An Economic Stimulus for the Channel

By Pedro Pereira  |  Print this article Print


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The federal stimulus package may be a bit misguided, but it can still benefit solution providers who know how to make the most of the deal's lesser-known incentives.

It’s good to know that a government that decides to hand out money when the economy goes south can also do something right once in a while.

By now, surely you’ve heard of the economic stimulus package the geniuses in Washington put together in the midst of escalating oil prices and the sub-prime mortgage mess. Washington reasoned that what people needed to cope with these problems was a tax refund of a few hundred dollars. Then all would be well with the world.

Of course, if you’re one of the 340,000 or so people who have lost their jobs since January, you will welcome an extra few hundred bucks, but the money won’t solve all your problems. You might have been better served with a proposal to extend unemployment benefits, which lawmakers rejected in favor of handing out cash.

But the Economic Stimulus Act of 2008 isn’t all bad. The law actually includes incentives that should prove beneficial to the channel.

No, it’s not extra cash.

If that’s what you were hoping for, I hate to disappoint you. No, what comes as a potential profit-making opportunity is a depreciation clause that solution providers can use in pitching new technology to customers.

This special depreciation allowance for businesses applies to computer equipment and software bought and installed this year. Business owners are allowed to deduct 50 percent of these expenditures in addition to the depreciation allowance the government already gives them as part of the regular list of tax deductions they can claim. So the point is, you can try to persuade your customer to make a purchase by arguing that what they buy will lose at least half its value immediately.

Odd, isn’t it?

But odd can be good, and that’s the case here. And it may be just the thing to get a customer who is hesitating about a purchase over the hump. In uncertain economic times, businesses tend to put off capital expenses. It’s a natural reaction, which may prove unwise in some cases.

While it makes sense to control costs during hard times, ignoring new technology or upgrades that may help a business’s bottom line is counterproductive. Data, its safeguarding and maintenance are critical to keeping a business humming.

Unless, of course, you’re still running the business on bits of paper stored in shoeboxes. Hey, it still happens.

From a solution provider’s perspective, however, it’s important to push the depreciation argument in a way that makes sense.

This isn’t a license for shoving unnecessary technology down customers’ throats. It’s an opportunity to make an equipment or software sale for which the solution provider can make an effective case that it will fulfill a real need and advance the client’s business strategy. The depreciation incentive easily becomes part of a discussion about return on investment (ROI) and total cost of ownership.

To make the argument effectively, the solution provider has to take the IT trusted adviser role to heart by becoming intimate with the client’s existing technology and current and future IT needs, and how they fit in with overall business strategy.

And just think of it this way: Chances are your small or midsize business customer likely hasn’t heard of this depreciation incentive, so you will look like a genius by bringing it up. And who wouldn’t want to buy something from a genius?

Sure, this depreciation stuff isn’t free money. Only Washington seems to be able to hand that out (after taking it from you, of course). But, hey, it’s something.

Pedro Pereira is editor of eWEEK Strategic Partner and a contributing editor for The Channel Insider. He is at pedro.pereira@ziffdavisenterprise.com.



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