Integration and Services: Opinions

I recently participated in ARN’s Partner Profitability roundtable, which fostered spirited discussion around some of the business and profitability issues facing the channel, as well as new profit opportunities going forward.

As the economy worsens, the prospects for outsourcing and offshoring improve. Throughout 2008, the key word for the economy was “uncertainty”. While facing uncertainty, CIOs avoided signifi cant changes to internal organisations or operations including evaluating or implementing outsourcing. Most outsourcing initiatives are driven by a strong need for change and “economic uncertainty” hindered that need.

The financial fraud perpetrated by Satyam Computer Services executives could trigger near-term disruptions across the outsourcing and IT industries. Ramalinga Raju, the company's founder and chairman, resigned last week. He has admitted to inflating Satyam's cash balances and the credit amounts it was owed while understating its liabilities. This scandal has many ramifications for Satyam's customers as well as those of other outsourcing companies.

No two IT shops conduct business in the same way: CIOs report to various executives, project approval processes are all over the board, and personnel policies are vastly different. Unlike other professions, IT doesn't seem to have a common set of basic principles across companies.

During the last calendar quarter, I wrote an article for ARN (July 16, 2008) regarding recruiting staff from partners, alternative solutions and asked what retention plans need to be in place in order to maintain your employees. Now as we come to year-end and in the current economic climate, it feels like everything has changed – or has it?

Open up any newspaper, online media site or industry report and you’ll hear about the effects of the economic downturn. Last week, the Australian Financial Review published a report on the looming recession, pointing out Australia’s gross domestic product grew by just 0.1 per cent in the third quarter of the year. The report also found the market had begun losing momentum before the global stock markets went into freefall.

It's no surprise that Microsoft has its eye on the cloud. Cloud computing, that is.

Looming on the horizon are the nimbus, cirrus, stratus and cumulus that threaten to deliver us cloud computing imminently. Promising an end to most of the challenges and frustrations of IT systems as we know them, the concept of cloud computing is thundering through the business community to become one of the most talked about and revered subjects of the day.

The latest instalment of the Commander saga hit the ARN newsdesk last week and raised more questions than it provided answers. The company’s receivers, McGrathNicol, announced the sale of the embattled integrator’s telecommunications assets, including its national franchise network, to a newly created private equity firm, Commander Telecom Group.

As Optima’s administrators recommend the company be liquidated, I can’t help but think that repercussions for the local whitebox industry are going to be much deeper than I first feared. The reason why, in a word, is warranties.

While reading outsourcing horror stories may be somewhat entertaining, especially if it hasn't happened to you, it's even better to learn from the mistakes of others.

News that Commander had hit the skids was no surprise to many in the industry, but I was still a little shocked when the receivers were finally called in.

Pity the poor road warrior who tried to find his data on The Linkup, only to get this message when he logged in: "Unfortunately The Linkup service is no longer available. Please visit box.net for your storage needs." What's worse, the sales guy was on an extended trip through North and South America. That's a real story, told by one Jacob Sherman, "I just want my data," he said.

About a month ago, I used this column to warn of difficult times ahead and suggested that companies already under pressure would find the going particularly tough.

Some recent stories I’ve read, and conversations with senior industry folk, have brought an old question back into the spotlight – how many distributors should a vendor have in any particular market?

It's one of the oldest rumours still flying around the local IT industry, but stagnant product sales in the first half of Dimension Data Australia's financial year will once again have people asking whether the integrator will offload distribution arm, Express Data.

Last week saw the Federal Government extend the tender deadline for a $4.7 billion national broadband network (NBN). You can bet this won't be the last delay in what is likely to be a very lengthy process.

How many heads will roll at EDS? That's the obvious question, now that Hewlett-Packard is buying the company. A back-of-the-envelope calculation says that at least half the employees of HP+EDS are in services, but they generate only one-third of the revenue. Conclusion: Up to 50 per cent of them will get the chop.

As a channel consultant, I meet many partners (resellers, integrators or VARs) and I am keen to understand what they do. More often than not, their answer is a derivative of:

As the role of the CIO within the organisation evolves, so does the support the CIO needs from IT vendors and channel partners.