Channel focuses on business benefits

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Big IT infrastructure refreshes are thin on the ground and the channel needs to pick up its act in a market fraught with massive decreases in spending and end-user demands for faster ROI, according to attendees at CRN's Channel Roundtable.

Most attendees agreed that the channel and industry as a whole needs to sharpen up and translate the technology pitch into a real business benefit. When this happens, spending will increase, according to Nick Verykios, MD at distributor LAN Systems. 'The big issue is how are you going to get people to spend money? The first thing is – if an end user is presented with a responsible solution based on a business productivity initiative, they're going to invest,' he says.

Verykios says the channel is failing to turn technology into true business productivity benefits for customers. 'Is there propagation of true business productivity solutions out there by integrators and resellers? The answer is no – because if it was yes they would be spending a lot of money.

He says that the end user wants to reduce costs, increase their opportunities to generate revenue for their business and do it properly, and IT is a small part of the equation. 'End users haven't stopped investing, they've stopped investing in IT,' he says.

Verykios says the big question is: 'What kind of solutions that meet that productivity requirement can the industry offer?'

It is a hard question to answer because the channel is in immense conflict with vendors, distributors and resellers in being able to provide that productivity initiative.

'All we want vendors to do is produce technology and what they need to do is sell shit-loads of it. So therein lies that notion of that commodity sell.

'The channel sweet spot is being able to translate that. People aren't buying lots because that translation that the channel has traditionally done – translating it from a commodity sell to a highly considered buy. It's based on business productivity and if that translating can't happen then the buyer won't spend on IT,' he says.

Paul O'Connor, director of partner sales at Sun Microsystems Australia, adds that collectively the industry needs to take a 'good hard look' at itself. He says while the industry and the channel wax lyrical about the latest hot technologies such as security and storage, it is failing to provide solid reasons for customers to invest.

'If you sit down and look at it from a business perspective, what value does [the latest technology] add to a business? Does it make them more competitive, does it make them more productive? Does it make them get anywhere closer to where they need to be as a business? The answer is no,' he says.

Bruce McCurdy, CEO at Brisbane-based infrastructure reseller Clariti, says everything his company does is based around how to get a business return.

'If there's no return there you find that the CIO is going to sign off on the decision – they're not going to spend the money because they got heavily burnt in 1999.

'Now they're very careful about what they spend. Everything we do is about: “Let's take what you've got and add something into it that's going to give you that return that you missed”,' he says.

Hardware and IT infrastructure needs to be refreshed, but increasingly in the global economy, purchasing decisions are being made offshore, according to Colin Williamson, CEO at corporate reseller, Comaxes.

With the globalisation of systems and Internet driving businesses, decisions on IT purchases are being made at companies' head offices and progressively being rolled out to other locations around the world.

'In a lot of organisations I've seen consultants walking around with 300 megahertz notebooks. It can't last too much longer.

'Some of the systems that have been sitting there for years and years need a good look at – but the question is whether it is going to follow the standards that have been set in the US and Europe anyhow and roll out the program and the decisions that have been made in the States locally. That, in my experience, is getting to be more the norm in the sort of enterprises I'm dealing with,' Williamson says.

He says the scope for influence of the reseller channel on purchasing decisions is diminishing, primarily because those decisions are made well away from Australia. 'There's a realisation that we are only a couple of percent of the world market. We are not going to influence local decisions,' he says.

'Most [companies] in my experience are now getting their IT budgets defined by the States or by Zurich or whoever it may be and all we're really taking about is how to split the pie up when we've got the money locally. The timing of refreshes to a certain extent is being determined offshore,' he says.

'Whether or not they use A notebook or B notebook – whether or not this year they spend money on security or on the rollout of a new CRM system – is going to be defined in the States. There is some local discretion but I think that is getting reduced over time,' he says.

Refresh or not?
Joe Arcuri, national sales manager at corporate reseller BCA IT, says the company's service business has increased due to a lack of product sales and the average life cycle of notebooks and PCs has stretched up to five years.

'Two to three years ago the average life cycle of a notebook was two years and the average life cycle of a PC was three years. Anybody would tell you now that notebooks are pushing out to three and four years and desktops are going out to five years.

'So this has caused a lot of attrition in regards to maintenance offerings Australia-wide. So that part of our business – our support services – has grown dramatically: we're actually getting tenders on our desks to maintain desktops to seven years; they're doing that basic business practice that they're required to do. We've seen a lot of that so I don't know if there's going to be a big refresh,' he says.

Sun Microsystems' O'Connor adds that while companies go through several rounds of IT refreshes, they're still only performing simple tasks like word processing and spreadsheets on their machines. 'We [the industry] put a whole lot of technology in and say: “Oh it's not secure, you've got to spend a whole lot of money to make it secure, but it doesn't add one iota of extra value to the business”,' he says.

In addition, the ability of the channel to justify the sale and show the benefits of moving to new technology has 'diminished dramatically' over the past three years, according to BCA IT's Arcuri.

'I see a lot of the good quality sales people in the channel have moved on to different fields – more sexy fields. Selling desktops and servers and that infrastructure stuff is not appealing for guys that have been in that marketplace for five to seven years.

'Now we've got a lot of young kids in our industry and I just don't think they have the ability to walk into an organisation, go higher up the food chain, and show the business problem and show the solution that addresses the business problem and show the return,' he says.

Toshiba Australia boss Ralph Stadus agrees. 'They [some salespeople] don't know how to sell. They know how to take orders but they don't know how to sell. The calibre of salespeople in the industry has dropped dramatically. 'When the IT industry first started – in the last decade you didn't have to sell. Customers would say: “Give me a thousand desktops”. All the salespeople thought they had to do was con


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