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Are you ready?

Are you ready?

Guess what, after this week you only have five weeks to go before Y2K becomes a reality. We are now at the tail end of receiving reassurances from banks, airlines, governments and the like that everything will be OK and `your money will be safe'.

But from the channel's point of view, I suspect the concern over the so-called IT purchasing `Y2K slowdown' did not really bite as expected. Some distributors are reporting sales have been a little soft, but it's largely business as usual for the majority of resellers and systems integrators.

Curiously, it seems the only real exception is the retail community. At this time of year the retail marketing machines typically trot an abundance of Christmas deals but it seems unusually quiet. Perhaps Y2K budgets ate into marketing funds?

As we start to gear up for business in the new millennium, I suspect there are two issues foremost in the channel's mind.

The first is my gut feeling that the channel is more interested in the impact of the GST than Y2K. GST is going to have a much greater impact on your business than Y2K because it forces you to examine your back-office administration processes and the financial transactions you conduct with your partners and customers on a daily basis.

The second, and I think even more important issue, is the application service provider (ASP) phenomenon.

ASP companies represent a new set of partners that can provide your customers with a plethora of outsourced IT services based on the IT rental or leasing model, designed to reduce your customer's IT management `headaches'.

According to analyst Dataquest, this market will be worth $US22 billion by 2003, which it observes is a significant jump from a market worth only $889 million in 1998.

The majority of resellers and distributors, however, are yet to fully grasp what impact it will have on the supply chain as a whole.

The first step to take, according to ASP guru Traver Gruen-Kennedy (page 1), is for channel companies to understand their `core competency'.

ASPs build their business around running efficient data centres capable of hosting applications on behalf of your customers.

Data centres are not traditionally the domain of systems or network integrators, which conveniently allows the two businesses to draw a line in the sand, leaving you to focus on maintaining customer relationships.

Two local ASP examples are Solution 6 and Tequinox.

But what about distributors? They are problematic, according to Gruen-Kennedy, as large distributors must be able to provide e-business fulfilment services, particularly to support what many believe will be the proliferation of data centres that sit at the core of multiple server-based customer networks.

While the big guys are figuring out how this will work in practice, it appears the smaller distributors may get left out in the cold if they cannot find a niche in what is already a crowded market.

Meanwhile, you can take it as gospel that applications, consulting and integration services will be the only worthwhile revenue streams to chase should ASPs become as big as the pundits claim.

If you're not prepared to accommodate ASPs, next year could offer more surprises than you think.


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