Profit From The Downturn

Is there a way you can bolster business when things go south?

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Watching the talking heads on CNBC the other day, I was struck by a rather innocuous remark by one expert who offered advice on how technology firms can profit from the economic downturn. Initially, this sounded a bit like ambulance chasing but, then again, what's wrong with a little ambulance chasing when there are fewer to chase? The commentator's point went something like this: With all the layoffs hitting Wall Street, solution providers should find all those laid-off, high-IQ programming whizzes who developed complex financial offerings and hire them. One of the greatest challenges solution providers have is finding good people, so why not capture some of this talent pool? This got me thinking about how solution providers can profit from the downturn in other ways.

Taking advantage of the soft job market is the primary way. With the unemployment rate expected to rise to 8 percent, there will be experienced individuals out there you can hire, whether they lost their jobs working for an electronics retailer or elsewhere in IT. Your customers are also looking at their payrolls, especially in the areas of IT support, so why not be proactive on that front? If you have customers in verticals such as retail, which is taking it on the chin right now, why not offer to assume their IT staff in an outsourcing deal? Those customers might be willing to fund office space or benefits to those workers in exchange for you taking on their salaries. You can then use those workers to drive new sales or support additional clients.

There are many talented sales professionals today who have no shot at making their annual bonuses. The outlook for commissions is bleak for 2009 so they are looking for new opportunities. Find ways of connecting with these individuals either at face-to-face local events or through social networks online. By the way, if your company is based in a market where the cost of living is reasonable--in other words, less expensive than Boston, New York or Los Angeles--use that as a recruitment hook.

Edison Peres, a senior vice president in Cisco's channels organization, deserves credit for the next way to profit from the downturn. In a story we ran on Nov. 11, Peres said Cisco planned to let some of its partners forgo their annual certification audit to help them reduce costs. Now is the time to look at all those costs associated with your vendor and distributor engagements and push back on those partners hard. If you are a partner in good standing with any vendor, you can certainly ask them to bypass such things as certification audits. More important, how can they improve processes that tie up your people and money? I am sure a long list is already coming to mind when it comes to processing paperwork for back-end rebates or onerous deal-registration or profiling information you need to update. Those are just the tip of the iceberg. Here's a thought. Study the VARBusiness Annual Report Card for vendors that were rated by their partners as easy to do business with and also had high ROI scores. If you are not engaged with the highest-performing vendors, maybe you should be throwing the results in the face of your current partners or switching camps. If a company is not easy to do business with, it is costing you precious dollars. EMC, NetApp, Ricoh and Kaspersky Lab were tops in the ARC for ROI. Companies that struggled included Dell, Symantec and Microsoft in certain categories. You get the idea.

Now is also the time to stock up on those inexpensive alternatives to the big brands. One thing we know from our Midmarket CIO Advisory Board is that CIOs are looking to cut costs and are open to products from lesser-known vendors. By the way, demand very favorable terms from those vendors.

Another way to profit from the downturn is to merge with an organization in your region that has little customer overlap or bring in a new practice. With credit tight, this may be a way to expand the business and gain great access to credit lines or increase cash flow.

Robert C. DeMarzo ( is Senior Vice President/Editorial Director of Everything Channel.

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