December 24, 2008
By

Herman Mehling

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Education is another strong vertical, said Rich Black, director of marketing, Acer America.

“Very few schools have an IT infrastructure, while all face the challenge of bringing their institutions into the 21^st century via technology,” said Black. “VARs have plenty of opportunities to serve the IT needs of schools.”

As for picking verticals to avoid, most channel insiders didn’t have to think too hard: retail and anything related to real estate were automatic choices.

“Clearly, retail, real estate, and construction are verticals taking revenue hits right now, and those hits are translating into less IT spending,” said James Chinn, partner, Shadow-Soft, an Alpharetta, Ga.-based VAR that specializes in open-source solutions and SaaS.

“VARs should definitely avoid retail,” said Heather Clancy, vice president, strategic communications, SWOT Management Group, an integrated channel and sales development firm in Hillsborough, N.J. “Although retailers talk a good game about mobile solutions, as an example, they historically invest very little in innovation and tend to be technology laggards,” said Clancy.

 Opportunities in the financial services sector also will be questionable, said Chinn.“IT spending in the financial sector seems unaffected so far by the recession, but I think it could slow down over the next three to six months,” Chinn added.

Managed Services Opportunity

Within verticals and across IT as a whole, VARs, vendors and analysts agree that certain core technologies offer the strongest market opportunities for VARs. Those technologies include business intelligence software, managed services, SaaS, security, storage, open source, virtualization – and anything promoting a greener world.

“We’re seeing relative strength in certain technology segments such as software, storage, security and wireless,” said Quaglia. “Businesses are looking at ways to spend their IT budgets intelligently, with an eye towards long-term operating costs.”

Quaglia identified green technologies and newer, energy-efficient servers and storage devices as likely popular sales opportunities for VARs.He added that business Intelligence software and virtualization are big because they help businesses operate more efficiently. 

Clancy noted that anything positioned as a managed service, including software applications delivered as a service, will become more interesting because businesses won’t have to spend money upfront to take advantage of the functionality. “I believe the economic climate will accelerate the adoption of technology as a service,” she said.

“Managed services and SaaS-based offerings will bring a distinct sales advantage to partners in the coming year,” said Bradley, who believes corporate focus on predictable IT spending will likely increase the adoption and deployment of managed services and SaaS solutions.

Bradley also expects to see an uptick in sales of mobility solutions as companies try to improve productivity and efficiency. 

Despite the mostly rosy projections for 2009, VARs obviously cannot ignore the big black cloud of recession (did someone say recession?) hanging over every sector of the economy.

Tightening credit and bad debt will be the biggest landmines for VARs in 2009, said Chinn. “Tightening credit will impact cash liquidity for every business across the spectrum, straining operating capital and new capital expenditures,” he said, noting that a large portion of IT spending is typically financed.“The poor credit environment will force CFOs to find other ways to fund IT projects, or they will simply be postponed or scrapped,” he said.

Chinn also expects bad debt and bankruptcies to jump in 2009, forcing VARs to take a hard look at their credit approval process for both existing customers and new prospects.

HP's LaRocca believes many channel partners will have to watch expenses closely as they focus on the economic challenges. “Like any businesses working through a downturn, VARs need to focus on driving revenue-generating activities and being vigilant about expenses,” said LaRocca. “VARs should focus on what they do best and look to new/adjacent competencies to drive new revenue opportunities.”

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TAGS: virtualization, HP, open source, managed services, IT spending

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