Although it is more than likely that the global credit crunch will have a significant effect on IT budgets, difficult times may also present an opportunity for resellers. The likelihood is that there will be an increased demand for IT services, as organisations have to put recruitment plans on hold, but still need to drive through innovative IT projects as a means of cutting costs.
As the economic downturn in the UK has yet to reach the levels experienced in the US, IT Directors still have time to plan a ‘damage limitation’ strategy, according to recent research conducted by Gartner. Companies often turn to outsourcing in hard times, but third party service contracts need to be planned carefully in advance. “A rushed contract in a time of economic crisis can end up costing more money than it saves – if you spend three to six months planning a contract it will be much more effective,” said Gartner analyst, Mark Raskino. “Those in the UK have the advantages of time if they act now,” he said.
Resellers that want to ensure that they are in a strong position to ride the economic wave, should be working with their customers now, to address the following business issues:
- Encourage customers to focus on projects with a strong business case. Now could be a good time to drive forward projects that will boost competitiveness, whilst others stand still.
- Talk to your customers now about any outsourcing requirements they may have in the forseeable future. The further ahead that they plan, the more sensitively and cost effectively they can explore this option.
- Encourage your customers to look at projects such as consolidation, virtualisation or Green IT, which will increase the efficiency of hardware and deliver measurable benefits quickly.
However, when it comes to undertaking outsourcing contracts, you need to be sure that you not only have the resources, but also the cashflow required to make these contracts viable in the short term. Many resellers make the mistake of looking at the gross profit potential of recruiting additional resources to fulfill an outsourced contract, without considering the actual cost of cash to the business. The problem lies in the fact that resellers will always have to pay for employees – not only in terms of salary, but also incremental costs relating to recruitment, infrastructure and training – well in advance of the time when they are actually paid by the customer.
To compound this problem still further, resellers often then look to take on still further service contracts, as a means of increasing profitability as cashflow becomes a problem. By engaging with Bell Micro, you can benefit from the business opportunity that exists during this period of economic downturn, without incurring the strain that comes with recruiting and funding additional headcount to service outsourced contracts.
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