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Making the most of madness

Making the most of madness

Traditionally, June has been a time of make or break in the local IT channel because anybody who couldn't make some money in the year's bumper month was probably in the wrong game. But there's evidence to suggest that wisdom doesn't hold sway any more; at least not to the extent it used to.

For tier-one and tier-two integrators, who predominantly ply their trade in the corporate market, June is still a wonderful time of year when IT managers are frantically trying to dispose of their remaining annual budgets. But for those focused on SMB, signs suggest the June rush might be little more than a slight acceleration. Distribution Central CEO, Scott Frew, said his distribution company, including its Firewall Systems and NetWorld Systems subsidiaries, recorded its best ever month in May and has massive back orders to deal with. He highlighted major security projects, wireless, intrusion prevention and government network spending as key drivers.

"It's an especially busy end of year, above and beyond general buoyancy in the market," he said. "Only one or two of our vendors are not way over budget and they are smaller players without a presence in this country. We have been through a couple of years' hard yakka establishing the managed services model and developing the Web engine but the moons are starting to align."

Similarly, Frew said the majority of tier-one and tier-two integrators buying through Firewall and NetWorld were also in a very positive frame of mind. He said the number of requests for increased credit levels was unprecedented.

"Anybody who isn't doing well at the moment must have something critically wrong with their business," he said.

A tale of two markets
Dicker Data also registered a record month in May but sales manager, Chris Price, said it was difficult to compare current performance with last year because the distributor was beating its June 2006 number almost every month. While the corporate market was going totally mad, SMB had not picked up to the same degree.

"The IT managers in large corporates have to spend budget before they are allocated a new one. If they leave money on the table, they get a lower allocation next year," he said. "It used to be the same in the SMB space but now small businesses operate quarterly rather than yearly so the spending is not as big as it used to be at this time of year."

Price said smarter corporates were also aware that vendors would be making deals this month. December was also busy for the same reasons.

"December is the other anomaly because most vendors run to a calendar year," he said. "IBM does a huge amount of business in the few days between Christmas and New Year."

Data#3 CEO, John Grant, said the ASX-listed integrator felt comfortable about the healthy business environment continuing into the next financial year but its immediate focus was on delivering the best possible result between now and the end of June.

"It's a solid market with plenty of opportunity but there is also no shortage of issues to deal with including competition, managing expense levels and retaining skilled people," he said. "These are the problems you are faced with in a buoyant market."

Attitudes towards ICT had certainly improved, according to Grant, with more customers now looking for greater levels of engagement and prepared to look externally for levels of expertise they don't possess.

"They are exploring new options rather than falling back on old models," he said. "Up until a couple of years ago, we and the vendors were the central point of information but now they are using the Web and their expectations have changed because they are more aware of what technology can do."

Same as it ever was
Allcom Networks technical director, Andrew Leigh, said the run-in to June 30 was typically hectic and as busy if not busier than the same period last year. Allcom used to attribute its fourth quarter hockey stick to winning more than 70 per cent of its business in government but that number was now below half and the end of year rush hadn't gone away.

"Jobs are coming out of the woodwork as people look to empty budgets. It's not being driven by special offers or marketing; it's just the usual 'use it or lose it' work you get at the end of financial year," he said. "We are transitioning how we sell [to get away from the end of financial year rush] but aren't seeing that change reflected in the buying habits of our clients."


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