Vendors woo partners as IT budgets stall

Sydney, Australia — Look forward to more new partner initiatives in the last 100 days of 2007 as vendors scramble to escape the tightening screws on ICT spending, according to IDC.

The analyst firm has released some cross-survey predictions for the last three months of the year, underlining several trends that push vendors to cuddle up to resellers in a bid to grow their businesses.

IDC research manager, Phil Allen, said a combination of stalled ICT budgets, skills shortages and industry consolidation was making life tough for vendors, who were being left with little option for growth other than to woo the channel.

“They’re going to have to get smarter about how they manage the channel,” he said.Allen said many vendors were in acquisition mode — yet that in itself meant fewer companies were available to buy at a time of industry consolidation and technology convergence.

Meanwhile, the increasing skills shortage — which also raised wages at a time when other costs, such as electricity, were increasing — and shrinking IT budgets worked together to make it harder for vendors to simply go out and sell, Allen noted.

IBM channels manager, Sue Hope, said the vendor spent A$16.5 million (US$14 million) on supporting its Software Group partners through a range of initiatives in the year to June 2007 — up from $15 million for the entire 2006 year.

Allen said IBM was a good example. Big Blue had little choice now than to boost partner initiatives if it wanted to grow its business, he said. But many other vendors would follow in its footsteps.

“IBM is aware of [the trends] and that’s exactly what’s going on [with IBM],” Allen said. “That’s why it is investing in the channel. It’s a key area for their growth. Its success is linked to the channel.”

Unfortunately, the skills shortages, industry consolidation and wages pressures were also accelerating the movement of work offshore, he noted.

Bright spots existed. Although overall ICT spend is tipped to have stalled at 3.2 percent growth to A$39.3 billion, not even keeping pace with inflation, security budgets are expected to keep rising.

The security solutions subset was predicted to be up 13.6 percent to $A1.3 billion for the year, Allen said.

Mobility also is rising, with another 200,000 consumers expected to pull the plug on their landlines by December. “That’s not a small number,” Allen said.

Other trends to watch included the move to ‘greener’ computing. Vendors would increasingly try to differentiate themselves by talking up their environmental credentials, IDC said.

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