IT confidence hits rock bottom

Firms' ability to look ahead had fallen dramatically

European IT companies' business confidence has fallen to critical levels, according to research from analyst IDC.

The survey of 50 IT suppliers in Europe, which was conducted before the terrorist attacks in the US, showed that, while business confidence was lowest among hardware manufacturers, the software sector reported the fastest decline.

The IT services sector is still more positive than both the software and hardware markets. Although confidence among hardware companies has actually increased, the research revealed that businesses' ability to look ahead had fallen dramatically.

Stephen Minton, director of IDC's European IT markets centre, warned that the lack of insight among vendors could have a damaging effect on resellers. "Anything that affects vendors at the beginning of the food chain will reverberate to resellers," he said.

Martino Corbelli, marketing manager at software vendor SurfControl, explained that many vendors reduce channel commitments at such times. "At times of reduced business visibility, vendors often make cuts to their channel instead of working harder and closer to it," he said. "Resellers want to work with vendors with consistent visibility in the marketplace because fluctuations are negative."

Tony Fisher, general sales manager at reseller Deverill, agreed that inappropriate strategies often result from vendors' inability to predict future sales.

"When vendors make knee-jerk reactions to a problem it can cause little ripples or tidal waves in the channel. Manufacturers today are able to create new channel strategies at a moment's notice that are introduced at a blinding speed," he said.