Weak IT Spending Equals Good Times for CIOs?

No doubt about it…IT spending is weak.  IT sector sales growth has been anemic if not non-existent.  The last several weeks have seen dismal results from Microsoft and equally sad results from Cisco (NasdaqGS: CSCO).  Cisco’s year-over-year sales were down 18% to $8.5 B for the quarter ended July 31, 2009.   And earnings were down a staggering 46%.  IBM (NYSE: IBM) was able to grow profits 2.3% in this tough environment, but sales were down 13% for the quarter year-over year.  HP (NYSE: HPQ) is due to announce results for the quarter ended July 31 on Tuesday August 18.  JP Morgan anticipates HP will beat expectations, but HP only expects revenue for the quarter to be flat to down 2%-hardly exciting results.

While these companies have all instituted cost cutting measures, the key challenge is to grow revenue.  A recent Forbes article explained this succinctly:

"But corporations aren't refreshing their servers on the same frequency they were in the 1990s, which is why IBM and HP were heavily pushing services before the downturn. And now, with services revenues under pressure, as evidenced by the IBM and HP layoffs and salary cuts in their services divisions, these big companies have to drum up more business--fast."

Clearly, direct sales and channel partners are all under heavy pressure to close business.  And time is not on the manufacturer’s side.  But this situation does create leverage for customers, specifically CIOs.  As Forbes continues:

"The real story is who has the better bargaining position right now. It certainly isn't the equipment makers or the service providers. And no matter what they say about the competition buying the latest and greatest, it really doesn't matter. Time is on the CIO's side… "

So CIOs may be holding out for the best deals and to increase leverage.  IT channel partners, like manufacturers, may not have leverage, but they can benefit from the special incentives manufacturers will throw their way to win business.  Don’t be afraid to ask for these sweet deals.  




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