What recession? A break in the clouds: Part 2

In the second part of our look at 2009 so far, it seems that confidence can definitely be found in the market if you know where to look, writes Sara Yirrell

Blue skies ahead?

Six months down the line, the national press is finally waking up to the fact that there is actually some positive news out there - MP’s expenses aside - and some businesses are in fact seeing growth.

So what is the mood of the channel? And what should resellers be doing to ensure they stay in the game?

Clare Barclay, director of partner strategy and programmes at Microsoft, said adaptability was a key skill in turbulent times.

“There will be challenges, but for those partners able to adapt to changing customer requirements, there are opportunities to seize. Now is the time to really dig deep and make it happen. We are seeing continued strength in public sector business and we believe that consumer-facing partners are likely to see the market recover first.

“Partners should be able to diversify and evolve their offerings to address customer concerns, and make the most of the opportunities available. There are two main conversations happening in boardrooms at the moment: how do we save money and how do we find new customers to increase profitability? Channel partners need to be very clear about how their offerings will answer these questions. If they can answer them, investment in technology will continue throughout the rest of 2009.”

Christos Papakyriacou, managing director of components distributor Alpha Micro, said making the right business choices is crucial.

"As predicted, 2009 has been one mixed with anxiety and additional pressure, something which most players in the channel have felt the repercussions of, only further added to with the recent budget announcement predicting doom and gloom for coming year,” he said.

“At Alpha Micro we have taken a step back to review expenditure to ensure that all our suppliers, staff and contractors are adding real value to the business.”

Papakyriacou said saying no to business was not always a bad move.

“During tough business times, people often make bad 'business choices' and take on deals with little margin. It is therefore essential during the remainder of 2009 for all distributors and resellers to take their time in committing to partnerships and think more about the longevity of each deal they plan to seal. In doing so, all those involved can guarantee that efforts put in the right direction will duly pay off as the economic climate settles,” he said.

Chris Gabriel, director of solutions at Logicalis, said the recession has forced more firms to consider working together.

“This year has thrown many obstacles at us, not least the lack of confidence caused by the continuing financial crisis. However, looking positively on this, it has definitely enabled organisations to focus on consolidation and cost efficiency to drive businesses forward.

“The challenge for our industry has been to work together and accept that helping organisations make micro investment decisions is where our collective focus needs to be. If we can continue to show that we are helping our customers achieve more with less now, then we will demonstrate our industry’s combined intellect is being put to good use.”

Pat Dunne, senior director, UK and Ireland at Websense, said security had escaped the brunt of the downturn.

“The need for security is as great, if not greater than ever before and the security industry as a whole has held up well. We’ve seen some resellers consolidate into larger reseller managed services organisations, which strengthened some of the larger players. And there is recognition that security is an area that cannot be ignored; larger players have looked to either acquire security partners or use services to fortify their offering.”

Gary Marsden, VP sales and marketing, CRYPTOCard, agreed that security is safer than some sectors.

“No industry sector is immune to the wider economic problems we face; however, security is an essential, rather than a concessionary spend and continues to be driven hard by regulatory compliance in some key markets.”

He said the firm is seeing continued investment in both the local government and education sectors.

“While this delivers us and our channel the opportunity to maintain sales revenue, it is still critical that we’re cognisant of the financial challenges end-user organisations are facing, and that our managed service proposition supports the need for achieving economic efficiencies and ongoing overhead reductions,” he said.

Andrew Donn, EMEA regional sales director at Honeywell, said the right portfolio will help resellers counter the doom and gloom.

“No question, the first quarter of 2009 has been tough for the channel. Revenues have been affected by the global downturn as businesses across the board look to hold off spending on new technology.

“However, we are seeing investment continue in mobile computing, as companies look to ensure their supply chain is as efficient as possible. For the remainder of 2009 and on into 2010, we expect to see adoption of mobile technology from other industries, as companies, now more than ever, look to understand exactly where their assets are, and how to manage them effectively.”

“It is an ideal time for channel partners to demonstrate their understanding of how their customers’ businesses run, and how the right VAR can help make a business run better,” he added. “It may not lead to new revenues immediately, but will certainly strengthen relationships, putting them in pole position to secure new business once the client has the budget to invest.”

Andy Horn, head of COLT’s SME division in the UK, agreed that there was opportunity out there.

