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EDITORIAL: What is 6 x 7?

EDITORIAL: What is 6 x 7?

One thing evident from the examination of any historical tome is that history keeps repeating itself. The cycle of "life, the universe and everything" involves forces beyond the comprehension of mere mortals, but only a fool's fool would deny they exist and roll around at regular intervals.

Night follows day, spring follows winter, war follows peace, bust follows boom and, according to popular British author Douglas Adams, the answer is 42.

Because of the cyclical nature of things, a downturn in economic fortunes, such as the one currently being endured, needs to be navigated rather than surrendered to. Things are going to improve, so it is merely a case of sitting out the storm and being ready to make hay again when the sunshine returns.

Of course, no one is exactly sure when our current stormy weather will improve, but as sure as peace follows war, the IT industry will continue to grow and channel partners are going to play a major role in the equation.

So if history repeats itself, what can we learn from the past?

The last major crisis in the IT industry is generally chronicled by pundits as having taken place in the early 90s. From the dust of that economic dip sprang the boom that has just stalled.

The first observation to be drawn as the economic pendulum swings into recession is that the IT industry will swing back before the mainstream economy will and it will also rebound very quickly after it has bottomed out.

Despite the apparent slowing in demand for technology, no-one denies the industry offers genuine cost-efficiency and productivity benefits where a suitable solution is effectively implemented. Such return on investment is increasingly demonstrable, and tough times have elevated it to priority status on the list of buying motives.

Economic low points therefore create an environment in which IT businesses can potentially flourish, and if history repeats itself - as it invariably will - the new demand will again arrive in a torrent.

Another pattern that has been identified since the last recession and subsequent consolidation and rationalisation in our sector was that some technologies and skills become obsolete.

How carefully channel entities have selected the vendors and technologies they sell and support is going to be the telling factor in the fall-out which is going to occur. If the thin client, voice-over-IP or security partner you have sidled up to doesn't sustain flight, expensive support issues, and dissatisfied and lost clients can inflict damage.

Meanwhile, there is no surprise at the latest round of lay-offs, as a drop in demand for network and PC twiddlers is coupled with a critical shortage of security, storage and broadband switching skills.

The good news for the myriad small enterprises which make up the vast and varied IT channel is that it is often the leaner operators which are first out of the blocks after a downturn. Large companies are restricted by unwieldy processes. They are often tied up in acquisitions and mergers that slow their big cogs and which take lots of energy to get going again.

Smaller companies are much more nimble in embracing new opportunities as a result of centrally managed structures and autonomy over direction and investment. Perhaps the best demonstrations of how little guys can became mainstream players by outwitting the market leaders in times of recession are Dell Computers and Harvey Norman.

Michael Dell offered a new way for people to buy computers, and took enormous chunks off the costs of doing business in the process to emerge as a major player in the PC market.

Similarly, Gerry Harvey's empire rocketed out of the last great consumer retail boycott by bringing a fresh approach to the shopping experience, and latching on early to the commoditisation and retail potential of IT.Gerard Norsa is editor of Australian Reseller News. Reach him at gerard_norsa@idg.com.au


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