I was in Perth and Adelaide last week as part of a national roadshow organised by Trend Micro. 'Total Network for SMB Resellers' sees the security vendor joined by IBM, Microsoft and Netgear for half-day sessions where each talks about their SMB products. Once the vendors have presented, a reseller gets up and offers tips on how to combine these products and get the best out of them.
My involvement in all of this is to set the scene by offering some market intelligence courtesy of analysts at Gartner and IDC. When looking at spending projections for Australian companies with 1-99 employees, it isn't difficult to see a pattern. Hardware spending, for example, reached just over $3.5 billion in 2006, down from almost $3.8 billion a year earlier, according to IDC figures. Not surprisingly, longer refresh cycles and falling average sell prices will see this figure fall year-on-year to reach a level of just over $3 billion in 2010.
By contrast, the amount outlaid on software is rising. The $107 million spent in 2005 will almost double to reach $207 million by 2010, according to IDC projections, at a compound annual growth rate of 13.9 per cent. It is a similar story in the small business IT services market. A total of $284 million in 2005 grew to $304 million last year and is expected to reach $373 million by 2010, according to IDC. To keep things in perspective, boxes still accounted for almost 90 per cent of IT spending last year among Australian small businesses and will still easily be the largest proportion of spend in 2010. But with hardware and associated margins on the slide, while software and services show healthy growth, it isn't too difficult to see where the channel should be looking for future growth.
However, it is one thing to have knowledge but quite another to execute a successful strategy based on what you know. Vendors are forever telling resellers that they need to get into services but it isn't an easy transition to make.
At the Trend Micro roadshow I mentioned at the start of this column, Correct Solutions' Wayne Small has been talking about how he has now transitioned 20 per cent of his customers away from the break/fix model to a managed services relationship. It hasn't been an easy road but the benefits are well worth the effort.
For a start, he now earns a regular and predictable income from those accounts, even if he doesn't have to do anything more than deliver automated electronic reports showing that everything is working as it should. This reporting also means he can watch trends and advise on future spending needs such as additional storage well in advance so his customers can budget accordingly. There are no perfect models for managed services in the small business today, but the idea is certainly worth some exploration. As Wayne Small did, why not sit down with some of your most loyal customers and run the concept by them? You have to start somewhere.
You can still catch the 'Total Network for SMB Resellers' roadshow in Sydney on March 2 or Brisbane on March 6.