The terms “value-added reseller” and “systems integrator” are commonly used in the IT industry, but many people don’t understand what they mean. Even when VARs are fully explained, the difference between a value-added reseller (VAR) and a systems integrator is sometimes blurred.
A value-added reseller (VAR) adds value to the products it purchases from manufacturers by specializing in niche markets or product lines. The VAR system integrator business model includes three layers of distribution:
- Manufacturers provide the VAR with price breaks for volume purchasing, marketing funds, sales commissions, and other incentives for promoting their products.
- VARs resell the product or market it to customers through independent channels at a markup.
- Customers pay the VAR for its services, including hardware and software installation, training, and warranty support. This model is called “value-added” because the reseller adds value to the products before reselling them.
On the other hand, a systems integrator normally doesn’t buy products from a manufacturer and resell them to customers. Instead, a systems integrator contracts with its clients for a fee for supplying hardware and software products, then install and integrate those products into an overall system that meets or exceeds the client’s business goals.
Systems integrators, unlike VARs, don’t normally compete with their clients’ customers for sales. When a systems integrator is sold to or merges with another company, its ongoing integration work usually continues without interruption. Companies that provide VAR and SI services are known as “value-added resellers systems integrators” or VARSI’s.
In addition, a VAR will normally have an ongoing relationship with the reseller while the SI only sells its services to different companies. A value-added reseller (VAR) system integrator has some of the characteristics of both.
Here are some examples of differences between value-added resellers (VARs) and systems integrators:
VAR System Integrator
-Buys products at wholesale prices, then resells them to customers at a markup
-Usually doesn’t buy products directly from manufacturers
-Resellers offer one or more specific technologies while generally offering an array of independent products
-Does not normally purchase products directly from manufacturers; the reseller only provides the integration of manufacturer equipment and systems
-Does not sell products to end-users (only to VARs or other SI’s)
-Integrates information technology (IT) hardware, software, and services into solutions that meet customer needs. The integrator’s goal is to deliver a complete solution and typically works on one customer site at a time.
-Provides a wide range of products and services from various manufacturers, which can include hardware, software, or networking
-Is sometimes referred to as a solutions provider
-Offers one product line at a time
-Purchases products directly from manufacturers as well as through independent distributors
-Resellers offer technological breadth instead of depth in any given area
-Integrates technology products and services to solve specific business problems for one customer at a time
-Provides integrated solutions that can include software, hardware, networking, or other technologies; systems integrators usually work with only one type of system (such as servers) per project.
Final Thoughts on Resellers vs. Systems Integrators
When choosing a reseller or system integrator, it’s important to determine each company’s level of service and expertise in providing products that meet specific business needs. Resellers can provide the best reference for the types of products they carry, while systems integrators are better qualified to discuss their project experience. In addition, it’s important to consider whether a VARSI is better suited to meet the needs of your company and its current or planned technologies.