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The 1999 channel gospel according to ARN

The 1999 channel gospel according to ARN

ARN asked seven IT and channel professionals and analysts to gaze into their crystal balls and predict what would be the major driving forces and changes in 1999. Tamara Plakalo looks at their conclusions.

It's the beginning of another year, and you just know that predictions, prophecies and the occasional fatalistic bug-scare will be lurking everywhere.

Especially this year, they will be lying in ambush behind your computer screen and spoil your Saturday morning newspaper session, simply to annoy the C-ommon R-ational A-nalytic P-redisposition out of you. Yet you will remain transfixed by their inexplicable power to drag you into the realm of the crystal ball.

Welcome to the year of the millennium bug! But, hey, not that millennium bug! You see, it's 1999 and, as it usually happens at the end of an era - not least at the end of a millennium - our prophetic, astrological, numerological and other foretelling mechanisms are ready to go into creative overdrive.

ARN asked seven IT and channel professionals and analysts to gaze into their crystal balls and predict what would be the major driving forces and changes in 1999.

We even tried to get a well-known astrologer to contribute to the effort, but all he had to say was that we were re-entering the age of Aquarius, which is also supposed to be the age of computers. And since I figured that the age of computers was already here long before he told me so, I refrained from using his services any further.

So without further ado, here is ARN's 1999 channel gospel.

The year of mixed fortunes

Let me give you the bad news first: when it comes to the channel, 1999 is definitely going to be the year of mixed fortunes. But, if "thriving on a challenge" is your choice of a clichŽ and you like to feel the occasional surge of adrenaline, stay put, for this will be your year!

1. Electronic commerce to facilitate new distribution modelsOn the one hand, the last year of the 20th century is poised to be a big year in the areas of Internet and particularly electronic commerce development. On the other, as Chee Wong, technical director of Perth-based electronic commerce specialist OpenSearch asserts, the acceleration in the uptake of electronic commerce is certain to have a huge effect on the way distribution chains will work in the future.

As a result of the general increase in use of electronic transactions, Wong expects "manufacturer-to-end user" relationships to mushroom next year, spelling out trouble for resellers whose future as a "middleman" is destined to come under attack from yet another direction.

But, while one might be forgiven for considering Wong's view slightly biased, the anticipated change in distribution models indeed seems to be gathering momentum.

Industry analysts predict that up to 50 per cent of all business and retail transactions in the US this year will be conducted over the Internet. And whether you like it or not, Australia will follow the trend.

Recent IDC research points out that already 31 per cent of all banking and 25 per cent of all manufacturing purchases in Australia are made using the WWW and Bernard Esner, a senior analyst at IDC, believes the figures indicate the channel is in for the year of "big migration". According to Esner, as retailers become more willing to surf the big e-commerce wave and defect to the Internet, they will start doing so en masse.

Retailers and Web developers aside, the e-commerce explosion is sure to delight database and accounting software specialists as well. Focus Software's Richard Jones says both will have to move to the Internet and this, together with the emergence of object oriented databases, will provide accounting software companies like Focus with the potential for growth.

However, the picture is less rosy when it comes to the vendor-channel relationship.

There the convergence of entertainment, communication and information tech- nology industries will cause more vendors to align with telcos in an attempt to create more "specialised and mobile channels", abandoning their resellers along the way.

Graham Porter, marketing manager of software powerhouse Inprise, said that "channel partners will [therefore] need to identify their USP and determine the value that they add to ensure their customers come back to them".

2. Hardware sales slow down, but WAP technology takes offThe tremors of the Asian crisis are yet to be felt down under.

One of the possible scenarios to watch for in 1999 is that its economic impact, coupled with state government elections, will make individuals and small businesses more cautious in spending their hard-earned cash on technology. As a result, IDC's Esner warns that resellers will have to face up to significantly reduced hardware sales.

Furthermore, with businesses rushing to achieve Y2K compliance, local companies succumbing to the pressure of big multinationals and more vendors choosing to bypass distribution channels and go direct, it is highly unlikely that computer hardware will be a star sales item for the channel this year.

The advice from Paul Schulz, technical director at Sydney smart card specialist Indigo, is to look to the upcoming Wireless Application Protocol (WAP) technology for an answer.

Schulz proclaims that this will be a big year for mobile technology.

"1999 will see the release of WAP technology into the Australian market and "value added services" will be needed to support that market."

While Schulz admits that the take-up rate for the new technology will be slow, due to the high price of terminals and the initial struggle with the billing models to offer with respect to WAP services, Schulz believes the number of WAP services on offer will start to grow towards the end of 1999.

"2000 will be the year of wireless services in Australia if 1999 proves to be the year that operators start to roll out stage two in the age of personal mobility," Schulz said.

3. Skills shortages 'cripple' the industry1998 was the year when the IT industry skills shortage problem was on every- one's lips. But, save for the public debate, little was done to address the issue, with many companies facing serious staffing problems.

Adrian Di Marco, managing director of Brisbane-based Technology One, frowns at the mere mention of the word "shortage".

"The biggest problem for our business in 1999 will be recruiting the people with the skills we need," he declared after revealing that he has been trying to recruit several people for his thriving financial software business for the last six months - without success.

Di Marco is adamant that the pessimistic refrain about "the crippling effects" that the IT skills shortage is supposedly going to have on the industry is far from being an exaggeration.

"The problem is exasperated by the pull of people to Y2K jobs, as well as overseas to places such as the UK," he added.

Unless the industry manages to produce some sort of deus ex machina solution fairly soon, the shortage is likely to cause the cost of labour to sky-rocket in 1999, with the trend probably continuing well into 2000.

4. The Y2K bug starts to bite

Despite assurances to the contrary, many companies will not be Y2K compliant when the dawn chorus welcomes January 1, year zero-zero. Assuming that Y2K compliance is a problem that can be dealt with within a time frame of between six to 12 months, a large number of businesses have left it to the last moment to embark on a solution.

What they have failed to take into account is that throughout 1999, the demand for Y2K services is destined to remain much higher than possible supply.

According to Di Marco: "The demand on vendors will be so high that they will start knocking back business around March or June, and then you will be lucky if you find someone prepared to sell or implement a package for you."

Furthermore, the expected avalanche of Y2K lawsuits against solution providers and especially those who built their businesses doing Y2K conversions will, according to Di Marco, force some of your channel partners out of business.

"Unfortunately, insurance will not cover these companies and we will see some of them go to the wall," Di Marco said.

5. Thin client computing takes over from client/ server modelFinally, it is not just that habitual oracle Larry Ellison who thinks that PC computing is yesterday's news.

Most of our partners in prediction crime also think the time of the new paradigm shift in computing is just around the corner and its name is Internet/virtual private network-based computing.

Leading to this new era is the demise of client/server computing in favour of the hyped up Internet/virtual private network-based thin client computing, expected to start late this year.

Promising to centralise what Ellison calls "distributed complexity" by removing information from desktops and storing it with universal/application servers, the new era will give rise to a whole new generation of applications in the development of which Java is set to play a crucial role.

But that's 21st century already, so, until then, enjoy 1999!


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