Crafting Tech Opportunities amid Economic Ruin

By Jessica Davis  |  Print this article Print

Business-technology consumers are slashing IT spending. Companies are laying off workers by the thousands. And economists, finally declaring the U.S. is in a recession, are forecasting a down year for 2009. Amid all this bad news, solution providers are finding a silver lining in the economic storm clouds.

While IT solution providers may be seeing their business customers push out payments or delay deals, they are taking the now-confirmed recession in stride.

"It's not like we are in the auto industry facing bankruptcy," says Ken Lamneck, Tech Data's president of the Americas, speaking about business and the current economy. "Our partners serve SMBs, and we are modeling low- to mid-single-digit growth for 2009—say 4 percent to 8 percent. As you go to the enterprise, there will be less than that."

And IT solution providers attending IT distributor Tech Data's recent TechSelect event in Washington, D.C., admit that signs of a down economy are evident, but are taking a wait-and-see approach to business. They say it's like a "storm watch."

"People are paying a little slower than in the past," says Angela O'Donnell, managing director of New York-based W. O'Donnell Consulting, which specializes in the publishing industry.

"And they are a lot more cautious with spending," says Jonathan Register, vice president of operations at Raleigh, N.C.-based Alphanumeric Systems, a solution provider that specializes in government customers.

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IT solution providers that have shifted their business to a managed services or SAAS (software-as-a-service) model say business has remained steady. "We've put ourselves in a better place," says Sam Ruggeri, president of Advanced Vision Technology Group in Hauppauge, N.Y.  "We haven't seen renewals tail off." 

"We are looking at pitching managed services to smaller businesses," says O'Donnell. "They are cutting back on IT staff and talking to us about how to fill the gap."

"We are seeing the government extending refresh cycles from three to five years on the state level," says Stephen Ale, chief operating officer at Fairfax, Va.-based Richards Computer, which also specializes in the government markets.

But projects are another matter, according to Ruggeri. And other solution providers agree.

"More projects are being put on hold," says Debra Candido, vice president of administration at Manhattan Information Systems. "I feel like we are in a storm watch.  Is the storm going to hit us? Or is it not going to hit us?"

But as projects are deferred and the same old equipment must continue to be productive, Ale says that Richards Computer has noticed a pick up in its break/fix business.

And as the "storm watch" continues, these solution providers are implementing strategies to weather whatever comes ashore.

"We are doing tons of partnering," says Ruggeri.

"We sent people to a customer training workshop," says Ale. "Customers are going to be in a terrible mood. We don't want to get pulled down with them."

"The last recession we didn't invest in training or new products, and that was a mistake," says Candido.

But even with threatening clouds overhead, solution providers still see some bright spots.

"There are two clients I have that still have budget money they need to spend this year," Ruggeri says. "I am cautiously optimistic."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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