Does the MIS Group demise spell the end of the Super VAR?
On July 6, 2009 many in the Sage community were shocked to learn that Dallas Texas based MIS Group had not only disclosed that they were disbanding but on the same day of the announcement they turned their phone systems into auto attendant mode advising their customers to call Sage for support.
Sage’s Business Partner of The Year for 2007 and 2008 and Accounting Technology’s #10 VAR on the VAR 100 had essentially gone out of business leaving employee’s, clients and the Sage community scrambling for answers.
The super sized VAR, which had grown by acquiring several Sage Business Partners, had apparently completely shut down which left all of their customers in the lurch. Whatever the explanation – financing problems were mentioned on the web site – the end result was the same and the company left hundreds (and perhaps thousands) of employees and customers in the lurch.
While details are still likely to emerge in the coming weeks – this surprise shut down may lead some to question whether what’s known as the “Super VAR” may now be defunct as a business model.
Conventional wisdom has held that by pairing up with a larger VAR that customers and consultants had much better protection against a sudden economic downturn. Instead what we’re seeing is that perhaps the opposite is true. Are larger VARS less able to react to unfavorable economic climates?
This seems like it might be the case especially where operations are centralized and not distributed out to local offices which continue to run their own businesses.
Instead the business model that I think makes the most sense is still the pairing up of VARS. Except I firmly believe each local branch office must manage themselves for profitability and share (but not totally rely upon) any one member or VAR for all fo their resources.
In the coming few years I expect to see such poolings of resources where the “best of the best” in VAR organizations form affiliations that pool experiences in a distributed manner with each office bringing a skill set to the organization. Perhaps gone forever are the days where one VAR buys up competitors and houses them all under one centralized roof.
© 2009, Wayne Schulz. All rights reserved. Formed in 2005. the 90 Minds Consulting Group is a collaboration of 100 Sage partners who independently join together online in a 24 x 7 private communication network to solve difficult issues for their customers. The group is not affiliated with Sage and our collaboration provides for unparalleled member access to early warnings of bugs and other issues which members in turn are encouraged to use to provide an exceptional customer experience.
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Comments
The demise of MIS Group should be viewed accurately. It is not an omen of how VARs should be structured in the future. It is simply an exercise in bad management. Should we stop making cars because General Motors can't make money? GM has had bad management for a couple of decades. Current economic factors are sijmply hastening the inevitable.
So it is with MIS Group. The CEO knew how to put together a finance deal, but he didn't know how to run a sales organization. And he chose not to listen to the people in his company who did know.
"The CEO knew how to put together a finance deal"… really? I looked at the executive bios of the MIS Group and noticed a few MBAs and a few CPAs. Hard to believe they didn't teach 'how to read a balance sheet 101' at the schools these folks attended. Put simply – no one is exempt from having the chickens come home to roost. Too much debt, too much leverage, too much optimism – no cash, no equity, no idea of how to grow while maintaining a sound balance sheet. I'm sure greed comes in somewhere. All those MBAs, CPAs, VPs, etc were probably earning a fat paycheck – they should have cut back last year.
RIP MIS. Good luck to all the staff left without a job.
Folks, everybody wants to find blame somewhere. The problem is simple.
Too few deals with too many vars. Thus too many vars are being stupid and discounting to a point of self fulfilling prophesy. I'm competing with bozos now charging less than we did in 1991 and doing so from mid-town manhattan. Then lying through their teeth and quoting about 20% of what is really required to do the job. They will win the deal, go 2 to 3 x over budget and maybe get fired, but the damage is done.
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