VARs Tap Marketplace to Boost Their Revenue

OnForce forges strategic partnerships with channel companies to create and deploy an on-demand IT workforce for business customers. Some view the arrangement as a viable business model for the future.

September 16, 2008

Alison Diana

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Solution providers, often interested in partnering with non-competitors in different geographies or areas of specialization, are increasingly turning to channel marketplaces such as OnForce.

Founded four years ago, OnForce was designed to enable VARs and IT service firms to find skilled, contract IT professionals in the United States and Canada. To date, OnForce has successfully completed more than 750,000 work orders and has more than 5,000 service buyers and 12,000 technicians from numerous fields, according to officials with the Boston-based firm.

VAR membership is free, said Shane Bell, president and owner of ITechWest Solutions , which joined OnForce about five years ago. ItechWest's revenue generated from OnForce reached $160,000 last year, compared with about $1,500 in its debut year, according to Bell. “It’s allowed us to expand,” he said, noting that OnForce-based fees account for about 85 percent of the Midland, Texas-based firm’s total revenue.

“I think we’ve pretty maxed it out at that 85 percent, because we’ll always be out looking for new business. We’ve built such a relationship with our buyers that a lot of buyers call us first and check our schedules before they create the work order,” he said. “We’ll add staff to meet demand for OnForce work orders. We manage staff based on our workload from OnForce.”

OnForce has succeeded where some previous marketplace pioneers failed, in part due to the organization’s neutral stance, said Paul Nadjarian, senior vice president of marketing and product.. Unlike other marketplaces that have spun off from vendors, OnForce does not sell any product or services, he said.

The timing was right, too, as companies felt more comfortable outsourcing and partnering; high gas prices discourage technicians from traveling outside a certain mile radius; and VARs, and their customers, do not want to hire more people than they need.

“People are taking a look at this model, the model of variable, on-demand workforce vs. a W2 workforce. They’re taking a look at that model and saying, ‘Not only is this a viable model, but this is the future,’” said Nadjarian.

While there are no membership or subscription dues, VARs pay $11 per work order they create. The client pays for the services through OnForce, which deducts a 10-percent commission, and pays the solution provider. “It is free to sign up for OnForce and free work, basically,” said Bell. “They send you work when there is work in your area.”

Part of the marketplace appeal is the elimination of redundant tasks, said Nadjarian. “I think we identified something within the industry that was very, very inefficient. You had to find the right skill and the right technology at the right time. It was not only difficult to do, but costly and time-consuming. We’ve made an inefficient process and made it very efficient.”

OnForce recently reached an agreement with IT services management software developer Autotask to integrated its web-based business management software with OnForce's system.. “While we have a pretty large installed base, probably over 20,000 users of our system, they still have a need for outsourcing to other people. We wanted to make it easier for them to outsource… right through our software,” said Bob Vogel, chief marketing officer at Autotask. “This allows the people who are using our software to mark the service tickets they create internally and, with a click of the button, have it submitted into OnForce's network."

TAGS: developer,services,software,VARs

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