20 Questions on… Taking advantage of the economic upturn

The Organization of Economic Co-operation and Development (OECD) says the global economy is showing definite signs of recovery, visible in all seven major economies, including France and Italy, as well as China, India and Russia. And the Conference Board of Canada says the Index of Business Confidence recorded its second consecutive double-digit increase for the third quarter of this year.

On the technology front, Forrester Research says 2010 marks the return of technology spending that started in 2007 but was snuffed out by a deeper-than-expected recession and financial crisis. IDC Corp. says the market is poised for the beginning of a significant infrastructure refresh cycle in the months ahead.

CDN interviewed analysts, economists, futurists, distributors and channel executives from across the country about what they’re doing in preparation for the economic upturn.

1. Jim Carroll, innovation consultant

CDN: How is the recession changing the way we do business?

“There’s a realization that we need to get to market faster, because consumer trends are happening faster, and IT plays a big role. If we don’t have a solid infrastructure, if we can’t collaborate, then we can’t push ideas through the organization faster. And if you think about the rollout of IT, it’s becoming more critical than ever before – it’s the lifeblood by which we develop this ability to act fast. I talk [to clients] about business model disruption. In the next few years it’s likely that our iPhones, BlackBerrys and mobile devices are going to become credit cards, and the entire financial industry will find that innovation will occur not at the previous speed of banking innovation, but at the speed of Silicon Valley innovation. So going forward into this next economy they need to ingest new technology faster and respond to faster business model disruption.”

2. Don Conaby, president, Conpute (Oshawa, Ont.)

CDN: How have you dealt with the recession?

“We spent most of the recession investing in our company, getting ready for the recovery. We used the recession to invest in increased head count for sales, and we revamped our sales and marketing strategies to take maximum advantage of the upswing expected in 2010. Investment in a down economy isn’t easy, but it’s necessary to fuel growth. This past year we have seen successes in smaller SMBs but had cutbacks we didn’t expect in larger organizations. This recession has been very difficult to figure out or to plan for. The only good thing is we know that it will eventually come to an end.”

3. Mary Ann Yule, general manager, CDW Canada

CDN: As a national reseller, how are you preparing for 2010?

“We’re seeing our customers be a little more optimistic about their spending in their view for 2010. We’ve continued to add net new customers – they’re coming to us and we’re seeking them out. We’ve spent a lot of energy this year in training and honing skills sets of our co-workers so they’d be better in a tough economy and that training will poise us for a stronger next year.”

4. James Alexander, senior vice-president, Info-Tech Research Group

CDN: Can we expect to see more IT spending next year?

“We certainly don’t see a vast increase in IT spending, and even in conversations we have with customers, and these represent hundreds of conversations with customers over the last month or so, for 2010 they have an idea what they want to do, but they haven’t locked and loaded and got final approval to do it. So while we can prioritize where people would like to invest, I don’t think CFOs and other C-level folks have really said go ahead and spend. When you consider the vast proportion of an IT budget is really pre-spent in terms of keeping the lights on, for the [other] 20 or 25 per cent of the budget, folks are still cautious. It’s a bit of a structural recession out there and things are not going to come back in the same way they were before. A lot of them are rethinking their old strategy in light of what’s going on in their markets and with their customers and how the economy is restructuring around them.”

5. Jean-Jacques Dion, sales manager, Azuris Technologies (Montreal)

CDN: What is your economic outlook for the Quebec market?

“In the IT industry the requirements are still there, the storage requirements are still growing, and I don’t really see anyone holding back on their budgets – it’s still business as usual in the IT industry. A lot of companies are cutting back with employees, but the sales are still there. I haven’t really seen any downturn to tell you the truth – I’ve heard of other resellers, but not us. We focus on high-performance computing and R&D, and usually this is when companies decide to reinvest so when [the economy] comes back they’re ready, so 2010 is going to be pretty much business as usual for us. In Quebec the recession didn’t hit as hard – I don’t think it was that bad, even for other resellers.”

6. Warren Jestin, SVP & chief economist, Scotiabank

CDN: Are we seeing true signs of a recovery for 2010?

“We’ve been inundated for the last year with bad news, but gradually since the spring there’s been some important signs of improvement and, whether you’re looking at car sales or the housing market, they’re all suggesting a turn is coming. Between now and next spring you’re going to see optimism begin to return to the consumer market, but businesses are still pretty cautious because they’ve been through the ringer. The big issue for profits to return is not so much on the sales side – sales will improve but it won’t be a boom. The big improvements in profitability are still going to come from cost cutting, so effectively that’s where productivity improvements can be generated through IT. But by the time we get into the spring, you’re going to find businesses in a more expansive mood – not expansive in the sense of building new buildings, but making workers more productive. ”

7. Steven Fitzgerald, president, Habanero Consulting Group (Vancouver)

CDN: How are you preparing for an economic upturn on the West Coast, particularly with the upcoming Vancouver Winter Olympic Games?

