Top Newsmaker: The Economy

Published: January 8th, 2009

With fuel, transport and business costs on the rise, and the economy heading into a recession, today’s troubled economic times are at the top of everyone’s minds.

Due to a slowdown in the global economy and the credit crisis, many organizations are having to find ways to stay efficient and competitive.

Distributors such as Ingram Micro and Avnet Technology Solutions (ATS) feel the economic pressures from increased fuel costs, and so have revised their shipping charges to reflect that. Ingram Micro increased the minimum requirements of its orders to qualify for free shipping and also introduced a $2 handling fee for all invoice orders last summer. ATS also felt increased financial pressures and so, the distributor decided to pass on fuel surcharges to its partner community beginning last year August 1.

John Paget, president of Avnet Technology Solutions, Global, said ATS isn’t looking to make any money off of these recently announced fuel surcharges.

“What we’ve done is we’ve taken a look at fuel surcharges and we’ve made the decision to pass through those fuel surcharges to the partner community,” Paget said. “We’re not expecting to make money on the fuel surcharges because we’re not in the shipping business; we’re in the solutions business of IT. That fuel surcharge is flowing through and we decided that whatever we get charged, that’s the amount that we’ll pass through.”

On the solutions front, businesses are now turning towards virtualization and other green IT solutions and practices to help trim costs and stay productive.

According to Sebastian Ruest, vice-president of services research at Toronto-based IDC Canada, troubled economic times are the times in which IT departments need to look to their service providers to help them improve their business models and practices.

The more IT budgets continue to shrink, Ruest said so will the number of IT projects as well.“People (will be) looking to extend the lifecycle of their infrastructure” instead of otherwise renewing their hardware purchases, Ruest warns.

But even in light of these tough economic times, he advises businesses to still keep up with innovative solutions and strategies that will keep them competitive and productive in the marketplace.

“Let’s assume that all (businesses are) going to do now is keep the lights on, and that the crisis doesn’t last that long,” he hypothesizes. “The organization will find itself at a real disadvantage because they didn’t keep up with the other organizations,” he adds.

Innovative solutions though, should be ones that are considered “lower-risk innovation” as opposed to ones that are on the “bleeding edge,” he advises.Businesses who utilize outsourcing can also see their financial costs go down too. IT departments can look at eliminating unnecessary hardware within their business and can consolidate resources and hardware, which can then be managed and monitored by a third party organization.

IT decision makers also need to be extra cautious says Jason Brommet, a senior product marketing manager with Microsoft Canada.“(With strained IT budgets), everything is going to be under the microscope,” he said.

Ricky Mak, analyst for SMB and channels research at IDC Canada, said given the current economic climate, IDC forecasts SMBs to spend money in areas such as wireless LAN, notebook PCs, security software and appliances, and hosted infrastructure services, to name a few, not only in 2009, but in the years ahead as well.