Credit crunch hits the channel

The roller-coaster ride on Wall Street continues, and there’s much debate on how that will affect the global economy.

Prime Minister Stephen Harper, for example, maintains that Canada is not the United States and that we should maintain the status quo, while opposition leaders believe in government intervention in the economy – a hot topic in last night’s French-language election debate.

Some industry analysts (and ordinary citizens) believe this is the start of the next Great Depression, while others say that’s hogwash – an overreaction. I’m not an economist, nor would I ever attempt to predict the future, but I do believe no matter how bad a situation appears there’s always a silver lining. You just have to look for it.

Many IT analysts agree that it’s not all doom and gloom for the tech industry – and the current “credit crunch crisis” could spur spending in other areas.

Customers may cut back on IT spending (and have been doing so all year), but they still need IT to run their businesses. This is where options such as hardware leasing and software-as-a-service (SaaS) may become more attractive. For customers, it means they don’t have to dish out all that cash at once.

For VARs, it means steady recurring revenue. And those with steady recurring revenue will be less impacted by the ups and downs of the global economy.

Of course, it’s still up for debate how much of a credit crunch crisis there is in the channel at this point. But a lot of VARs don’t get involved in customer financing, such as helping customers get loans or lines of credit. Those that do, however, have a leg up in today’s economic environment.

Distributors not only provide financing options, but in many cases they have experts on staff who can walk a VAR through the process and help them come up with the best financing solution for a particular customer. They can make a small VAR look like a big VAR.

Ingram Micro offers a financing tutorial on its Web site and has credit analysts on staff to help VARs understand different programs. Tech Data also has experts on staff that can help VARs understand the financing world and Synnex offers various financing options to its reseller partners.

Then there are vendor-led financing programs, from IBM Global Financing to Cisco Capital.

Microsoft Financing says it’s expanding its credit program (for deals that include a minimum of one Microsoft product) and will underwrite more than $1 billion in solution provider sales next year.

U.S. banks may be collapsing, but that doesn’t mean everyone else is. VARs can panic or they can look for opportunities. The key is to learn about alternative financing options available to their customers – and distributors are a great resource for this.

Some IT analysts say about one-third of solution providers are already doing this. That means two-thirds are not. If you’re not, this may be the silver lining you’ve been looking for – one that will give you a distinct competitive advantage.

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Jim Love, Chief Content Officer, IT World Canada

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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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