The first half of the year saw trading remain tough, uncertainty continue and those in the channel facing a challenge cracking open the customer order book. But as Amro Gebreel finds out there are positive signs out in the market.
Bob Dalton, CEO at Intact Integrated Services, says that although it had enjoyed a positive start to the year, "new business continued to be tough to win, with an overwhelming business and return on investment cases proving a prerequisite for project sign-off.
"However, many businesses have delayed investment over the last 18 months to 2 years, so the good news is that there is now a head of activity to be delivered. Intact is keen to balance this with caution in key markets: expect a continued recovery, but initially it will prove a slow one."
Gerald Moser, vice president of business development, for Paessler UK, says that the way customers were behaving has changed.
"We have seen a number of changes this year in terms of how companies use their networks, driven mainly by the tough economic climate, and this is having a real impact on their network monitoring requirements.
"For example, distributed networks are on the rise as many businesses seize the current climate as an opportunity to grow their business globally at less cost than before. This requires monitoring network activity across new worldwide offices or manufacturing facilities, putting centralised network monitoring in higher demand than ever.
"Also, we are seeing greater demand for (and deployment of) high availability networks as businesses rely increasingly on their IT systems to help them stay competitive and serve their customers 24/7/365. They simply can't afford not to be 'always on'. This is particularly important for organisations where customers actually pay for IT-based services or which rely on IT systems to operate, such as e-tailers."
He adds that the hunt for cost savings has filtered through to the way firms handle licensing. "Companies increasingly are looking to manage their costs with transparent licensing where all expenditure is clear up front and there are no hidden extras, no nasty surprises. We have won a number of new customer contracts in 2010 on this basis alone."
Andy Travers, managing director, UK at F5 Networks, tells MicoScope that the first half of 2010 has been a busy one.
"2010 has so far shaped up to be the year of the cloud and mobile working, with devices such as the iPad really taking off across the global, changing the way businesses and employees interact forever. Since the start of the year F5 has launched a number of new initiatives and projects, which have helped both our customers and partners, including the deployment guidance and test results that validate the deployments of VMware and F5 solutions and the launch of our new Unity partner programme, which has changed the way we review our EMEA distribution channel."
Colin Farquahar, CEO of Exterity, tells us that in February this year Exterity surveyed Audio Visual resellers and integrators at the annual Integrated Systems Europe show in Amsterdam and despite the challenging economic times, 90% of those questioned were optimistic for 2010 and well over one-third expect significant growth in demand through the year.
Michael Davies, head of product management at Viatel, says there has been significant growth in sales of MPLS VPNs through the channel.
"Many customers have wide area networks purchased from traditional telecoms providers over two years ago, however these typically are expensive and do not have the bandwidth or flexibility required to run the increasing number of applications a business now needs to operate effectively.
"A key stimulus for the replacement of existing networks has been the availability of lower cost, fibre-based Ethernet access. In addition, the introduction of Ethernet in the First Mile (EFM) is providing businesses with uncontended bandwidth up to 10Mbps at less cost than equivalent fibre based services. This access to cost effective, higher bandwidth services enabling businesses to rollout new MPLS VPNs potentially reducing costs or providing more for the same cost."
Davies adds that with the greater bandwidth and network flexibility, businesses are able to support more applications over the wide area network including running converged networks with the addition of voice and video over IP.
Paul Clark, managing director of Plantronics, tells MicroScope that the first half of the year saw a very active market. "There has been strong interest in Unified Communications, especially as many UC pilot projects have started to progress into the next phases of their roll outs. In addition, the contact centre market also showed significant progress on last year, with an increase in interest in service and maintenance programmes as major contact centres look to drive better value from their headset estates."
James Coulson, European marketing manager at ViewSonic, says that the first half was a challenge as customers honed their bargaining skills from the recession, and are more informed and have better tools to compare products and suppliers, which means that resellers are less able to command loyalty.
"Businesses are the same, but have kept their capex purchases back, choosing to continue to ride the services and outsourcing trend. We are starting to see 'budget thaw' for products where the business case can be demonstrated by showing a quicker ROI than is normally available. The first to buck this trend is LED monitors which provide such a power saving.
