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2008: A Bright Outlook

If the economy is about to take a dive, solution providers don’t seem all that worried. Nearly three-fourths of channel companies polled in Ziff Davis Enterprise’s Channel Outlook 2008 study said they anticipate higher profits in the next 12 months, and many expect to achieve that with new customers, a sharpened focus on solution sales […]

Written By: Pedro Pereira

Jun 2, 2008

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If the economy is about to take a dive, solution providers don’t
seem all that worried. Nearly three-fourths of channel companies polled
in Ziff Davis Enterprise’s Channel Outlook 2008 study said they
anticipate higher profits in the next 12 months, and many expect to
achieve that with new customers, a sharpened focus on solution sales
and services, and increased business with existing customers.

Despite economic indicators pointing to a downturn—including the
ongoing mortgage crisis—it seems many solution providers are feeling
immune to macroeconomic factors as they work to diversify their
portfolios with a strong emphasis on sales and services offerings while
de-emphasizing stand-alone product deals. The technologies of sharpened
focus include things such as security, application integration and
mobility Despite a weakening economy, solution providers expect higher
profits in the new year.

The survey results point to the channel’s overall efforts to
emphasize value and specialization, said Bob Dutkowsky, CEO of
distributor Tech Data. As solution providers find some level of
economic security by seeking out higher-margin, higher-value
specializations, they naturally feel better about business prospects,
Dutkowsky said.

"Any time companies anticipate improved profitability, that is a
good thing because that says they’re focused on adding value rather
than driving down prices," he said.

Such is the case with Greg Starr, owner of I.T. Works, in New
Boston, Texas, who, despite some trepidation over possible spillover
effects from the mortgage crisis, said he feels good about the coming
year.

"We’re moving more and more into managed-services recurring-fee
contracts," Starr said. "The more we do that, the more profitable we
are becoming. We’re taking the business to the next level with the
client." Tiffani Bova, an analyst at Gartner, called the focus on
profitability, rather than top-line growth, a good sign. "If VARs are
starting to look at real profitability, then it means we will have a
healthier channel," Bova said. "It’s good to see that they are tracking
real profitability, adding in costs for time of sale, logistics,
support and other services, and not just working from cost of buying to
cost of selling."

Diane Krakora, president and CEO of analyst company Amazon
Consulting, said the channel is an optimistic place in general. "It’s
not just the VARs who are optimistic," Krakora said. "The vendors are,
too. We are hearing nothing but great expectations as vendors
increasingly look to investing in their partners and partner strategy."

2008: A Bright Outlook

Pedro Pereira

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