With gas at nearly $5 per gallon at the pump in some areas, a housing
crash upon us and the weakest dollar we've seen in a lifetime, how can
anyone think the 2008 economic outlook is bright?
With gas at nearly $5 per gallon at the pump in some areas, a housing crash upon us and the weakest dollar we've seen in a lifetime, how can anyone think the 2008 economic outlook is bright?
Still, it seems no one has told IT industry leaders the bad news. We hear a constant stream of success news mixed in with these poor economic indicators.
Did the channel contribute significantly to technology vendors' growth and profitability this year? Undoubtedly. The proof? Arrow's sales are up, and Synnex and Tech Data both beat Wall Street estimates.
We at Amazon Consulting are hearing three trends from solution providers and vendors that we expect will shape the channel's success and profitability in 2008. First, we're seeing more attention paid to the growing conflict around services. The quality of an implementation and configuration is becoming increasingly important to the vendor, and that hopefully leads to increased customer satisfaction and sales. Most vendors believe their teams are the most qualified to ensure a successful implementation and a satisfied client. That leads to a large internal professional services team competing with solution providers for services.
This services conflict has been a channel reality for years. What Amazon Consulting predicts will affect channel conflict in 2008 even more is the increased adoption of the MSP model and the move toward SAAS.
Two opposing forces are increasing the tension. They are the vendor's need to ensure customer quality and satisfaction, which vendors feel best suited to provide, and the desire to present a full solution to the client's business challenge, which most would agree is best accomplished by a solution provider.
Consider that more customers are demanding, and more vendors are offering, software and even hardware provided as a service, and it looks like we're in for some fireworks over the next year or so as the industry sorts out the channel partner's value in a SAAS offering.
We also see partner-to-partner initiatives blossoming over the next year and having an impact on the channel. As solution providers continue to focus on core competencies while struggling to remain profitable, they will continue to rely on partnerships with other providers to increase their technical competencies or geographic reach.
Lastly, there's no doubt the SMB market is still hot and continuing to influence the programs and initiatives vendors offer channel partners. We're seeing an increased vendor focus and commitment to training and partner enablement for 2008. Along with enablement programs, vendors are increasing their communications to solution provider partners in hopes of bolstering awareness and mind share.
So is the 2008 economic forecast gloomy or bright? My position is it doesn't matter. Whether bullish industry leaders such as Cisco's John Chambers or the bearish Wall Street guys are right about the economy, one thing is certain: Tech vendors will need to continue to invest in partners to quickly reach increasing market opportunities and to continue to "do more with less."
Diane Krakora is president and CEO of Amazon Consulting. She can be reached at dkrakora@amazonconsulting.com.
