parella saw that technicians were jumping ship after getting their certifications, he knew he had to stop "training the competition," as he puts it. That's when he set aside $1 million for one year, approached Global Knowledge Training and said the money was theirs for the taking. That deal brought down the cost of training dramatically--from $5,000 per course to about $1,200.

But Parella knew he still had to do more. So he created a two-part program for techies. First, a bonus of $750 to $1,000 awaited each course graduate. Then, "after a year of putting all that new wisdom into practice, the technician gets $2,500 to $5,000 as a retention bonus," Parella says, adding that Shared's voluntary turnover rate is at an all-time low these days. For the year to date, turnover at the VAR is less than 5 percent, one-third the national average, according to Parella. "The cost of losing service and support people is astronomical," he says.

The exec puts a premium on keeping his people happy. In 2006, Shared made the top 60 list of the "Best Companies to Work for in Texas," and he's shooting for a spot on the much-coveted Fortune Top 100.

Shared is growing its linecard, too, dedicating more of its product portfolio to converged IP solutions than ever before. Today the Coppell, Texas-based VAR offers telecom solutions from Nortel, NEC, Mitel and Tandberg, and the company recently signed on as a Microsoft distributor.

Parella takes pride in Shared's service profile, saying the company covers 41 markets across the United States, receives sky-high satisfaction scores on customer surveys, seamlessly blends organic growth with acquisitions and is on target to ratchet up its revenue by more than 50 percent from 2006 to 2007--from $231 million to $350 million.

So give the 113 VARBusiness 500 newcomers a hearty welcome; chances are they're only going up from here. They're an irrepressible bunch--driven, innovative and diligent. Best of all, their stories reiterate for up-and-coming channel players a message career and business coaches have been spreading far and wide: Do what you love and the money will follow.