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Editorial: Mixed messages

Editorial: Mixed messages

How are you faring in the economic downturn?

We’re getting mixed messages from the Australian IT channel around the impact of the economic downturn, as can be seen from the collection of stories in our edition this week.

For several locally listed integrators, the first six months of the 2009 financial year were robust enough to allow revenue and profit increases. For instance, NT-based player, CSG, and outsourcer, SMS Management and Technology, both managed to raise their net profits over the past six months. However, fellow players, Oakton and ComputerCorp, admitted to a slower market and were affected by a hold on Federal Government spending, resulting in falling profits.

In the latest of ARN’s Distributor Direction interviews, Ingram Micro managing director, Jay Miley, expressed contrasting views on how the distributor will fare in the challenging market. While some low-end commodities business has inevitably been hit, Miley was confident other areas, such as its Solutions Group, would continue to grow.

In the second instalment of the ARN Business Index, responses were also a mixed bag of optimism and pessimism. For most surveyed, 2009 is going to be a tough year, with the overall market slowing in line with a drop in consumer and corporate spending. But despite gloomy circumstances, 68 per cent said they were in the same or better financial position compared to 12 months ago, and were confident of things improving in 2010.

Everybody is taking a slightly different tack around how to get through the tough times. For Miley, the way forward is to relocate staff from less robust divisions and product categories and invest into stronger growth areas – something, incidentally, that many integrators are doing too. For 70 per cent of our Business Index respondents, it’s a good time to invest in expanding their businesses and revisit acquisitions and mergers.

Those dealing with the public sector will also be pleased to hear industry experts are predicting the Federal Government and public education sectors will hit the accelerator around spending in coming months.

One of the most important things for those in the channel to do short-term – besides manage cash fl ow more effectively and retain liquidity – is shore up their position with customers and secure suitable opportunities present in the market.

One way Westcon Group is hoping to help its partners capitalise on customer prospects is through financing. The distributor has begun providing leasing and rental financing for resellers in the hopes of helping them get more customer deals over the line. The new value-add offering has met with positive comments from several resellers thus far, so I’ll be interested to see how many take up Westcon’s offer.

But it’s also critical to keep your long-term goals in sight. As Data#3’s CEO, John Grant, pointed out when discussing the integrator’s financial results recently, growing profit shouldn’t be the sole focus for businesses in the next six months. What’s more important is to secure customer relationships so that when things turn around again, you’re in a position of strength.


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