Box movers fail to satisfy cashed-up IS managers

Box movers fail to satisfy cashed-up IS managers

Australian Information Systems (IS) managers are prepared to dig deeper into their budget to pay for services from resellers and integrators, a new report has concluded.

Unfortunately, these same managers still perceive most resellers as just being box movers, said Peter Hind, manager for end-user research at IDC Australia.

The report, titled Forecast for Management, IT Management Metrics and Technology Adoption, also found that users are spending more on technology than ever before.

Of most cheer to the channel, however, is the finding that IS managers are prepared to pay for services. Many Australian resellers and integrators are now looking to services to compensate for shrinking hardware and software margins.

But such a strategy is dependent on IS managers recognising the value of service providers and being prepared to pay for them.

Thankfully, the report indicates that this is the case.

"The makeup of the IS budget is changing and what has become apparent over the last five years is the increase in the amount of the budget spent on external resources," said Hind.

"When I talk to IS executives their biggest challenges are staffing matters; staffing retention and acquiring special skill sets.

"This presents an opportunity to the channel, to not just provide a product, but to provide the total solution including product and staff," he added.

The report, which compares IS budgets of five years ago with those of today, demonstrates explicitly why resellers must shift to selling services.

Expenditure on hardware has dropped dramatically. In 1993, it accounted for 27 per cent of the IS budgets, today it represents just 10 per cent. Meanwhile, the amount spent on external staff - that is, contractors, consultants and professional services - has almost doubled, rising from 6 to 11 per cent in that time.

This sends a clear message to the channel, Hind said.

"If you have a reseller whose bread and butter is selling hardware, they're fighting for a diminishing percentage of the IS budget.

"If they want more, they have to recognise where it is going, and it is going towards external staff," he said.

Users want to outsource their people problems, Hind said.

The bad news for the channel is that the view held by many end users is that most resellers cannot solve these problems because they are stuck in the old mould.

"I don't know whether the channel is seizing this opportunity. I think IS managers still perceive too many resellers as box movers," Hind said.

"I think that when many resellers think of the outsourcing opportunity they think of companies like EDS, but I think there are many components of outsourcing that smaller companies can provide.

"As an outsider looking in at resellers, I think too many reside in a comfort zone and need to look at the corporate world more laterally."

Growing budgets

Growing IS budgets are good news for the channel, though.

"The investment in IT as a proportion of total company revenues rose from 1.49 per cent in 1990 to 2.25 per cent of turnover in 1997," Hind said.

"It was not only the relative investment in IT that increased; IT budgets rose in absolute terms and will continue to do so for the next two years."

Networking has certainly been the biggest growth arena over the last five years. In 1993 it accounted for 5.5 per cent of IS budgets, today it accounts for 12 per cent.

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments