Solution Providers Scoff At Debt Ceiling Gridlock

Timothy Shea, the CEO and senior consultant for Alpha NetSolutions, is disgusted by the debt ceiling gridlock on Capitol Hill. But Shea and other technology solution providers say that they refuse to be distracted by what they see as the Capitol Hill circus.

"I am a Zen Buddhist which tells me to simplify and not worry about the things I can't change," says Shea, who expects his Marlborough, Mass. based company's sales to be up a whopping 30-50 percent this year, a record high. "I can't make Washington not be in gridlock. I am not going to agonize over it. I'm aware of it, but I am not going to change my plans or pull my hair out over what a bunch of politicians are doing."

Shea is one of many solution providers who see the breakdown of debt ceiling budget talks between President Barack Obama and House Speaker John Boehner as more of the same from Washington.

"This is the best year we have had since 2007 and our highest revenue in our nine years in business," Shea said.

He says many Alpha NetSolutions' customers are simply "sick of the economy being out of whack" and are moving on long-delayed technology refreshes to keep their businesses running efficiently. "We are doing server refreshes, a lot of virtualization, desktop virtualization and cloud computing business," he said. "We did a mobile computing seminar one month ago and expected 10 people. We got 16."

Economist Douglas Holtz-Eakin, a former director of the Congressional Budget Office and the president of The American Action Forum, a Washington policy institute dedicated to keeping America strong, warned technology solution providers two years ago at Everything Channel's XChange conference that the government stimulus response to the economic crises missed the mark.

In an interview Monday, Holtz-Eakin said if government tries to tax its way out of the deficit crises, small businesses will be in "big trouble."

Getting through the "debt limit increase" without market disruption is only dealing with the "symptom of the problem," said Holtz-Eakin. The question is "how do you address the real problem, which is the fact that you have projected so much debt in our future. If the solution is we are going to tax our way out of it, small businesses are in big trouble."

Small businesses have to keep their eye on whether Washington is "willing to address the spending problem," said Holtz-Eakin. "The greater their willingness to address it, the better it will be for small business."

"At this point, we have made all the mistakes that we can afford to make and now it is time to put in place solid, pro-growth policies and get back to business," he said.

Next: 'We Need A Plan'

Arlin Sorensen, CEO of Heartland Technology Solutions, a Harlan, Iowa-based VAR with offices across the Midwest, said he continually hears from SMB customers who have a lack of confidence in what the federal government is doing regarding the debt issue.

"Uncertainly equals an unwillingness to approve opportunities in the pipeline. Small and midsize companies have a lot of quotes in their hands and they want to do business but are fearful of what might happen," Sorensen said. "This situation and the economy in general is continuing to impact us because people are just unsure. We need direction and a plan. This continual upheaval causes doubt and confusion which translates into postponed business which is bad for us as VARs and also our customers who are already extended in much of the technology they continue to utilize. "

Sorensen is confident there will be a significant IT refresh at some point, but he can't say when.

"Right now it is just business as usual until some clarity comes from not only [Washington] but also a lot of states. It is pathetic that these folks can’t make a decision to give us true recovery," Sorensen said.

Several technology solution providers said small businesses are using technology refresh cycles to move to cloud computing solutions. And smaller busineses are quicker to move on cloud computing projects because they do not carry the IT infrastructure of larger companies.

Joe Balsarotti, president of Software To Go, a St. Peter, Mo. , said his small business customers are not "worried about debt ceilings, bankers or Wall Street. They are worried about whether they can open their doors the next day, take care of their customers and pay their bills."

"If they ran their business like the federal government they would be in jail," he said. "They'll (Elected officials) come up with something (to raise the debt ceiling). It is all about who is going to blink first. Our business is simple: you either have to cut your expenses or become more efficient."

Next: A Message For The President

Balsarotti, for his part, sent a message via The White House Web site urging President Obama to require every government agency to implement a two percent budget cut. "If someone wants to say there is not two percent waste in any organization -- let alone one the size of the Federal Government -- they are a liar," he said. "There is two percent waste in my business and there are only four of us. Who can argue with a two percent budget cut?"

Balsarotti expects Software To Go sales to be up about 15 percent this year, said Balsarotti. "This is the best year we have had in five or six years," he said noting that he is also seeing a number of well-established businesses refresh their technology infrastructure with a healthy server sales. "A lot of our clients that have been in business for 10-15-20 years are doubling down, putting in new equipment and improving their systems and getting more efficient," he said.

Gary Berzack, CTO and COO of eTribeca, a wireless solution provider based in the heart of New York City, said he is concerned about the impact a federal government default could have on his vendor partners. "There are many cash negative technology companies that this could impact," he said.

Ultimately, Berzack says he sees a scenario of Republicans and Democrats "walking to the brink in order to make it palatapble for all sides, including the public who are the majority partner in this decision, to take the measures in the medium to long term that we have avoided just like Greece."

"If they do make significant headway in resolving long term debt interest payment and debt reduction, then we will get stabilization and clarity in the marketplace so we can start building vision from the likes of (Cisco CEO) John Chambers and others on how we can move the IT economy forward and deal with the next issue which is healthcare costs which is crippling the IT business."

Scott Campbell contributed to this story.