"The gap is widening between the route to market for retail and commercial with the channel actively choosing to engage with one and not the other. This means that ViewSonic has to carefully evaluate the products its channels adopt."
Matthew Searle, director of Canon partner channel at Canon UK, says that in the printing world the resellers that were faring well provided more than just a product or software package.
"We are now seeing resellers provide a complete solution, or workflow process, which will help the customer save costs and improve processes over time, through ongoing management and education.
"For example, in the print market, organisations often struggle with what we call the "Printing Paradox"; where IT Managers negotiate the individual components of print contracts to get the best prices but rising overall costs mean they actually exceed their print budgets. Resellers have responded to this by providing a professional management service and implementing a full print audit and strategic plan to help the customer manage and reduce their printing costs over time."
Paul Early, channel manager, technology services at HP UK, tells MicoScope said that the channel played a crucial role as customers looked to evaluate technologies including cloud computing, virtualisation and energy efficiency..
Neil Murphy, managing director of Bytes Software Services, says that the first half was boosted by very large government orders, unlikely to be repeated in the second half, and a good steady stream of SMB and Corporate business.
"A lot of our business is being spurned on by the adoption of Windows 7, Sharepoint and other Microsoft products like Unified Communications, Forefront and SQL Server. Compared with the corresponding first half of last year our revenues are up 25% and profits up 30%."
David Ellis, director of the new technology and services division at ComputerLinks, says everyone in the channel was working harder to close opportunities but there were positive signs.
"With the combined pressures of compliance and the need to cut costs, many technology areas are now showing strong growth. At ComputerLinks we have seen areas such as IT security continue to show solid performances primarily driven by regulatory compliance, the need to secure virtual environments and opportunities for appliance refresh and consolidation projects. Any technology that can optimise, secure or improve the performance of virtual or cloud environments is very hot at the moment.
"We are also seeing an increasing interest in virtual desktop infrastructure technology (VDI), which is already starting to translate into sales. The convergence of physical and network security is also beginning to gather momentum - we've seen year on year sales more than double in this space during H1."
Peter Titmus, chairman at Networks First, tells us that everyone has seen a lot of price pressure in the market with a certain level of desperation in the prices being quoted.
"From our perspective, as a network support services provider, we have continued to be busy with our consultancy services, professional services and implementation related work. We suspect that these areas have remained busy because end users simply don't have the skills in-house to do it all themselves.
"Where there has been a bit of a shake-up is in the outsourcing arena. We are seeing, for example, more councils beginning to look at in-sourcing again and only out-tasking specific tasks (rather than the whole of their IT departments which is what they would have been doing two or three years ago)."
He continues: "Cash flow remains a key issue across the channel with late and extended payments causing more and more of a problem. Too many of the big players seem to be treating the smaller firms as their own personal banks and appear happy to pass their own cash flow concerns on to those that have no choice but to accept it and suffer the consequences."
Barrie Desmond, business development director at VADition, tells MicoScope that despite the first change of government in nearly 15 years and the deepest recession for over 50, there hasn't been any indication that organisations across any sectors are hitting the pause button on technology spending.
"What works is enabling end-user customers to consolidate, automate and accelerate their business processes and IT operations. These are so compelling because they all make sound financial sense. Yet, even though they promise to drastically reduce costs, partners with the right approach should still expect to be making healthy margins. From a technology standpoint, 'cloud' has started making a lot more sense to people in these last six months.
"Unfortunately the credit management situation hasn't been getting any easier for many in the channel - another reason why the revenue predictability and zero capex attributes of managed services are proving so popular perhaps. Banks and credit agencies seem to be exactly like the new UK government: somewhat conservative," he adds.
Alan Ball, managing director at Spicers, says that politics dominated the first half and the budget is going to have a major impact on the rest of the year.
"At face value, the budget seemed to give hope to small businesses, but throughout the second half we will see how the full extent of it will impact on those businesses. The increase in the NI threshold and decrease in corporation tax will help many smaller businesses throughout the year but businesses will face big challenges as they prepare to face next year's increase in VAT which will hit businesses and end users alike.
"It is this additional tax that will ultimately stifle the growth needed to help small businesses successfully enter 2011," he concludes.
This was first published in August 2010