2016 IT Channel Outlook: Optimism and Obstacles

As far as the 2016 IT channel business outlook is concerned, the coming year is starting to look like the usual best and worst of times for the channel.

On one hand, there are more emerging technologies beginning to find mainstream acceptance than in any time in recent memory. This bodes well for mobile and cloud computing solution providers in the near term and longer term for channel companies skilled in big data analytics tools and techniques and Internet of things (IoT) applications.

On the downside, pressure on both product and services margins has never been greater. Couple that with a massive disruption in terms of how IT services are now being delivered via the cloud, and it’s clear that 2016 is shaping up to be another challenging year for the channel.

For example, a new survey of nearly 100 organizations in North America finds that more than 70 percent of respondents said their annual IT budget has stayed the same or even decreased over the past three years. Fewer than 15 percent expect to see any increase in the next three years, according to the study based on a recent survey conducted by Spiceworks on behalf by ioFABRIC, a provider of storage systems. Areas that are expected to be affected most include reduced hardware spending (71 percent), reduced software spending (42 percent), cutting back on outsourcing and professional services (42 percent), and reduced human resources spending, including salaries and training (29 percent).

Although some of this downward spiral reflects the shift to the cloud, the downtrend has been consistent for several years, said Andrew Flint, vice president of marketing at ioFABRIC. “The impact on storage, in particular, has been significant, even though organizations have to store more data than ever,” Flint said.

As a result, it’s never been more critical for solution providers to pick their spots. To that end, a survey of 50 IT organizations conducted by IDG Research on behalf of WEI, a solution provider based in Salem, N.H., finds that the top four IT priorities for these organizations is backup and recovery (42%), application development (40%), network security (36%) and private/hybrid cloud computing (34%).

The key to success for any solution provider is to invest and develop IT skills in advance of when customers actually need them, said Jennifer Burl, senior director of product marketing and management for WEI. For that reason, big data analytics tools and techniques and IoT applications are top-of-mind right now, even though the adoption of those technologies is occurring at markedly different rates, Burl said.

“Right now, a lot of organizations are focused on getting value out of their data,” Burl said. “The Internet of things is a little further out.”

Seth Robinson, senior director of technology analysis for the IT industry trade association CompTIA, noted that technologies, such as mobile and cloud computing, are just now moving out of the early adopter phase. As a result, solution providers that invested in these areas in 2015 stand to benefit from mainstream adoption of these technologies in 2016.

“It comes down to making investments in the right places,” Robinson said. “For many organizations, the cloud and mobile are just now becoming a reality.”