VARs Are Moving Aggressively To Capitalize On Education Market Boom

Lester Keizer, CEO of Las Vegas-based Continuity Technologies, said he believes so much in the education market that he is building a separate standalone business to capitalize on the opportunity.

Keizer said a number of variables -- including affordable devices for students, the introduction of Common Core technology requirements, a recovering economy and tax base, scholastic fundraising and government assistance programs -- have created a perfect storm that is driving the education market renaissance.

The initial market boom is just the beginning, he added, because VARs are realizing that the market has grown so much, the landscape has changed. Over the past three years, schools have acquired the equipment, but now, that hardware needs to be maintained, Keizer said.

[Related: Controversial Common Core Boosting Opportunities For K-12 Education VARs]

"The perfect storm has turned into a natural evolution," Keizer said -- an evolution that has created opportunity around training, services and hardware refreshes for solution providers.

Keizer's spinoff company, Ed10x, focuses on training educators on how to use technology in the classroom.

Tiffany Kelly, CEO of Ed10x, said the company teaches educators -- particularly ones not familiar with the newer technology -- how to manage applications and educational websites in their classrooms. By doing that, she said, the company magnifies a big opportunity around hardware into an even greater one around services and training.

"We are just scratching the surface here -- it is no longer a 'box' solution, and we need to rethink how we are doing business," Kelly said. "It is not going away now. We have entered a different age."

Ed10x training focuses on professional development training aimed at making teachers and students partners.

"It is a shift in the dynamic," Kelly said. "The more tools we are able to give [students], the more they unveil a whole new level of that technology. The excitement is unlike anything I've seen before."

The education IT market has shot up from $17.1 billion in 2012 to a projected $19.2 billion by the end of this year, according to Framingham, Mass.-based market researcher IDC. Over the next three years, IDC projects, the market will shrink and level out at $18.5 billion by 2018.

Harrisburg, Pa.-based D&H has seen its K-12-related business increase a whopping 12 times over the past three years, said D&H co-President Dan Schwab.

Schwab said low prices on devices like Chromebook or Microsoft's Shape the Future devices are fueling the market growth, but that the real money for solution providers is in training and other services. "Just selling the point products is not a lucrative business model for the resellers," he said, noting that support of the technology is providing robust margins for partners -- "whether it be the services, wireless or reviewing their entire back office."

Indy Batra, owner of Ventura, Calif.-based MJP Technologies, said there is no better time to invest in helping educators migrate to fully integrated technology classrooms, given the growth he has seen in the education market over the past several years.

By the end of the year, Batra said, he expects to have sold 50,000 devices to school systems, up from 25,000 in the past several years and a mere 5,000 in the previous 20 years. With schools looking to replace 20 percent of the devices every year, Batra said, he sees a good business in selling devices.

However, some partners, such as managing partner Raymond Ribble of Torrance, Calif.-based Fusion Systems, said they believe there is more money to be made in layering services and management solutions on top of the devices in order to secure returning revenue. Fusion Systems has seen a consistent revenue spike over the past three years.

"If you work with [schools] in advance, they can have part of their budget ready for those big plans," he said.

Ribble added that "big plans," like the instillation of outdoor Wi-Fi routers and updating classrooms to new technologies, are where he has seen the biggest profits for his business. In the summer, Ribble said, he sees revenue spike a couple of hundred percent.

Later, as the revenue cools off during the school year, he turns his attention to management and services of the new upgrades, he said.

This year, Ribble said, he is looking into providing security platforms both inside and outside of the schools. "Kids are careless and extremely vulnerable," he said, and it is valuable for schools to have security and training that can keep students safe.

Allen Falcon, CEO of Atlanta-based Cumulus Global, said that although the margins on devices are thin, his company is seeing returns on providing training for staff.

In fact, Falcon said, Cumulus Global has designed programs that include service and support and run up to three years.

PUBLISHED JULY 6, 2015