How does your garden grow?

What must the channel do to ensure the green shoots of the new economic season appear in their own businesses?

Any green shoots that appear must be cultivated correctly

Rumours are flying of a turnaround in the recession but it may be too soon for the channel to breathe a sigh of relief. Recessions can cause more trouble on the way out than on the way down, with business failures tipped to increase and unemployment ­ an indicator which tends to lag economic events ­ still rising.

Yet those who are not fit for the starter’s gun when it finally fires will surely fall behind. Scott Nursten, managing director of Bailey Teswaine integrator s2s, says companies need to ensure they can scale up for future economic growth but without putting their necks on the line.

It is a delicate balance, but s2s is trying to ensure it gets things right by taking its pulse every step of the way. This means talking to staff, monitoring business activities and operations and acting on what it finds.

“Make sure you have those staff conversations,” said Nursten. “They need to know whether you are having a good month or a bad one, for example. Many staff at s2s have come from other businesses where they were never told anything.”

Effective communication
Keeping staff informed means inspiring trust, loyalty and keeping them on side. If staff feel that senior executives are keeping them in the dark then they are less likely to still be in the company when needed.

In addition, there must be enough “headroom” to allow for growth, but not so much that the company is wasting resources. For example, 20 per cent “spare” could be a good average for sales.

“[To calculate it] you need to monitor various standard metrics, like sales per head and revenue per head, sick days and so on,” Nursten added. “A good CRM or ERP system makes it very easy.”

Graham Wylie, group product marketing director at distributor Steljes, said it was crucial not to cut corners. VARs that make too many redundancies, for example, are likely to find things really tough as the economy picks up.

Clever resellers should watch their markets and end-user behaviour even more closely to pick up changes in technology or strategy and to see how the recession has affected them. This knowledge can then be used as a pointer for resellers’ own business development.

Some sectors may go on growing while others may slide. Corporate sector investment is likely to pick up while the public sector enters its own recession, he noted.

“Although there will be opportunities, say, in healthcare, it might get very difficult for anyone who is not already selling into it to enter,” said Wylie.

Savvy VARs could also look into customers’ needs horizontally to see where their skills and technology portfolio would be favoured.

“For example, collaborative tools such as videoconferencing can reduce travel needs and costs,” said Wylie. “But there has been a decline in so-called ‘nice to haves’, such as upgrades to PC systems.”

Public sector slower
Chris Gabriel, marketing and solutions director at Logicalis, agreed, saying that those gambling on public sector deals must hedge their bets. Public sector spending must be cut as the UK exits the recession, no matter who holds the reins in Westminster.

Things will likely not ever return to the status quo. Traditional outsourcing may not return, but managed services and hosting are likely to remain popular.

VARs should seek out new markets and product areas now, and start boosting their resources accordingly. Waiting until more growth is evident may be too late.

Many customer businesses will have been affected by the recession and be seeking to do things differently, and that includes their IT departments. VARs must figure out how to support those changes now and in future.

“It is not how you went into the recession, it is how you go out,” said Gabriel. “You should never waste a crisis. And I doubt many [end-user] IT departments have wasted this crisis -- ­ I think all have had to change.”

David Ellis, director of e-security, professional services and training at Computerlinks, said distributors must step forward to assist resellers and help cover gaps that may have widened in skills or credit during the recession.

“However, a lot of people say it is a good time to start a business, when the market is at its lowest point,” said Ellis.

Resellers must get themselves into a more entrepreneurial mindset and be less defensive if they are to ride a growth wave when it comes.

Some areas, such as security, are likely to remain strong. But vendor and distributor relationships should be reassessed. Everything should be made ship-shape to take advantage of any fair wind, said Ellis.

Anthony Norman, business group director at GfK, noted recently that some predict the UK could be out of recession within a month. The housing market has picked up slightly, and stock markets have also risen. Some products are still selling, although continual price cutting has been negating the gains. Resellers must prove they are up to the next challenge.

Upturn expected before new year
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