Where are the revenue opportunities for VARs in 2004? The global economy is picking up and IT vendors are hoping that this will be reflected in IT spending over the next few years. But don't expect a surge - well, not in the next 12 months, anyway.
Quocirca research shows that more companies expect spending to increase than decrease, but this difference is not huge.
In the UK the spending spree by the government, at both local and national levels, continues. Sales cycles are long, and it is only specialist resellers and large system integrators that are geared up for direct business with government.
To be a compliant supplier of IT equipment a firm needs to be included in the Government IT Catalogue or, for services, the Government IT Services Catalogue.
To gain entry to these is time-consuming and expensive, and by the time you have completed registration it is likely that the government's funds will have dried up.
The requirements for sub-contractors are less stringent, so the major suppliers to government, such as EDS, CSC and IBM, may be more realistic targets.
In the search for new sources of revenue many IT vendors have turned to another potentially lucrative area: SMEs.
For the channel this is a double-edged sword. VARs understand the SME market, and most vendors recognise that they are the most cost-effective way to access it. Those that do not soon discover that targeting the SME market directly can be very expensive.
The challenge for the channel is trying to recognise which vendors are making a genuine commitment to support SMEs and which are, despite what they say, attempting to fill a short-term revenue gap.
The position of many of the larger vendors is clear. They have always ensured that their mainstream products are available to SMEs and have schemes and packages designed specifically for them.
Take Microsoft Small Business Server (SBS). In essence it is a repackaged version of Windows Server 2003. Resellers cannot expect to make a huge margin on the software or the hardware it runs on.
However, there are many value-add services that can be added to SBS, through partnerships brokered by Microsoft, from which resellers can make additional margin.
These include broadband access, mobile connectivity, applications software and insurance, plus the more obvious training and consultancy.
If you are looking for a box to run SBS on it is worth talking to Hewlett-Packard (HP) about its Clearway financing programme, which enables resellers to upgrade their customers' hardware without a major up-front investment.
Through the programme SMEs can replace new kit for old. Outstanding write-down costs for the old kit are paid off and replaced by a multi-year monthly payment plan to cover the cost of the new kit.
The aim is that new payments should not exceed the previous monthly write-down payments. Estimates can be done online and HP will help with marketing. Most firms take a long-term view of IT investment, so such proposals should get a good hearing.
Many other vendors have announced packages for SMEs over the past 18 months. IBM's range of Express products is targeted at medium-size businesses.
Oracle, SAP and BEA have all announced new packages that better suit the channel and SMEs.
Oracle eBusiness Suite Special Edition is a server with all necessary systems software and eight applications pre-installed; 40 per cent of the cost is set aside for reseller services to enable and configure the applications.
There was some excitement recently when the government reminded us about the tax breaks available for SMEs investing in IT. But these apply only to firms with a turnover of £5.6m or less.
Whether you are targeting SMEs, government or corporates there are technology hotspots to watch in 2004.
These include IT security (think holistic, rather than point solutions) and IP-based products, especially IP telephony and utility computing. A rethought hosted IT applications sector is one of the driving forces behind the latter.
Over the next 12 months Quocirca will be taking a closer look at some of these opportunities and we look forward to sharing our findings in this column. Your feedback is welcome.
Bob Tarzey is service director at Quocirca.
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