2008: A Bright Outlook - More consolidation
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Keith Blake, president of Timpanogos Technologies, had another take
on the challenges with an acquisition strategy. "Consolidation is a
trend that will continue, but there will always be a place for the
smaller companies who drive innovation," Blake said. "Larger companies
will acquire for customer sets, and they do have increased
efficiencies, but they cannot drive innovation like a smaller company."
Blake said his company is happy being a small software development
business working in the education space, growing steadily and being a
place where employees feel valued, something bigger companies also find
hard, he said.
Getting credit
despite some worries in recent months that the mortgage crisis would
prompt lending institutions to tighten credit not only in the housing
market but also in other areas, the Outlook 2008 survey indicated that
many solution providers are relatively confident about credit
availability.
Thirty-two percent said credit availability is better than a year
earlier, and 47 percent said it was better than three years earlier.
Looking forward, 44 percent said they expect credit access to be better
in one year, and 50 percent said it would be so in three years. Asked
about credit sources, 52 percent named local banks; 26 percent,
national finance companies; 24 percent, vendors; and 19 percent,
distributors.
Dutkowsky speculated the lack of credit worry may be because many of
the respondents hadn't quite processed the potential ramifications of
the mortgage crisis. "That was the one issue in the survey that really
caught my attention," he said.
Tech Data, he said, will continue to provide credit to its solution
providers and has no plans to pull back. The same goes for Ingram
Micro, said Keith Bradley, president of the distributor's North America
operations, who added that his company has consultants in the field
working closely with solution providers, assessing their business and
doing analyses on cash flow, rather than just relying on spreadsheets
to make credit decisions.
Confident in that information, Ingram Micro expects no changes in how much credit it extends, Bradley said.
However, VARs are still feeling the pinch, according to Timpanogos
Technologies' Blake. "Credit is an issue and we are all feeling some
strain from that," he said. "If we want to expand, we need capital to
do that, and investors are nervous right now. We have looked at the
equity market, which I think will open up more, but there is always
risk in equity and companies will have to prove they have a good
business track record if they want to get capital or investment."
