May 27, 2017

IT Industry Bullish on Business Conditions

Companies in the IT industry are bullish on business conditions for the next 12 months, according to a new study commissioned by the Computing Technology Industry Association.

Nearly 90 percent of the more than 500 companies that participated in the study expect revenue growth of 10 percent or more in the next year. Better than half (53.9 percent) of respondents said they expect revenue growth of 20 percent or more. Just 9 percent of firms expect to experience a decline in revenues.

“Revenue growth will come about the old fashioned way, through increased sales, not through mergers or financial engineering,” said David Sommer, vice president, e-commerce, CompTIA. “The difficult market conditions of the past few years prompted many firms to reduce overhead, streamline business processes and sharpen their focus on sales and service delivery.”

The channel is shifting resources away from product sales and towards services, especially targeted to small and mid-sized business customers, the study found. Services such as support outsourcing, systems integration and network security often offer higher margin and less competition.

But while IT channel companies expect brighter opportunities in the next year, respondents said the challenges of obtaining new business and trying to maintain existing relationships are more difficult than ever. Among the factors affecting profitability:

— cut backs in support from vendors, who often are competing for the same services business;

— more competition;

— increased expectations from customers who do not understand technology;

— lack of client loyalty; and

— difficulty finding and keeping employees with the right combination of technical and communication skills

“Most companies agree that hiring truly qualified salespeople is one of their biggest challenges,” Sommer said. “They need qualified salespeople that have technical proficiency as well as the business and communication skills that are necessary for performing their jobs and serving clients successfully. The single most repeated theme in this study is the importance of effective communications with customers, partners and employees.”

The IT channel study, conducted for CompTIA by the Yankee Group, identified key business challenges facing IT channel companies today and over the next 12 months. The Yankee Group is a global leader in communications and networking research and consulting.

More than 500 individuals participated in the study, which targeted decision makers from IT resellers, value-added resellers, service providers, and systems integrators in North America. Respondents were primarily small firms (75 percent employ fewer than 100 people) with a local or regional customer base (49 percent sell into one metro area).

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