Looking Ahead, Channel Executives Stay Optimistic

Channel executives are surprisingly upbeat on their prospects in 2009, expecting IT spending to hold up and managed services and other "disruptive technologies" to grow more popular.

Channel executives and pundits are surprisingly upbeat in their predictions for IT spending and the health of the channel in 2009, despite the stream of gloom-heavy news about the overall state of the U.S. economy.

Their predictions are based on positive data about IT spending, the strength of certain vertical markets, and rising demand for disruptive technologies (such as virtualization, managed services, and open source) that decrease customers’ costs and consolidate infrastructure, while boosting VARs’ profitability.

Global economic problems will impact IT budgets, but the IT industry and VARs will not experience the dramatic reductions seen during the dot.com bust, said Tiffani Bova, vice president of research, indirect channel programs and sales strategies, Gartner Inc. (NYSE: IT).

“In a worst-case scenario, our research indicates an IT spending increase of 2.3 percent, down from an earlier projection of 5.8 percent,” said Bova. “IT budgets aren’t likely to totally collapse as IT is much more embedded in businesses now versus 2001-2003 during the dot.com crash.”

Many other channel players concur. “We don’t expect to see a dramatic change in IT spending this year,” said Tom Tucker, president, Akibia, a solution provider in Westborough, Mass. “However, we expect companies to be more cautious with their spending, which will delay some projects.”

The realities of today’s economy have accentuated businesses’ needs and demands for predictable IT spending and for less capital expenditure upfront,” explained Keith Bradley, president of Ingram Micro (NYSE: IM) North America.

Bradley expects that IT spending in 2009 will become much more of an operational (and therefore necessary) expense for businesses.

Although the United States will be one of the worst-hit countries, Gartner remains optimistic about the outlook for 2009, said Bova. “Hardware will take the biggest hit, with overall sales dipping 4 percent next year, the IT services sector will be flat, telecoms will grow 3.9 percent, while software will rise 8.6 percent,” she said.

Strategic Focus

Bova and others believe that smart VARs will weather the pending economic storms of 2009 by focusing on verticals and technologies that will have fairly limited impact from the recession and are strategic to companies’ long-term growth and desire to cut costs.

“Healthcare, telecom, financial, and public sector are just a few of the verticals that HP believes have growth opportunities for VARs in 2009,” said Tom LaRocca, vice president of strategy and marketing, Americas solution partners organization, HP (NYSE: HPQ).

Bova said Garter expects to see considerable IT spending from the public sector – mostly by the Veterans Administration, Homeland Security, Treasury, Energy, and the Health and Human Services Department, which operates the largest civilian IT budget.

“Resellers who focus on key verticals such as healthcare, government, and education should continue to find opportunities,” added Joe Quaglia, senior vice president of U.S. marketing, Tech Data (NASDAQ: TECD).



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

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