Enron Scandal Will Have Wide Impact On Channel

"I think the fallout will be better for companies like ours," said Vince DeRose, president of PEAK Resources, an IBM specialist and one of the largest solution providers in the Denver, Colo., area. "End users are going to start understanding the value of specialized, localized solution providers and IT consultants, instead of relying on these big behemoths like the [Arthur Andersens of the world.

"I don't think a customer needs an Anderson to tell them whether they should buy an IBM or a Sun [Microsystemsplatform," DeRose added. "And they certainly don't need the Andersens to implement it. If you look at what happened to Enron, it will be inherent for the end user to rethink their relationships with a large consulting firm or, at the very minimum, they'll scrutinize those relationships a lot closer."

The impact, however, could have a negative impact on high-tech companies, other solution providers said.

Oli Thordarson, president of Alvaka Networks, an MSP and solution provider in Huntington Beach, Calif., said he believes the recent slide in the major markets proves the scrutiny DeRose spoke about has begun. "That's a reflection of the lack of investor confidence," he said. "That affects a company's ability to raise equity or cash or to borrow money. It makes everyone skittish."

If Thordarson has learned anything in the IT trenches it's this: When a company gets nervous about earnings, one of the first things it cuts is IT spending. "So it could abort this rebound in IT spending that we've been seeing," he said.

Declining stock prices also impact companies' stock option and 401K programs, which in turn affects their ability to hire top talent, develop new technologies and grow their businesses, he said.

"Look at all the high-tech companies that used employee stock options as incentives to grow the company and hire the best and brightest people in the world," Thordarson said. "If they don't have that tool to attract and compensate those people, it could slow down development and the profitability of those companies. There is also a lot of speculation about how companies are going to be allowed to do those things in the future."

Harvey Najim, president and CEO of Sirius Computer Solutions, a large solution provider in San Antonio, Texas, said he agrees with Thordarson. He doesn't think his company will gain business from the fallout, but he does think a general paranoia will follow the additional scrutiny regulators will pay to the dealings of large, complex companies.

"When you take a look at all that happened last year, Enron was huge," he said. "There are a lot of people out there worried as hell about whether the financial statements of the company they work for is inflated or if their 401(k) is okay. That's sending a lot of nervousness throughout a lot of companies. I don't think we know what the total effect Enron will have on the economy, but I think it will be huge."