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BIG YARN: They just don't get IT!

BIG YARN: They just don't get IT!

There is a subdued post-election mood in the reseller community, with just a hint of optimism stealing in around the edges. During the election campaign itself, the information and communications technology (ICT) sector captured its highest-ever mind-share rating among politicians.

Unfortunately, the sector's obvious haemorrhaging of jobs hasn't drawn the same attention lavished on other industries in crisis, such as tourism and air travel.

Few campaign promises engaged the attention of the IT industry, either pro or con. Resellers have saluted the election result more as a guarantee of continuity in unsettled times than for any specific policies. What optimism exists is being fuelled by a combination of macro-economic trends and industry-specific events rather than as an outcome of the election. Yet, there is an oweverwhelming sense of hope that the fortunes of technology vendors will change for the better as the economy runs its cycle and re-inflates once again.

Geoff Crowshaw, CEO of systems integrator Senteq Information Systems, for example, is cautiously confident about the first half of 2002. His views are based partly on higher activity from new and existing customers in the last six to eight weeks.

But he also points to low interest rates and the general pervasiveness of technology across all sectors of the economy, stressing there are a number of events that could prop up the industry and work in favour of a recovery.

These include the rollout of Pentium 4 and Windows XP, a pickup in demand for thin-client work and the arrival of replacement cycles for Y2K equipment, now two years old.

Then there's the silver-lining effect. "As horrific as September 11 was, it has had quite a [positive] impact on the security areas of our business," says Crowshaw. "We are seeing customers who were blasé with regard to security factors becoming very particular about getting security higher on their agenda. The flow-on effect from this is significant interest in firewalls and desktop applications, server and storage space, and SAN solutions."

However, unlike the previous election (which was largely defined by its polarising GST issue), a sampling of opinion among regional IT resellers showed that last month's election didn't help shape their views on business prospects for the next year. The optimists might have slightly outnumbered the pessimists, but the informal poll revealed that uncertainty still rules the vast majority.

While some are apprehensive about Australia's economic prospects in the coming year, most share the views of Don Kouimanis, manager of Inkjet City, a high-end PC and modem reseller in Glandore, South Australia, who is relieved that "Labor didn't get in and start mucking around with the GST. Rollback would have been a disaster for us." Yet, it is the words of a spokesman for warranty repair shop Northwest Computers, in Moree, NSW, that sums up the attitude of many: "The election was a non-event."

As good as it gets

Sadly, the industry seems to agree on one thing: the best thing about the election was that it didn't produce a change in government. As it stands, when an overwhelming feeling is that politicians ‘just don't get IT', status quo is as good as it gets.

Neil Hancock, managing director of mobile computer specialist Portacom, in West Perth, explains: "The IT industry is in terrible shape and anything that creates insecurity causes IT spending to slow down even more because people wait that extra month to upgrade." A Labor administration would only have exacerbated that effect, he believes.

The election campaign itself had a more pronounced impact on business than any policies it generated, according to John Slack-Smith, Harvey Norman's general manager for computers and communication.

"At election time, people go into a holding pattern because of subconscious uncertainty. Every time there is a state or federal election, we see a drop in retail activity," says Slack-Smith. "Now that the election has been decided, we are back to business as usual. But none of the specific election issues are going to have any adverse or beneficial effects on business."

More upbeat is Australian software developer Tower Technology, which earns the majority of its revenue from exports of its imaging software. The Federal Government's progressive erection of a framework for e-commerce has been "extremely good" for its business, says Tower managing director Noel Jones.

Tower's products help capture and archive Web page activity, an area that government departments must comply with as a matter of online policy. "The Coalition's promises to continue to move government to e-commerce status is good for all of us," Jones says.

Broadband unresolved

The election failed to provide a definitive answer to the burning question of how quickly and smoothly broadband (DSL) access to the Internet will be delivered. The pace and manner of the arrival of broadband on consumer and corporate desktops is the key issue for Australia's information economy, according to the Internet Industry Association (IIA).

"Everyone recognises broadband uptake is going to be the critical driver for the industry. We view it in the same way that previous governments viewed telephony," says IIA executive director Peter Coroneos.

Both major political parties made impressive commitments to the IT industry but in the broadband arena their policies were powered by different funding mechanisms, he says. The government wants competition policy to do the heavy lifting while Labor prefers carrier-funded universal service obligations to carry the load.

The IIA is wary of the government's reliance on competition drivers to deliver broadband into areas where it is not commercially viable, says Coroneos. He argues that government intervention will be necessary.

Whatever the mechanism, not only ISPs but content providers and e-commerce players are saying they can't progress further until broadband "becomes the preferred means of access to the Net".

From the Liberal side, ICT policies during the election campaign were mainly a repackaging and consolidation of earlier announcements such as the $3.6 billion innovation statement in January and the $12 billion education package in the May Budget.

"The challenge now is to make sure those commitments are translated into action and don't become ‘non-core' promises the government walks away from," says Coroneos.

Datacasting doubts

Datacasting remains a grey area, which the election campaign did little to clarify. A review was promised, which will probably occur next year, but "the question is whether it will be a review they have just so they can say they had a review", Coroneos says.

Momentum has leaked out of the datacasting push since the Federal Government fumbled the issue last year. "Datacasting is now stalled globally and it will be hard to re-attract the same level of interest," Coroneos predicts.

The IIA has a short wish-list when it comes to who will take over from IT Minister Richard Alston as the chief ringmaster in charge of executing government ICT policy. But the list consists of qualities rather than names.

"We're hoping for someone who loves the portfolio, is not compromised by other political imperatives and is prepared to argue like hell for the industry in Cabinet," says Coroneos. What he doesn't want to see is "a non-believer who is just taking the portfolio [Mini-ster for Communications, Information Technology and the Arts] to fill in time".

The emergence of ICT as a major plank in the platforms of the main parties for the first time was a big plus in the election campaign, as far as industry onlookers were concerned. Offsetting that was disappointment that the expenditure timelines on ICT policies extend to "three to five years or longer", says Australian Computer Society president John Ridge. It demonstrates that neither side of politics appears to understand the full impact of the tech downturn, Ridge says.

"They don't share the sense of urgency felt by ICT industry leaders that something needs to be done and done damn quick."

The ICT sector has been a golden boy and job generator for so long the government can't seem to grasp that that era is over. As a result, politicians have a blind spot about the pain the industry is going through.

"We have not seen anything from the government that recognises how our industry has lost three-quarters of a million people around the world this year," says Australian Information Industry Association executive director Rob Durie.

In the past few months, telecom companies in Australia have laid off more workers than Qantas's planned cutbacks. In contrast to the storm that surrounds layoffs in the tourism, and airline industries, however, "there is no recognition by government on how to help our industry through this time", Durie says. The industry isn't asking for handouts so much as policies that will stimulate investments in trying circumstances.

The ACS and AIIA are both part of the ICT Industry Alliance, a loose coalition of interests, which intends to hammer at government to bring forward its planned expenditures "for the economic benefit of the country", Ridge says.

He also believes more attention should be given to allocating a greater share of Federal Government procurement spending to Australian-owned companies. That share now sits somewhere between 5 and 25 per cent of the total technology spend, depending on who provides the figures.

During the campaign, the ALP pledged to channel up to 50 per cent of government spending into local companies and that type of stimulus should be "first cab off the rank", Ridge says.

"We aren't suggesting the government should stop buying Microsoft Word. It is about looking at where Australia can develop niche markets for itself to create export opportunities."


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