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Solution providers are generally upbeat about the prospects for the new year. Generally speaking, about half expect revenue from consulting, managed services, software, technical services and hardware to be flat in the first half of 2011 while one-third or more expect revenue increases. Only a fraction of those surveyed expect decreased sales.
Blytheco LLC, a Laguna Hills, Calif.-based solution provider, hired 10 people in the last quarter, including sales, support and consulting personnel, after 2010 turned out to be “much better than I expected,” said CEO Stephen Blythe. Blytheco, a Sage Software reseller, reported total revenue growth of 30 percent last year.
“The real growth is going to be on the ‘soft skills’ side,” said Technology Advisors’ Biardo, pointing to increased demand for consulting services, such as user training/adoption and business process management. But a big part of his company’s business today is integrating siloed CRM applications with back-office systems, Web sites and third-party information sources. “Integration is hot right now,” he said.
Dresser & Associates, a Scarborough, Maine-based solution provider that focuses on human resources management and payroll systems, is providing a lot of business consulting and support services. “We think it’s important for our customers to maximize the value of their software,” said President Mark Dresser.
Some vertical markets show more promise than others in 2011 with the greatest number of solution providers (45.5 percent) expecting increased sales in the health-care industry, followed by financial services (33.1 percent), manufacturing (28.6 percent), and then education, retail and communications.
More than 60 percent of those surveyed, nevertheless, cited economic trouble in specific target markets and geographies as a potential obstacle to growth in 2011. More than 55 percent pointed to customers’ inability to justify IT investments as a hurdle, while 38 percent cited “customer inability to pay or finance.”
Yenke said the practice Lighthouse Computer Services developed around document management, e-discovery and litigation is “growing like crazy.” Security and data storage are also big, although the latter “has become as much of a software business as a hardware business. It’s all about the software now,” he said.
Providing users of mobile devices with access to corporate systems is also a fast-growing service.
“Mobile access is something that’s really attracted many of our customers,” said Michael Cohn, founder and marketing vice president at Cloud Sherpas, an Atlanta-based Google Apps reseller. That was echoed by Blythe at Blytheco, which developed its own Bly/Mobile Web client software for connecting mobile devices with Sage MAS 90 applications.
Forty-six percent of those surveyed said it is “likely” or “extremely likely” that they will expand their solution offerings into new emerging technology areas in the next 12 months. More than 25 percent said it’s likely they will form new strategic supplier partnerships, and more than 11 percent even said they are likely to acquire other businesses to expand into new emerging technology areas.
As for cloud computing plans among solution providers, the outlook is, well, partly cloudy. Those surveyed said 24 percent of their revenue came from cloud services in 2009, a number they expect to grow to 36 percent in 2012.
“Our business has really taken off,” said Cohn at Cloud Sherpas, which along with reselling Google Apps provides a range of cloud integration, data migration and development services. “I’m expecting our business to double [in 2011], if not more than that.”
According to the survey, 31.5 percent have or will offer cloud-based
solutions in the next 12 months by adding new resources, while 22.4 percent have or will offer cloud aggregation services for end customers with multiple cloud solutions. But 15.1 percent won’t be offering cloud-based solutions due to security concerns, and 13 percent won’t do so because of pricing model issues.
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