“Like many companies, we used the tumult of this year to focus on the fundamentals and refine some key hygiene factors relating to things like the client experience, profitability and even cash flow. These hygiene factors were instrumental in keeping us healthy this year. Our focus with respect to preparing for the upturn – which seems to have started from our perspective – is to make sure we continue with those systems and behaviours and make them permanent aspects of our business. We’re excited about the impact the Olympics will have in Western Canada. Many of our clients are affected in ways ranging from being official sponsors to needing to adjust their operations leading up to and through the Games. This has made things more complex in some situations, but more importantly, it’s opened new conversations with our clients and created a great deal of activity in the market. ”

8. Steven Burns, CEO, Bulletproof Solutions (Fredericton, N.B.)

CDN: How are you preparing for an economic upturn in Atlantic Canada?

“Bulletproof has been working diligently throughout the slowdown because we feel that it’s the opportune time to prepare yourself for the upturn. In other words, you can’t wait for it to happen because you’ve missed a lot of it if you do. When this all started last year we knew we would have to work twice as hard to get the same amount of deals as in past years, so this meant stepping it up on the sales front. We have since added two sales people and plan to add one more before year’s end. The time is now, not later.”

9. Gerard Lyons, chief economist and group head of global research, Standard Chartered (London, U.K.)

CDN: How is the global economy changing?

“It’s important to view what’s happening as part of a shift in the balance of power from West to East. This doesn’t take place in weeks or months but over decades. The winners will be countries that have financial resources, such as China, or have natural resources in food, water or energy, such as Brazil [and the] Middle East, or those that have the ability to adapt and change. America and Britain will fall into that category. The near-term outlook for those countries is, quite frankly, terrible, but the ability to adapt and change is not easy. This is a dynamic environment. In Asia, the focus is not on the level of debt but where the money is being spent. South Korea has thrown the kitchen sink at the problem, focusing on fusion and green technology … Yes, we’re off the floor, but primarily because the central banks cut rates. ”

10. Rick Reid, president, Tech Data Canada

CDN: As a distributor, what bright spots do you see on the horizon for resellers?

“In terms of bright spots which resellers should look at to boost their business, I can tell you that the NMSO business has been strong and we are anticipating significant demand in the coming season. We continue to see high growth in our server and storage business, with a particular emphasis on virtualization. And software seems to be showing no signs of slowing down. We’ve spent the last six months traveling across the country talking to resellers from Halifax to Vancouver, and there seems to be a genuine buzz in the air. At Tech Data, we like to remind ourselves that great companies are built during tough times.”

11. JoeAnne Hardy, president, WBM Office Systems (Saskatoon)

CDN: How have you used the recession to your advantage?

“At WBM, 2009 was a year to focus even more closely on existing partnerships and engagements. With the recession looming, the WBM account team went through a workshop highlighting the drivers of the recession and the effects to expect within the marketplace. [We] set forward a number of strategic objectives, recognizing technologies that drive immediate reductions in operating expenses may become more pertinent and timely as economic pressures escalate within client organizations. We prepared to use any resource cycles that may come available to build technical competencies and certifications, and to develop the company’s own internal IT infrastructure for scalability and efficiency. Our heightened ability to understand and address client issues has revealed the importance of IT optimization and governance for establishing productive, long-term partnerships. An example of that was our growth in print assessment and optimization through the recession. While print industry spending fell by as much as 23 per cent in 2009, we continued a dramatic upward swing.”

12. Dan Sottile, senior vice-president for North America, Long View Systems (Calgary)

CDN: How have you been preparing for an economic upturn in Western Canada?

“In 2009 Long View grew just as we have the past 10 years we’ve been in business. That said, we’ve already noticed that many of our client’s activities in the past few weeks are pointing to new projects and initiatives going into 2010. The upswing seems to have already started. The companies that are well prepared and can execute effectively coming out of this recession will grow the fastest and will surely become the industry leaders in the years ahead. Long View has been working hard over the past 12 months on many initiatives – projects to strengthen our brand, to improve internal tools and processes and to prepare our recruiting engine for the expected growth ahead. ”

13. Harry Zarek, president and CEO, Compugen

CDN: How are you changing your business processes as we come out of this recession?

“We’re investing internally in systems and infrastructure to prepare ourselves for growth. This includes a new ERP system and upgraded CRM system and virtualizing the majority of our servers. We are also reviewing our sales engagement processes to enhance productivity and scalability. Growth opportunities abound in virtualization and managed services.”

14. Todd Empey, vice-president of operations, Future Shop

CDN: How are you preparing for an economic upturn in the retail sector?

