Survey sees 20 per cent sales growth in software

Resellers have been given hope by an IDC study that predicts sales will grow by almost 20 per cent over the next three years despite the mushrooming of direct software sales and application service providers (ASPs).

Resellers have been given hope by an IDC study that predicts sales will grow by almost 20 per cent over the next three years despite the mushrooming of direct software sales and application service providers (ASPs).

The study, by analyst IDC, found that end-user spending through indirect sales channels in western Europe would grow from $18.8bn (£12bn) in 1998 to $39.8bn by 2003, an increase of 16.2 per cent. Indirect software sales account for $15.5bn of the total Western European software market, with the system infrastructure sector generating the most channel income.

Simone de Bruin, IDC's European software partnering and alliances research analyst, said the study showed software vendors able to leverage their indirect channels had a strong competitive advantage, and that the execution of international strategic alliances would be a key differentiator. But she said European subsidiaries had derived little benefit from a rise in strategic alliances.

De Bruin said resellers need to change their strategies to take advantage of the market. "Consultants and system integrators remain important partners that can influence a market, but VARs and retailers have a more direct line to the e-business end-user," she said.

"Where VARs used to offer a service for the whole product range of one or two software vendors, they now have to redefine their value-add to the market. Their strength needs to excel in one or more solutions areas.

Software vendors do not have these direct lines to the market yet. The emerging ASP model will threaten many of the VARs operating in this area."

She said vendors needed to find where products fitted into resellers' structures to develop effective marketing plans.