Analysis: Channel homes in on changing needs

As the recession bites there are several market areas and approaches that have the potential to benefit from the widespread customer desire to save money without compromising performance or efficiency.

As the recession bites there are several market areas and approaches that have the potential to benefit from the widespread customer desire to save money without compromising performance or efficiency.

They also have the chance to attract resellers because of the margin benefits and the option it will give some partners struggling to get credit to look at technology that can be sold on an operating expense basis.

Virtualisation and SaaS have put themselves in the shop window with vendors in those markets arguing that this is a significant moment for the channel to step forward and sell their products and for customers to take advantage of more flexible payment terms.

“People want to do more for less and consolidate but they have got to maintain performance,” says Nick Garlick, managing director of Nebulas Solutions.

What helps Garlick, who is involved with virtualisation, is that the return on investment arguments are fairly compelling and even more so in the current climate.

He is backed up by other virtualisation players including management specialist Veeam. Speaking to MicroScope recently Colin Fisher, regional director, northern EMEA at Veeam, said that it continued to report strong customer activity.

Driving down costs

It seems that across the board, from enterprise down to SME, users are now investigating the ways that technology can help them improve business processes and cut costs in a way that they might not have done when things were going slightly better.

“Everyone is looking at driving costs down in the business as the whole economy goes through a period of turmoil,” says Phil Wilson, consulting director at Oracle partner Inoapps.

“The brave companies will continue making sensible investments and those that put on the brakes will find they have not taken the decisions they need to,” he warned.

The recession has led to a change of emphasis in customer discussions, reports Christian Koestler, managing director for sales & marketing and professional services at retail intelligence specialist Lixto.

“They really want to know what’s going on with them,” he says.

Another example of changing attitudes among users comes from Paul Albright, general manager of SuccessFactors, which is a human resources management specialist.

Albright has seen increasing numbers of companies that traditionally kept details of staff on bits of paper in files rather than using technology to help manage that process change their approach and look to IT to improve their knowledge and help find efficiences..

“The economy is challenging and SaaS is the way everyone wants to go to get lower costs and faster times to value,” says Albright.

The evidence of a change in customer behaviour continues to mount with Ed Colonna, vice president of global marketing at application process management specialist Precise, also noticing that opportunities are opening up as users focus on improving their internal IT management.

But resellers don’t have limitless amounts of time and energy to spend finding out about these opportunities, getting trained up and striking the right relationships. Inevitably for some there will have to be choices made.

In some cases that process has already been started by some of the larger players looking to recalibrate the balance between hardware, software and services. Plus added to those movements in the market there has been a restriction of credit.

David Pratt, COO at ThinkGrid, talks about the need for resellers to sell products that can be aligned with the operation expenses not capital.

“Resellers realise they have to make that switch more because everyone is looking to get a recurring revenue stream as most customers have a cap ex freeze,” he said.

Recent credit cuts by Euler Hermes have impacted a number of resellers and even for those unaffected the days of taking a cap ex business model for granted are running out.

Pratt, along with numerous others, has an alternative that he believes has a strong attraction to both customers and partners in the current situation.

The challenge for resellers gauging the way the market is developing is to work out how far that movement from cap ex to op ex is going to extend and just how deep the interest and commitment to alternative IT products goes.

This might just be the turning point for a number of technologies and sales models and the channel needs to be aware of the potential for change even if it is currently surrounded by a fair amount of spin.

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