CA services
As I've said many times in this column, dealers must always look to value-added services for their longer-term profits, if they are to survive in today's cut-throat box-shifting marketplace.
It's with some interest, then, that I can report that Computer Associates has created its own value-added services division called CA Technology Services. The operation includes CA's existing technical pre-sales and professional services divisions, and will be added to by specialist staff at all levels. Chris Devlin, the vendor's general manager of indirect sales for the EMEA region is quoted in the latest Microscope, a UK trade reseller paper, as saying that CA is evolving its business model. The aim of the new project, he told the paper, to offer increased levels of service to customers.
So what does the change really mean? According to those resellers this writer has spoken to, the CA Technology Services division doesn't plan on pushing dealers aside - it actually wants to establish closer links with its sales partners.
At the moment, CA says it generates around 10 per cent of its revenues from services - a figure the company clear wants to boost. The danger is that extra sales of value-added services may be carried on a direct-to-customer basis, effectively squeezing dealers out of the frame when it comes to extra profits. CA will have to play its game very carefully, then, if it is to avoid upsetting its dealers with the new gameplan.
IDC predicts better times ahead
The last 18 months have been tough - very tough - for the reseller business in the UK, as well as in Western Europe, so it's good to hear from IDC that there are brighter times ahead for IT resellers.
According to the research firm, its latest IT spending data suggests that the market bottomed out late last year and is set to grow by two per cent this year. During 2003, IDC predicts that packaged software and services will capture most of the rebound, expanding by 3.3 and 2.5 per cent, respectively.
Following a particularly difficult year, the research firm adds that hardware markets will stay essentially flat in 2003, before returning to more positive trends next year. Some of the most dynamic markets will, says IDC, include mobile connectivity solutions, webservices, and converged devices.
In parallel, the focus on security issues will continue to grow, fuelled by the threat of terrorism and cyber crime.
Commenting on the predictions, Vicky Hawksworth, research manager with IDC's European IT Markets Centre, said that, overall, the IT market is still being inhibited by challenging business conditions and tight spending on capital goods and technology. 'Nevertheless, prospects are encouraging, and we see some bright spots emerging in the market, particularly around the concept of mobility and wireless,' she said. According to Hawksworth, the results from IDC's recent end-user survey - Project Barometer - show that 37 per cent of companies expect to spend most of their 2003 IT budget on routine infrastructure upgrades.
Spending on new initiatives, however, will be a lower priority in 2003, particularly among larger organisations. Because of this, IDC predicts that companies will tend to migrate away from large, expensive rollouts, moving instead towards smaller, point-to-point solutions with shorter implementation times.
Firms, the IT research group adds, will also seek to capitalise on previous investment by squeezing value out of existing systems and running their IT departments more efficiently.
Cisco offers bigger discounts to registered resellers
Cisco is offering bigger discounts on its kit to those resellers who register for its partner program. The only snag, as far as this writer can see, is that dealers have to guarantee to generate $100,000-worth of sales in the first six monthsafter joining the program, rising to twice that figure in subsequent six monthly periods.
On top of this, the reseller must generate at least 25 per cent of their sales from IT security products and have five certified security engineers on the payroll.
In return for these stringent requirements, Cisco is dangling a 10 per cent cash rebate to resellers, payable in arrears, pushing gross profit margins to around 25 per cent. That's not a bad profit margin in these days of single figure margins on basic PC hardware, but it does require a lot of commitment to a single vendor from resellers who are more used to mixing and matching to meet their client's needs.
Computer 2000: WiFi systems are a hot seller
Computer 2000, the UK distribution division of Tech Data, says that it has logged a massive rise in sales of 802.11b - aka WiFi - wireless systems hardware over the last 12 months.
The distributor says that, as well as WiFi W-LAN systems, its dealers are ordering significant volumes of wireless keyboards and mice, as well a using products such as Sony's Memory Stick and USB storage devices to transfer information between PC's. Gary Fowle, Computer 2000's commercial director, said that the trend towards wireless means that cables will soon be a thing of the past in many offices and retail outlets.
'We're rapidly moving towards the wireless office. 802.11 networking and Bluetooth have kick-started the market and with technologies like MemoryStick catching on fast, users are very quickly realising that they can forget about the cables - they just don't need them anymore,' he explained. According to Fowle, cables also don't look nice and they often get in the way, which all adds to their appeal to end users.
'The great thing about USB plug-ins and Memory Stick is their size and adaptability. They are plug-and-play devices that give you gigabytes of removable storage that will just slip into your pocket.'
Interestingly, Fowle went on to say that the industry is getting to the stage where, you can't attach and use one of these devices, you are out of tune with other users. Fowle added that he expects rising sales of wireless kit through resellers will encourage users to move on up to the latest versions of operating systems, encouraging them to upgrade their hardware in the process.
Articon-Integralis sells off Allasso
Articon-Integralis has agreed to sell off its Allasso distribution business to InTechnology, the data storage and protection specialist. The deal will cost InTechnology a fairly hefty 28.77 million euros - 3.77 million euros of which are payable in 24 months time - and must past muster at Articon's annual general meeting in late June, but it will allow the firm to concentrate on its core business operations.
According to Articon-Integralis, the sale follows on from a strategic review of all its operations last year, at which management decided it did not have enough money to invest in both its divisions, Allasso and Integralis. Following the Allasso sale, the firm says it plans to focus on its Integralis end-user business.
Announcing the planned sale, Mark Silver, Articon-Integralis' CEO, said it will increase the financial reserves of the group, allowing it to focus on becoming the market leading security systems integrator. Peter Wilkinson, InTechnology's chairman, meanwhile, said that Allasso has become Europe's pre-eminent network security-specialist distributor. 'Its large customer base and strong relationships will be a good addition to the InTechnology business,' he said, adding that it will provide the firm with opportunities to replicate its successful UK storage and managed services business into other areas. As a result of the acquisition, InTechnology says its combined businesses will have an annual turnover of almost 40 million euros and 470 staff, with nine offices in six European locations. The firm says that no job losses are anticipated.
IDC, 0044-20-89877210 (GB), www.idc.com;
Cisco UK, 0044-20-82244478 (GB), www.cisco.com;
Computer 2000 UK, 0044-870-4010505 (GB), www.computer2000.co.uk;
Articon-Integralis, 0044-118-9306060 (GB), www.articon-integralis.com,
www.allasso.com, www.intechnology.co.uk