What Is a Value-Added Reseller?

Value-added resellers — also called VARs, or just plain resellers — are companies that combine computer components to build complete systems. For example, a VAR might take a computer chip, printer, hard drive, monitor and graphics software from different vendors, put it together, and package it as a specialized computer-aided design system.

In addition to selling hardware and software, most resellers also offer strategic planning, system design, implementation, training, asset tracking, technical support, wiring, database development, Web development, consulting and research. For smaller businesses, a VAR is generally the vendor of choice for designing, setting up and implementing customized computer systems.

A VAR may be referred to as hardware-centric if it derives most of its revenue from selling hardware or service-centric if a majority of its revenues comes from selling services.

What a VAR Isn’t

As with most things regarding technology, the scope of what VARs do is constantly changing. There are slight differences between VARs and similar types of service providers:

Retailers. Retailers typically add little value to a product, if any at all. When you purchase a PC, a printer and software from a retailer, you have to put them together and make them work. If you need any custom configuration, you’ve got to do it yourself or hire someone to do it for you.

System integrators and solution providers. While similar to VARs, system integrators and solution providers — companies like Andersen Consulting, Computer Sciences Corp., and the computer-consulting divisions of IBM, PricewaterhouseCoopers and Ernst & Young — are larger organizations that deal with bigger, more complex projects.

Application service providers (ASPs). These companies manage and deliver software solutions via the Internet so you don’t need to maintain your own computer network. All you need are low-end computers or dumb terminals. Some companies specialize in being ASPs, and some software companies offer application-rental services, especially in highly targeted vertical market niches. Some resellers also function as ASPs.

So how do you choose the right type of solution provider for your business? Select one that focuses on a specific area. For example, the business of a pure ASP is just that — providing application services. A software company providing ASP services has, as its main business, software development. A reseller that is also an ASP focuses on adding value to computer systems — ASP services are just an add-on.

Be sure to read the AllBusiness.com buyer’s guide The Scoop on Desktop Computers for your Growing Business, which will give you some useful advice and background info on the PC buying process.