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Solution providers adapt to rising gas prices

As rising fuel prices drive costs up, solution providers fight to hold the line on their prices to customers.

As rising gas prices drive up the costs of shipping and travel, value-added resellers (VARs) and consultants are finding ways to maximize sales without increasing costs.

Distributors like Ingram Micro in Santa Ana, Calif., are combating the rising fuel prices and related higher cost of operations by raising their minimum thresholds for free shipping and adding surcharges to orders, but these increased rates trickle down to the VARs they supply.

Channel partners know that passing those costs along to customers can hurt them in their competitive struggles, and so they are getting creative about holding the line.

"Our budgets aren't growing to accommodate the additional expenses, so we have to figure out new ways to keep our company growing without a proportionate increase in our budget," said Jason Black, director of consulting services at MSI Systems Integrators, an Omaha, Neb.-based IT services specialist.

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This can mean adopting some new, and some old, tools to help curtail traveling expenses. "It's unified communications and it's teleconferencing. These aren't necessarily new technologies, but companies are making a point to utilize what they've had," Black explained.

Rising gas prices drive better planning, more efficient travel

At MSI, this means canceling the annual corporate meeting to eliminate travel expenses and, instead, asking executives to record their presentations and post them on the corporate intranet.

Not only does this save money, Black said, it also allows more employee flexibility. "They don't have to get my presentation in one shot, because they can watch it online," he said. Another benefit is that new hires will be able to view the presentations as well, he added.

For consultants who need to be available on-site, the gas crunch is forcing them to streamline operations. "We're really doing a lot to curtail fuel prices by optimizing our drive paths. This way we can reach multiple customers at once, while driving less," said Michael Cocanower, president of Phoenix-based itSynergy, which specializes in providing IT infrastructure to small businesses.

He did, however, stress that remote management offers one solution that, while not all-encompassing, can alleviate travel expenses. "From our standpoint, purely tech, remote management has always been more appealing -- not only for the cost of fuel but also the time it takes to drive," Cocanower said. "The issue, psychologically, is that people sometimes need a real person, an actual person to see and talk to, so we're pretty careful not to ignore that psychological need."

In an effort to encourage remote solutions, companies like itSynergy are increasing the minimum amount of time for an on-site visit as well as coming up with new applications to better cater to their clients from outside their offices.

Often, however, simply developing new solutions isn't enough in an ever-changing market. "We're fighting the economic downturn by changing what verticals we're focusing on. For example, we used to work a lot with real estate. Today real estate is doing squat, but the medical field is really picking up. So rather than change our business model, we're changing our target market," Cocanower said.

Other companies, like Infinity Info Systems in New York City, are looking at the money crunch around rising gas prices more broadly. "We live in a global economy and people have to be much more connected. I think the younger generation is realizing that interconnectivity is a way to do better business," founder and CEO Yacov Wrocherinsky said. Infinity specializes in sales force automation (SFA), contact management and customer relationship management (CRM) solutions.

At a company where 20% of employees are working remotely, this means looking at new teleconferencing and infrastructure technology to connect employees who are located around the country and Europe.

As a VAR, Infinity has focused on the idea that technology is an investment, not an expense. "Customers are getting much more concerned about spending money, but we are in the business of working on efficiencies. So we are actually, in a certain way, helping people save money," Wrocherinsky said.

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