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Channel divided on user spending

With the end of financial year just two weeks away, industry opinion is divided on how successful June will be. While the channel is bracing itself for an end of year rush, some are claiming they have seen a move away from last-minute deals.

ChannelWorx managing director, Scott Lidgett, said the end of financial year was becoming less important in the sales cycle. One reason for this, he said, was that many of the networking security distributor's customers were now multinational organisations that didn't run an Australian financial year.

Sarbanes-Oxley had also put an end to the time-honoured tradition of channel stuffing that used to be such a big factor at this time, he said.

"We find there's a rush at the end of every month now rather than end of financial year. Even government departments are getting smarter about it," Lidgett said. "We had a great May but that was largely due to deals slipping from previous months. January, which is usually quiet, was our biggest month of the financial year so far. Go figure."

New Dicker Data sales manager, Chris Price, put the shift towards monthly spending down to customers becoming more risk averse.

"People are getting cynical about growth opportunities so most vendors and resellers are looking at business on a month-by-month basis," he said. "April was atrocious for everybody. May was better but not as good as last year.

"You get a perception of how healthy the market is from reseller interaction with end-users. They know better than anybody when buyers are being aggressive or tentative and it seems people are reluctant to make big investments at the moment."

Closing commitments

In contrast, Ingram Micro commercial and solutions director, John Walters, said it was gearing up to fulfill a raft of last-minute deals.

"The end of financial year is not as important for us because we run to a calendar year," he said. "But a lot of deals are being pushed through. Most of the companies we work with are Australian-based, so we are getting a lot of commitment to close deals by June."

The mid-market and retail sectors seemed particularly keen to finalise transactions in this financial year, Walters said.

The distributor's daily run rate across April and May had been consistent.

"It's not champagne popping stuff, but June is looking solid and steady," Walters said. "In previous years, May and June have gone through the roof."

Integrators are also reporting a swing away from last-minute purchases. Data#3 CEO John Grant, put evenly spread corporate spending down to astute purchasing and the adoption of more sophisticated technologies.

"The perception with customers is that they can invest to do more business," he said. "There is still a 5-10 per cent bias in the second half of the year but it's not a predominant driver anymore."

Grant claimed government departments and corporates had performed strongly during the past year. This was prompting higher levels of expenditure on IT projects, which could improve service and delivery.

"People are simply smarter about spending their bucks," he said. "There were good lessons learned after Y2K."

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Centralised purchasing

Oakton Computing managing director, Neil Wilson, attributed better buying patterns in the public sector to the introduction of whole of government policies. This had culminated in the appointment of state and federal-based CIOs.

"There's now a strong focus on sharing and commoditising, whereas historically it was more about departments," he said. "Whole of government initiatives have become very strong, which leads to rationalised spending."

The focus on business-oriented spending was fuelling investments in consolidating IT and service-based technologies, Wilson said. The broader industry was also looking for more customer and revenue-based systems.

Smarter spending

While there was still a tendency to spend up before the end of June, Southern Cross Computer Systems (SCCS) CEO, Mark Kalmus, said businesses were getting wiser about when they spent their dollars. The integrator's horizontal market coverage ranges from low-end PC product sales through to higher value enterprise technology.

SCCS was expecting to chalk up a better June than last year, he said, after experiencing a surprisingly strong April thanks to managed security solutions, integrated networking and storage.

Its focus for the new financial year was to invest further into staff for its consulting and professional services, Kalmus said.

Data#3's Grant argued customers were shifting away from coping with governance concerns towards business building technologies. This had resulted in more project revenue around IP and unified communications, WANs, refreshes and extensions.

Brian Corrigan contributed to this report.