VARs all set for vertical take-off

Voice and data firms assert lucrative markets can still be found despite businesses' cutbacks on IT spending

Flying high: resourceful resellers are still finding verticals eager to invest in voice and data technology

As the economic climate decimates spending in some vertical markets, shrewd VARs are still able to find lucrative niches.

UK firms in every sphere of industry are feeling the pinch. Auditor BDO Stoy Hayward predicted in December that business failures would spike by almost 50 per cent this year to 32,300. Next year is set to be even worse, with 32,400 firms predicted to hit the wall.

Construction will be worst affected in 2009, with 6,400 companies projected to go under, followed by business services, with 5,700 failures. The real estate arena will lose 3,200 firms, while manufacturing will lose 3,000.

Most channel observers agree the financial services vertical has suffered more than others.

Simon Osman, managing director of VAR Evolution, said: “We have seen a downturn in the hedge fund market, which started earlier this year. But banks are still investing in their infrastructure.”

Letter of the law

Evolution has enjoyed success working with Islamic finance companies, with projects and deployments which need to comply with Shariah law. Osman claimed the experiences would stand his firm in good stead for future projects.

“Having seen the effects of this high-risk credit swapping, the Islamic approach will become popular,” he said.

Chris Gabriel, solutions director for integrator Logicalis, also said the financial services space still housed some profitable corners.

“Clearly some of the financial markets have suffered enormously,” he said.

“But we work with a lot of niche, alternative exchanges. The guys that make money from volatility and providing information are still spending on technology. That part of the market is doing really well.”

Martin Hill-Wilson, director of strategy and marketing for integrator Datapoint, claimed that many banks still needed to spend money on infrastructure updates.

“One of the problems they have is the sheer complexity of their estate,” he said.

“They are trying to get down to a single telephony platform and are still buying IP PBXs. But most are not going for SIP trunking yet.”

The public sector has long been viewed as one of the most profitable spaces to operate in and research from the Society of Information Technology Management (Socitm) backs this up.

Socitm reported earlier this year that UK local authorities are set to spend £3.2bn on IT in 2009, up five per cent on last year. The public sector body claimed increased focus on data security was fuelling technological investment.

Samuel Williams, European general manager for unified communications vendor Zeacom, said: “The housing association market is still quite active,” he said. “It tapered off towards the end of last year but now it is becoming as vigorous as before.”

Gabriel said: “Logicalis has seen solid wins in local government and higher education.”

Reseller Ipitomi has historically operated in the financial services and property markets. Chief executive Adrian Coppin said: “The property market has suffered a little, but the financial markets have been relatively okay if you have keener pricing and innovative solutions.”

Coppin added that other people’s descriptions had always made the public sector seem appealing.

“It sounds like money for old rope,” he said. “But if something sounds too good to be true, it usually is. Still, I would love to go into the public sector, because I think we could smash the hell out of it.”

Real estate success

Osman offered a different view, claiming his firm was still enjoying success in the real estate space.

“Historically, we have had success in the property services market and it remains active,” he said. “We are talking with some big players in Germany and the Netherlands.”

Another lucrative niche picked by Osman was the not-for-profit sector, while Hill-Wilson claimed the betting industry is still investing in IT.

“The big guys need very quick voice communications because there is a tremendous amount of activity just before races,” he added.

Sectors singled out as faring less well included travel, which Hill-Wilson described as a “pretty tough” space in the current climate.

Across all verticals, channel players were unanimous in their agreement that getting investments signed off was a great deal harder than it was two years ago.

Gabriel said: “One of our sales guys was recently in front of a CIO who did not know the sign-off process; a year ago we did not have to ask about this.”

While Hill-Wilson said: “The majority of people are getting much tighter about business cases and have become very conservative.”

Coppin claimed his sales staff were still exceeding targets but that every pound had been much harder to come by than in previous years.

“It takes a lot longer to close deals,” he said. “Sometimes we have to work twice as hard to stand still.”