October 5, 2014 -
A value added reseller is an IT vendor that takes an existing, separate product and adds their own value to it, usually in the form of a specific new application. The value added reseller therefore combines a new service with an existing product and is defined by the fact that they add features or services, usually to the benefit of end-users.
Value added resellers ultimately provide an integrated end product that constitutes a turnkey solution. Instead of a technology end-user having to assemble a hardware solution and then seek to combine that hardware with appropriate software, a VAR undertakes that process on the end-user’s behalf.
In the biometrics industry, a VAR can bundle its own software application with specialized biometrics hardware. Value can be added through the provision of professional services that include customization, integration, training, implementation and general consulting focused on the new hardware/software combination, but most VARs are not system integrators. Typically, a VAR differentiates itself within a marketplace through the technical expertise it brings in terms of developing a specific application for an existing biometrics hardware product.
Value added resellers have expanded their area of business in the biometrics sector since many original equipment manufacturers (OEMs) design hardware around specific industry standards. With standardization of hardware comes requirements for more individualized software applications by end-users.
Many biometric hardware manufacturers will differentiate themselves by enhancing the technical capacity of their products. As an example, a fingerprint or palm print recognition scanner may be more accurate than a previous version. The scanner most likely will also be compatible with standards enumerated by standard granting agencies. The reason for compliance is self-evident. Many security and law enforcement agencies demand that hardware function within specified parameters. Such standards will outline operational performance requirements along with outlining interoperability specifications. The interoperability specifications ensure that hardware can be directed in certain standardized methods by software. This is important since not all end-users will utilize their biometrics hardware in the same fashion.
VARs permit hardware, in effect, to be customized to the requirements of the customer. This creates a tremendous number of benefits, which includes the assurance that unique and secure software approaches can be developed for law enforcement and border security end-users using standardized hardware appliances.
Benefits for VARs and end-users are obvious, but benefits of the value added model also accrue to hardware manufacturers. VARs often represent lower upfront sales cost for a manufacturer since VARs are only paid when they sell a product. This allows manufacturers to lower their customer acquisition costs. Manufacturers can leverage VARs in order to lower the costs of having to find, hire, train and manage a specific sales force in a certain sub-sector. VARs are also advantageous since they provide outsourced scalability to a manufacturer’s sale effort. Once a product cycle is completed, a manufacturer that mainly relies on VARs need not shrink its sales staff. VARs are also important because they typically have a wide network of customer relationships, which means that manufacturers do not have to invest a tremendous amount of time, money and effort in building their own sale channels.
As a consequence, manufacturers can utilize VARs to increase their revenue streams, while their end-users concurrently benefit from added product functionality.