IT industry optimistic about business conditions

Looking for a cheerful message? A new study commissioned by the Computer Technology Industry Association (CompTIA) suggests confidence about the overall business climate for the next 12 to 18 months.

The study, commissioned by CompTIA and conducted by the Yankee Group, surveyed more than 500 IT resellers, value-added resellers, service providers and systems integrators in North America about their business challenges and their hopes for the coming year. In addition, focus groups were conducted in two cities in the second quarter of 2004.

According to a CompTIA release, nearly 90 per cent of the study’s participants expect revenue growth of 10 per cent or more for their company in the next year; slightly more than half project a 20 per cent revenue growth. Only nine per cent say they expect a revenue decline.

Where will those increased revenues come from? David Sommer, vice-president, e-commerce at CompTIA, predicts, “the old-fashioned way: through increased sales, not through mergers or financial engineering.”

Areas that expect to see the most growth include systems integration and application implementation, where 68.3 per cent of companies foresee increases in sales, as well as network security (67 per cent) and storage solutions (63 per cent). Sommer says, “Companies we’ve surveyed clearly believe that technologies for a highly distributed network environment are the way to go for the next 24 months.” Specialized offerings, such niche and bundled services, also are seen as areas that will increase margins.

While increased sales may be the anticipated route to fatter revenues, a Yankee Group summary of the study says that the biggest challenge will be driving sales growth. According to the survey, these companies are shifting resources away from product sales and toward services, especially targeted to small and mid-sized businesses. Services such as support outsourcing, systems integration and network security often offer higher margin and less competition. The catch is that vendors have cut back critical support over the past several years, and now customers require high levels of ongoing communication in order to understand the underlying technologies and value of services delivered. On top of all that, respondents say it’s increasingly difficult to find and keep employees with the right combination of technical and communication skills. CompTIA’s Sommer says, “The single most repeated theme in this study is the importance of effective communications with customers, partners and employees.”

This emphasis on network infrastructure as a hot item jibes with findings of CIO (U.S.) magazine’s most recent TechPoll. Gary Beach, group publisher of CIO (U.S.), says, “Compared to one year ago, planned investments for data networking and telecommunications products and services were particularly robust in July. This suggests upgrades to the network infrastructure will be high on a CIO’s shopping list this fall.”

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Jim Love, Chief Content Officer, IT World Canada

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