Channel: Customers Are Ready To Spend

Nearly three out of four solution providers polled in the May CRN Monthly Solution Provider Survey said they expect sales growth of at least 6 percent over the next few months in the small-business market. Also, 59 percent said they expect the same level of growth in the enterprise IT space. Both of those figures are record highs in the three years that CRN has collected such data.

The results reflect overall solution provider sentiment for near-term business. The channel's overall sales expectations index hit 111 in the May 2004 survey, soaring past the May 2000 baseline index of 100, set just after the Internet stock bubble began to burst. What's more, the May 2004 index marked the second time this year that overall near-term sales expectations hit their highest level since CRN began collecting such data four years ago. The previous high of 109 was reached in February 2004.

Solution providers, too, gave sunny forecasts for virtually every IT segment. Expectations for notebook sales were 52 percent above the May 2000 baseline, as businesses continue their wide-scale adoption of wireless connectivity for mobile users. Other areas drawing strong solution provider optimism included Unix/RISC servers, PC servers, peripherals and desktops. The only segments below the May 2000 baseline in the latest survey were networking hardware and software.

"Customers are finally needing to upgrade," said Lucky Wright, president of Right Solutions, a Vancouver, Wash.-based system builder and solution provider. Many industry observers have been predicting a big upgrade push among businesses, and IT players have been waiting for them to reach the point where they're ready to spend. "Finally, they are getting there," Wright said.

Wright also echoed what many other solution providers said in the May CRN survey: Sales of notebooks and custom-built whitebooks are leading the way toward overall strong sales growth in the IT space.

And to help drive growth, some solution providers are stepping up hiring, particularly in sales. In the May survey, 39 percent of respondents said they plan to add new sales positions over the next six months, up from the 33 percent that expanded their sales forces over the previous six months (see story).

Still, not all solution providers are convinced that businesses and other customers are starting to open their wallets. Fred Shokati, president of Efftech International, a San Diego-based system builder and solution provider, said much of the government IT market--which makes up the lion's share of his business--has appeared soft.

"In the March and April time frame, we heard [business partners] say, 'We're going to be doing this, and this and that.' We never saw it," Shokati said.

Indeed, there's often a shortfall between businesses' planned technology spending and their actual IT outlays. To help solution providers better assess customer spending, CRN is now collecting data on businesses' level of commitment to carrying out planned IT spending. The first set of data, on midsize companies, is slated to be published in the June 28 issue.

*FOR THE FULL CRN MONTHLY TECHNOLOGY SPENDING OUTLOOK, CLICK HERE.