Making the most out of dismal demand

Time for vendors to step up to the plate and ease the channel’s biggest fear

Tags: Channel developmentIDC Middle East and AfricaUnited Arab Emirates
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By  Andrew Seymour Published  September 22, 2009

Strip away all the complexities associated with the recession and the IT market’s problems fundamentally boil down to one simple thing: organisations aren’t spending as much on technology as they were before.

Whether end-users are unable to get their hands on the finances they need to invest in IT infrastructure, or they merely decide it is time to rein in their costs, the eventual result is that demand starts slowing down and there is not enough business to go around.

While it all sounds rather basic, this is the scenario confronting the channel at the moment and it is something that is clearly worrying the minds of both vendors and their partners.

One of the questions featured in the 2009 Channel Confidence Survey that we have been running online asks participants to select the issue that poses the greatest risk to the health of the overall market.

Out of the six options to pick from, one of the answers has received more hits than all the others; even more, in fact, than ‘reduced credit availability’ and ‘delayed payments from customers’ — two issues that have really heaped misery on the channel this year.

The greatest risk to the market’s health in the eyes of the channel? A decrease in end-user demand.

For respondents to rate this as their biggest concern ahead of other business and financial issues may be slightly surprising, although the subject of falling demand continues to be well-documented.

Indeed, with every IDC report that is released these days seems to come a familiar tale of reduced IT spending, regardless of whether the category in question is PCs, servers, printers or something else.

So with piles of evidence confirming that corporate buyers have been tightening their IT budgets, and the channel citing waning demand as one of its major fears, the obvious question that now needs to be asked is what can be done about it?

Certainly some companies will be content to scale down their operations and accept that it is time to lower their expectations, but I’m sure the vast majority will be going out at all costs to maintain what they believe to be their normal run-rates.

In this climate, it seems to me that a strong emphasis is going to fall on vendors and distributors — particularly those that act as exclusive regional representatives for certain brands — to find ways of either helping partners seize the opportunities that are actually out there or account for the changing circumstances when it comes to setting channel targets.

There have always been question marks over the quality and efficiency of lead generation activities in this region, but this is the time when vendors cannot afford to get too many decisions wrong in that area.

Resellers have their own methods for cultivating leads, but it seems inevitable that they will become increasingly reliant on the vendor community for help.

A common consensus among some of the larger vendors that I speak to is that while mainstream parts of their business are often saturated, there tends to be hotspots — particularly where emerging technologies are concerned — that are presenting some attractive opportunities right now.

Yet, more often than not, these opportunities are not being taken because partners aren’t qualified enough or sufficient channel capacity is unavailable.

Most parts of the channel have probably already accepted that there will be fewer business prospects at their disposal, at least for the foreseeable future. But vendors also have a responsibility to ensure that the fertile growth areas they claim to be stumbling across are being properly mapped so that they do not fall by the wayside.

To see the full results of the 2009 Channel Confidence Survey make sure you grab a copy of next month’s Channel Middle East.

3365 days ago
Labib

Thanks for this precious information. Indeed, IT budget are still though in ME but how long time will it come to an end ? Indeed, if Mideast companies would stay competitive in this global village, IT would be a precious asset. Moreover, most of corporate and SMB in Asia and Europe are spending in IT to stay competitive. I am sure 2010 will be the year of IT spends in Mideast.

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