8 Tips To Recession-Proof Your Business

With economic uncertainty clouding the future for solution providers and their customers, many VARs are putting plans in place to try to safeguard their businesses. Of course, there are obvious ways to get your "house" in order: Improve productivity, cut bureaucracy, etc. Here now are some ways you may not have thought of how to recession-proof your reselling business, from top execs at various solution providers.

OUTSOURCE: KEEPING AMERICA FIRST

Outsourcing is a hot-button issue among solution providers. Many of their offerings take on responsibilities of their clients, allowing those companies to focus on their core competencies as they have to more closely monitor their pocketbooks. Providing such services in the United States offers cost savings, though generally not as large as offshoring those same services, due to wage differentials. The advantage here is that the VAR can focus on its core competencies while having its partner close at hand -- and it's a source of U.S. pride as well, noted Bob Venero, founder of Future Tech Enterprise, (No. 298 of the 2007 VARBusiness 500).

"Look at all the positives that are out there: We've got incredible people doing incredible things in the U.S. and we should leverage that," said Bob Venero, who is also founder of Insource America, a program that equips recipients of government assistance with the skills they need to offer expert IT support. "As opposed to keeping everything inside your company, outsource to other U.S. companies."

OUTSOURCE: PROVIDE OFFSHORE SERVICES

"By now, many companies have implemented a cost reduction program," said Gabriel Rozman, TCS executive vice president. "One way to do that is to look offshore for staffing and production." For less complex projects, this is a less expensive option than outsourcing in the United States. Firms that offshore work to India, Latin America or Eastern Europe have seen substantial cost reductions. Often, companies ship those less detail-intensive projects to be completed in other countries so they can devote money and headcount to larger, more complex projects.

OPEN SOURCE: FASTER TIME TO MARKET

While open source software isn't always 100 percent free, it is much less costly to deploy than proprietary software, assuming your business can support it, and that it knows where to turn when it can't solve a problem. "You can't deny the revenue that is attached to services, and proprietary software implementation takes 15 times longer: You have to negotiate margins, SLAs, do validation, licensing and paperwork," said Alani Kuye, (left), founder of Phantom Data Systems, Norwalk, Conn. "By the time you complete all that one, two months pass. On the other hand, on Day 1 with open source, you can have a service agreement and you can get going. The time to market is much faster.

KEEP YOUR OPTIONS OPEN

In addition to considering open source, think about adding new vendors to the mix. "More VARs are now interested looking at Google apps also. There's a major push toward that. There's more emphasis on open source. Google will drive that, coming up with software to compete on mobile platform, for instance," said Alan Weinberger, CEO of the ASCII Group, Washington, D.C. "We noticed VARs are going more to Dell. A year or two ago, that would not have happened. Today, Dell has authorized program. It's like a religion with some people; for many years, Dell played against channel. But now, ASCII has an agreement with Dell, we support their channel initiative and customers are asking for Dell product. VARs can make a buck on Dell. Dell is now a real alternative."

MANAGED SERVICES: A CONSISTENT REVENUE STREAM

Providing delivery and management of network-based services, applications, and equipment to customers is one way solution providers can ensure repeat income, often by using talent and hardware it already has. "Managed Service Providers who offer a flat-fee for the proactive support of their customers' networks are less likely to be affected [during a downturn]," said Ronnie Parisella, (left), Chief Technology Officer at Primary Support, New York.

FOCUS ON CUSTOMERS' ROI

Customers always want to be shown an attractive return on investment, but when funds are tight, only those solutions with high ROI will be approved. "The scrutiny companies will give proposed projects will be like what we saw 2001-2002. Only those projects with very quick and high return on investment will be approved," said Joe Mertens, president of Sirius Computer Solutions. "Business projects that are specifically geared toward solving problems are the solutions that are more apt to be approved. Other, more general ones will be pushed out further. Discretionary spending is not as likely."

'GREEN' TECHNOLOGIES VIABLE OPTIONS

When customers are updating data centers, it is an optimal time to introduce equipment that runs cooler, more efficiently and costs less to dispose of. The upfront costs of some of 'green' technologies can be more than of traditional equipment; however, when long-term costs (electricity, disposal, e.g.) are factored into the equation, going green can be an attractive fiscal decision.

"CPUs today use a fraction of the power that they did five years ago. Customers get a natural power efficiency through updating hardware. [For example,] there is new technology emerging, such as AMD's Barcelona, which, because it has hypervisor embedded in it, should produce additional efficiencies in virtualization. And virtualization means using a more streamlined architecture, creating less heat, which uses less energy, and means fewer pieces of hardware, which will need less service," said Rockwell Bonecutter, managing partner for the Accenture Data Center Technology and Operations Practice in America. "It's the Holy Grail of IT propositions: It's right for the environment, it lets you upgrade hardware and see ROI."

CONSIDER BUYING SMALLER VARS

If your books are in order, it may be a good idea to look at snapping up smaller solution providers that could add luster to your own offerings. Incentra Solutions, Boulder, Colo., for example, has been a part of a consolidation trend, with its acquisition of SSI and Helio.

"A bigger company has more staying power. We are now able to offer our customers, and legacy SSI and Helio customers, a broader portfolio of product," said Shawn O'Grady, (right), president of Incentra.