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EDITORIAL: Year in, year out

EDITORIAL: Year in, year out

This week marks the end of the 2001/02 financial year, a 12-month period that has been particularly challenging for many in the IT distribution channel.

It was a fiscal year that started with Tech Pacific struggling to find a buyer and finished with the post-merger HP doing its best to position itself as a new powerhouse software, hardware and services vendor.

In between there has been a constant struggle for channel companies to pinpoint the true meaning of just what value they contribute to the supply chain and a constant search for new revenue opportunities. With fierce competition driving continued consolidation in the channel and keeping margins on a downward spiral, perhaps the channel should be more offensive about its role in the supply chain.

Channel players seem too willing to forget that vendors are desperate to get at the vast small and medium business community that makes up Australia's economic environment.

It is the broad range of resellers, dealers, integrators, developers, consultants and retailers - themselves small and medium businesses - who own these customer relationships. It is the ability of these channels to influence technology-buying decisions, which vendors are so desperate to muscle in on. Don't underestimate your importance in the supply chain.

Financial year 2002 has included a vast array of external influences that have affected all businesses in the channel. It is unlikely the tragic events of September 11 can ever be forgotten, nor can the impact on business and personal confidence of such an event be underestimated.

Add to this the new generation of destructive viruses that have proliferated and it is no surprise that security is one of the hottest opportunities at the moment.

When you add a Federal Election to nullify demand and then take into account the contribution an emerging insurance crisis made to the rising costs of doing business, it has clearly been a financial year full of ordeals.

One huge positive for most parts of the industry during the year has been the improved performance of the Australian dollar. Around 15 per cent has been added to the value of our dollar over the last 12 months, which is good for all in the industry bar those with export markets.

Already Microsoft has reduced the price of its software across the board as a result of the strengthening dollar. Unfortunately, some other vendors that were quick to use the falling exchange rate as an excuse for rising prices have been far less willing to allow the reverse to be a catalyst for lower prices.

Of course for many, particularly hardware vendors, exchange rates have had very little to do with recent price fluctuations. Over-supply and aggressive market share positioning by distributors have been causes of price drops in the last 12 months.

With the financial year coming to a close, many companies will now be making their annual delve into the dark recesses of their ledgers to see whether income outweighed expenses. For many, the bottom line will not be pretty and will motivate serious contemplation about how to turn things around.

It is at this point of each year that many small businesses consider whether all the effort of the previous four quarters is worth doing again.

For the majority of small businesses, the first day of July each year - when all the numbers are in - is a unique opportunity to fine-tune each line on the ledger for better performance. Now, more than ever, it is crucial for resellers to take that opportunity to ensure the numbers are coming out in their favour and to see how they can be improved.

Tell me how the financial year tallied up for you.


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