IT ramps up for recovering economy

Things may finally be looking up in the distribution business – at least according to the Global Technology Distribution Council (GTDC). It’s seeing sales stabilize in both the U.S. and Europe, and says now is the time for disties and vendors to increase collaboration as these regions show signs of improvement.

While it doesn’t specifically mention Canada, it says the industry is set to capitalize on increasing sales opportunities in the U.S. and Europe, based on market reports from analyst firms NPD Group and Context.

What’s particularly interesting about these findings is that we’re seeing signs of recovery from the beleaguered European economy, which is a good sign overall for the global economy. This data is supported by aggregated sales-out data GTDC collects from IT distributors, which shows improved demand conditions and a leveling off of U.S. average selling prices. What’s particularly crucial right now, it says, is collaboration and execution between distributors and vendors.

In a poll of nearly 200 attendees at this year’s Vendor Summit held in California last month, GTDC found that nearly half of those polled cited plans to increase sales through distributors and decrease direct sales. Other related responses indicated that the ratio of direct sales to indirect sales through distributors is likely to remain constant.

These findings are in line with a Gartner forecast released earlier this week that stated global tech spending would climb 3.3 per cent to US$3.3 trillion in 2010. But Gartner also warned against being too optimistic.

While the IT industry is expected to return to growth next year, the market won’t recover to 2008 revenue levels before 2010, said Gartner, which means 2010 will be more about balancing cost, risk and growth. For more than half of CIOs, the IT budget isn’t going to grow, and will only slowly improve in 2011.

But hey, that’s not so bad – it’s certainly better than a continual decline in growth (and better news than we’ve heard in a while). Especially when we look at the stats from this year: Gartner predicts worldwide IT spending will decline 5.2 per cent this year.

Not surprisingly, hardware has been hit the hardest, and many resellers have been counting on upcoming refresh cycles to replace aging PCs, servers and printers. Those delays, however, will continue into next year, according to Gartner. So 2010 will require IT execs to demonstrate business objectives for every investment decision they make. And that, of course, means disties and resellers will have to do the same.

For distributors, it means they have to be ready to capitalize on opportunities as demand accelerates – even if budgets don’t.

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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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