The economy played a big role in how solution providers conducted business this year, and it will do so again in 2010, according to new research from Everything Channel. But next year VARs will be ready to invest more in their business and are once again preparing for growth, according to the 2010 State of the Market survey of North American solution providers.
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One big area of investment in 2010 will be managed services, where VARs plan to increase their already growing business. This year, managed services accounted for an average of 9.5 percent of revenue, up from 8.6 percent in 2008. That percentage is expected to jump to 11.4 percent next year, according to the study.
Wesley Gipe, president of Agil- IT, a Troy, Ohio-based solution provider, is not surprised by the increased interest in managed services among his peers. He expects managed services to count for up to two-thirds of his company’s revenue in 2010. “It’s a predictable business model for both us and the client,” Gipe said.
The Cloud Is Coming
As far as technologies, more solution providers (20.9 percent of survey respondents) expect to add security to their portfolios next year than any other category.
Cloud/SaaS-based solutions were a close second with 18.7 percent of VARs expecting to add lines in that space. Storage, business applications and voice/data networking rounded out the top five.
Cloud/SaaS solutions will garner more long-term opportunity for solution providers, as more customers evolve their IT infrastructures, said Glen Jodoin, vice president of operations at GreenPages Technology Solutions, a Kittery, Maine-based solution provider. “All the other [technologies in the top five] are pretty mainstream. They’ve been priorities for the industry for a while,” Jodoin said. “The cloud/SaaS area is something that we’re investing in and there’s a lot going on. We see more investments, more integration, more interest from customers. That’s the biggest opportunity for us.”
New Customers
This year, new customers represented 28 percent of the average solution provider’s revenue, up from 25 percent in 2008, according to the study. Solution providers said the economy caused some existing customers to delay or decrease their IT purchases this year, so they spent more time mining for new customers.
“We have been aggressive in finding new customers because of the economy. I think more people have been more aggressive,” Jodoin said.
He added that an increased focus on data center solutions by Green- Pages, and other solution providers, has driven more business from new customers as well.
“That’s our whole strategic initiative. The whole virtualized data center is growing. Now it’s really the cloud down to the desktop that people are interested in,” Jodoin said.
Investing In The Future
Finally, solution providers said introducing new technologies and expanding into new vertical markets or customer segments are their top business priorities for 2010. Further cost-cutting initiatives finished a distant third, indicating that VARs seem optimistic about the future and are ready to invest in growth opportunities for next year.
“I look at cost-cutting from both angles, in terms of both client and resellers. Cost-cutting from the client side is still going on, but it allows us to introduce managed services,” said Sam Ruggeri, president of Advanced Vision Technology Group, Hauppauge, N.Y. “Today, our sales pitch is a little different. You can dramatically save a company a lot of money. We can do a lot more with a lot less for them.”
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