EDITORIAL: Nasty "R" word

EDITORIAL: Nasty "R" word

Today's editorial is brought to you by the letter "R" and the number 50.

The number 50, or $0.50 to the US dollar, represents our ever-falling status in the eyes of the world.

But we can cope with the money market's negative opinions. It's the R-word that's causing problems.

Skip to the next paragraph now if you don't want to know what it stands for. For the brave hearted, I'm talking about a Recession. Ouch!

Former PM Paul Keating so famously entrenched this word in the public vernacular when he made some reference to the fact that it was the recession we had to have.

Nothing's really changed it seems, because Australia's economy still remains subject to the vagaries of international economic markets.

But if we were meant to have this "economic slowdown", you can almost wager the farm on the fact that our current PM John Howard will not use the same words as his former opponent.

Of course, I'm speaking about reports in the national media last week that we've had our first quarter of "negative growth" for some years.

Despite our country's recent success in riding out the Asian economic crisis, we're now enduring a fresh crisis of confidence.

I'm no economist so don't expect me to offer tips on how to improve our export performance or halt declines in the overall GDP.

What concerns me, of course, is how worried the channel remains about these significant economic changes.

Last week I spent some time with my colleagues at ARN's Reseller Lounge at Sydney's PC IT trade show talking shop with the channel. As an aside, thanks for dropping by and having a coffee or three with us.

It was uncanny how many people wanted to talk economics. Naturally one of the most popular conversations among resellers and distributors is who's making money, and who's not. It's great fodder for news, but it's also telling of our current levels of anxiety.

Some people claim we won't see a pick up in IT spending until the end of 2001, while others are quietly enjoying healthy sales in their chosen niche. It's a mixed bag.

The obvious observation I have made is that now, more than ever, is the time to stick to high-margin products and services, and dump the cheap stuff. Don't waste your time.

Just look at Siltek's restructure. There's no future in catering for the retail market at 2 per cent margins.

For resellers, it's a case of choosing your product lines very carefully. Profit above volume must surely be the focus now, particularly if you are yet to push your services' revenues above the 50 per cent mark.

Let's be honest. If the pundits are right and we are actually set to endure a downturn (I'll avoid the R-word), this is no time for espousing lofty ideals about how services will change your business.

I suggest taking your favourite customers out to lunch, or do whatever it takes to foster a stronger relationship, because you'll probably need a few big orders.

My final word of advice on the dreaded R subject is this - ignore the consultants and IT analyst companies.

You know your business - and your customer's - better than anyone else. It's a bit like what they teach in advanced driving schools. If you're out of control and sliding towards a tree, don't look at the tree because you'll surely hit it. Focus on a new target and steer out of danger.

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