The Cost-Cutting Edge


There is really only one thing on everyone's mind right now: the state of their business. Sure, the overall economy is an issue but the VARs and IT vendors we speak with every day are concerned solely about their business as they grapple with questions such as what solutions customers will buy and when; what incentives will stimulate sales; how to find new customers or better serve the ones they have. Today's average VAR is focused on how to survive this downturn by driving his business forward. So rather than listen to all of the rhetoric coming out of President Obama and his new administration or other experts, let's look at some of the facts.

Customers want technologies that help them take costs out of their operations. That is why our cover story is dedicated to helping our readership understand what is really going on today.

For an IT manager or executive to get funding for a new purchase or initiative—be it unified communications or server virtualization -- he must relay to those great protectors of the budget all the money that will be saved as a result of spending money now. For proof of this, just look at IBM's fourth-quarter earnings report in which IBM stated that three-quarters of new signings in its Global Business Services unit, which includes consulting, systems integration and application services, are focused on cost reductions. Since IBM operates the market's largest IT services company, this is a fact to pay particular attention to and apply to your strategy. If, as a VAR, you haven't focused your sales efforts around the theme of cost-cutting, you should stop procrastinating.

If you place a priority on adjusting your portfolio to focus on cost-cutting technologies, then by all means don't give up your growth plans. Again, let the facts speak for themselves: Thirty percent of the solution providers we surveyed just several weeks ago said they plan to grow sales by 15 percent or greater this year. Call them whacky or just ambitious, but 13 percent of those we surveyed expect growth of 30 percent or greater year over year. One-third of the VARs we surveyed expect growth of between 4 percent and 15 percent, while the remainder expect to be flat. (Hey, maybe "flat" is the new growth.) So, the bulk of the VAR community today is banking on, planning to, praying for and expecting to grow at a healthy clip. Consider those numbers against researcher Forrester's projection that the U.S. IT market will grow a meager 1.6 percent this year to $573 billion and you get a better idea of just how optimistic -- and hardworking -- today's VARs are when it comes to their business. There may be uncertainty, but there is still confidence.

Note to Steve Jobs: Get well. That was the topic of a blog I posted on Channelweb.com after Jobs disclosed he would be taking a leave of absence from the helm of Apple and temporarily turn the reins over to Tim Cook, who many in the channel may remember from his Intelligent Electronics and Compaq days. I wrote the blog in response to all the professional journalists, bloggers and others who were acting so holier than thou about what Jobs should or should not have disclosed about his illness. I have observed and written about Jobs for nearly two decades and still feel honored to have been at the introduction of the original Macintosh back in 1984.