“Although today’s market is challenging, it offers a significant opportunity for both us and our leading resellers. COLT’s channel has continued to grow throughout the early stages of 2009,” he said. “By listening and responding to our channel partner requirements we have been able to react to the current market conditions and deliver services, such as usage-based billing for internet access to provide flexible payment options to customers.

“Organisations are seeking to reduce costs, in particular capex, while simultaneously enhancing business processes and organisational productivity. Resellers that can offer a truly value-added, differentiated service as opposed to commodity services are best placed to succeed in today’s turbulent market,” he added.

“Looking to the rest of 2009, service providers, resellers and VARs that focus on meeting the need for lower capex investments and improved efficiency will be the ones who succeed in the recession,” he said.

Kevin Moreau, general manager UK and Ireland at Acronis, said the storage market was another sector that was margin rich.

“There will always be demand for back-up and recovery solutions, so it is a reliable area for partners to invest in. This technology is becoming increasingly important as businesses are cutting back on hardware investments, meaning they are relying on ageing systems which are more likely to fail,” he said.

“System downtime has always threatened to have major implications on business productivity, but the economic downturn means that organisations are operating closer to the edge, meaning the threat of a significant system failure can have an even deeper impact on a business.”

Moreau said his firm had seen growth in every sector, with the top performers being SME and public sector.

“Enterprise customers are seeking solutions which provide near zero downtime at a lower price point. Resellers are turning to vendors that can lower a customer’s total cost of ownership through consolidated storage solutions rather than integrating a multitude of vendors – an expensive approach.”

Andy Hardy, managing director of international sales at Compellant, agreed that storage was still a lucrative area for the channel.

“By boosting the efficiency of their storage infrastructure, companies can accommodate data growth within strictly limited budgets, without impacting capacity or performance, he said.

“In the second half of 2009, resellers need to ramp up their knowledge of intelligent tiered storage as quickly as possible and ensure that it's a central platform for their customer's future storage strategy. Not only will this help solve their immediate customer problems of data growth, budget limits, space and energy, but it can just as directly benefit their customer's bottom line. In this period of economic uncertainty, a healthy obsession with efficiency will be the key to weathering the storm.”

Peter Titmus, managing director of support service specialist Networks First, said a positive attitude will help in difficult times.

“While there is no doubt that 2009 thus far has been challenging, the recession has been an opportunity for many. Tough times do not always mean bad times. The key is to continue to invest in business, stay positive and keep the momentum.”

He added that it was no coincidence that the network support industry is going from strength to strength.

“This is primarily because customers are, in a sense, treating network service providers as an extended workforce. They appreciate the need for highly qualified network support services, but may not have the finances or resources to do this internally.

“Consequentially, they have turned to booking external support service engineers on a time and materials basis, giving them the flexible workforce needed during times of economic help.”

Paul Brennan, chief executive of Zeus Technology, said the year has not been as bad as anticipated.

“The rise of virtualisation and cloud computing has presented a host of new opportunities for the channel. Intelligent integrators and resellers are profiting handsomely by offering organisations keen to cut capex ‘on tap’ computing solutions, unheard of just a few years ago.”

Customers can be catagorised into three types relying on legacy, virtual or cloud-based infrastructures, he said, which only adds to the scope of solutions partners can offer.

“We have noticed a particular growth in web-based businesses as online shopping continues to rise at a startling pace. We anticipate that cloud computing will fuel further growth in the channel for those who can offer a wide range of support from value-added consultancy around regulation and compliance, to security and even ‘on-demand’ cloud solutions,” he said.

Neil Watson, channel sales director at Viatel, said the work was out there, but it was taking longer to seal deals.

“The most significant change we have witnessed has been the additional work taken to secure deals, with protracted decision timelines and the need to have considerably more deals in the pipeline to secure the same amount of business as a year ago,” he said. “However, it is encouraging that we are finding this increased amount of opportunity by gearing our proposition to reflect the economic climate that our partners and their customers are facing.”

Watson was confident for the future.

“While we can’t ignore that the economic outlook for the rest of 2009 remains very challenging, the strength and volume of opportunities that we are working on suggests that Viatel and its partners will continue to grow and even flourish in the year ahead.”

So it seems that although the channel hasn’t escaped completely unscathed from the economic downturn, feelings are strong that there is ample opportunity out there, as long as you approach the market in the right way and have the right offering.

There are always firms that will grow during a recession, but just by surviving this downturn, it seems you are heading in the right direction.