“As the economic situation improves for Canada, consumers will start to consider upgrading and adding to their existing technology. In home entertainment, we’re starting to see that Canadians want to maximize their technology through connectivity. Our ConnectPro team is expecting in-home services to continue in this area. For the home office category, we’re expecting interest in netbooks as a companion PC to continue to increase – they’re light, portable and affordable. With Windows 7’s enhanced multi-touch functionality, all-in-one PCs with built-in touch-screens are becoming popular.”

15. Michelle Warren, president, MW Research & Consulting

CDN: Where should the channel focus their attention as we move into 2010?

“Both VMware and HP have introduced some interesting options for the cloud. The offerings are not just about being 100 per cent in the cloud, or 0 per cent in the cloud, but more of a 50-50. From this standpoint, companies should understand more of the as-a-service opportunities and how they can take advantage of them. ”

16. Tim Billing, vice-president of vendor management, Ingram Micro Canada

CDN: What are you doing to prepare the distribution channel for an economic upturn?

“The economic slowdown has required the entire IT channel to become much more innovative in order to ensure its success both short and long term. Ingram Micro is introducing new business intelligence and data analytic capabilities to help our vendor partners better identify and target value-added resellers and understand end-user needs and buying cycles. These services are also being made available to our VAR partners. We are actively working on expanding our services capabilities to allow our partners to take advantage of emerging technology opportunities around cloud computing and software-as-a-service.”

17. Anthony Wright, vice-president of advanced technology solutions, xwave (St. John’s, Nfld.)

CDN: What opportunities do you see for your business in 2010?

“We’ve achieved several consecutive quarters of positive financial results despite the recent economic downturn. Our goal for 2010 is to build on that momentum through our three key lines of business: advanced technology solutions, professional services and healthcare. We will continue to leverage opportunities in healthcare, where we now are involved in five of seven interoperable electronic health record (iEHR) solutions and are a leading ASP EMR vendor in Ontario’s funding program for Physician IT. Human services is also a sector in which we’re active and will continue to seek out opportunities in areas such as case management and claims processing, similar to recent and ongoing projects for clients in Nova Scotia and Newfoundland and Labrador.”

18. Zeus Kerravala, senior vice-president, Yankee Group

CDN: What will the road to recovery look like?

“I’m seeing more activity out of buyers and more of a willingness to spend, but it’s still very shaky. The sense I get is that if there’s any kind of bad news at all, people will yank the purse strings. As long as we get no bad news, we’re fine, but any amount of bad news gets magnified and creates a lot of negative sentiment. We’re on the road to recovery, but I don’t think we’re going to have a v-shaped recovery where we hit bottom and then we grow. We’ll have continued peaks and valleys and we just hope the valleys we have are higher than the valleys we had previously. So it will be a long, slow march back. For IT dealers, one thing they’re going to have to deal with is IT spending has changed forever. CFO and business leader involvement are here to stay. Just because the signs are improving, dealers shouldn’t fool themselves into thinking that spending is going to go back to the way it was, because it won’t. It’s changed the way people buy technology.”

19. Carmi Levy, independent IT industry analyst

CDN: What can the IT channel learn from this recession?

“The general concept that you buy technology and by definition it will return some kind of value, that assumption is gone. Now the onus is on individual project managers to prove the worth of each project, and the project will be green-lit based on its potential to generate ROI. It’s a harsher environment in which to gain approval these days. It’s deadly to assume that projects that were shelved or delayed because of the recession will simply be restarted without much fanfare once the recession ends. The truth of the matter is everything needs to go through the approval ringer again, and many of those projects that have been sitting on the shelf gathering dust for the past year and a half may never see the light of day, and that’s a good thing – it’s a good opportunity for IT to revisit past assumptions and question whether in fact they remain valid.

“Microsoft became huge on the heels of the ’80s recession. Google became huge on the heels of the dot-com bust. Every recession or depression serves as the foundation for a company that basically goes on to change the way things are, so by extension, with this recession, tomorrow’s Google is already being born. It allows you to pursue opportunities that would otherwise not be reachable. It takes courage and it takes a stomach of steel, but for companies that have the guts to do that, to roll the dice and question the way things are done, we can see not evolutionary change but revolutionary change. This is not a negative time, and it’s not an unfortunate time – it’s a time of opportunity for companies willing to make that change.”

20. Joseph Quinlan, managing director and chief market strategist, Bank of America Global Wealth and Investment Management

CDN: Where is the U.S. heading?

“What worries me is next year. How much is the U.S. government becoming embedded in the private sector? Are we creating dependencies in these industries? Export is not a huge part of our economy, but the continued weaker dollar helps our exports, helps our manufacturing base, helps accelerate the base of global balancing. The commanding heights have shifted from the private sector to the public sector, but for how long?

“We’re not lending the way we were two years ago. We’re worried about the companies we do lend to. Commercial real estate is still really difficult. But you cannot have a real economy without a banking sector.”

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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