Small Solution Providers Buoyant About 2008

A survey reveals an SMB demand for new technologies and services seen as recession-proof opportunities for the channel.

Solution providers are shrugging off the economic woes caused by the subprime mortgage crisis and rising energy costs, saying that they're optimistic about the coming year and looking to expand their investments, according to the Computing Technology Industry Association.
According to a survey of more than 700 resellers with fewer than 1,000 employees conducted by CompTIA, 45 percent of the respondents expect their business to grow by 10 percent or more over the next 12 months and one-fifth anticipate growth of 20 percent or better.
CompTIA released the survey results this week at its annual SMB Summit in Bonita Springs, Fla. Conference attendees are already seeing rapid growth among small business end users—or companies that have less than 100 employees.
"Small businesses are trying to get the most out of IT and looking to their trusted advisors on where to invest," said Mitch Miller, president, Dynamic Computer Solutions of Topeka, Kan.

Small businesses are discovering that they have many of the same needs as their midmarket and enterprise counterparts, according to the survey. The technologies that solution providers anticipate the highest demand for in 2008 reflect that trend.

They are:
Secure data backup: 29 percent
Storage and disaster recovery: 24 percent
IP telephony: 19 percent
Server virtualization: 18 percent
Wireless: 13 percent
Storage area networks: 13 percent

"These are all solutions that allow an organization to get the most out of its technology infrastructure investment," said John Venator, president and CEO of CompTIA. "This is an important shift. Historically, SMBs tended to replace technology reactively when something went wrong. Now they are proactively looking for solutions that enable them to leverage their networks and boost productivity and efficiency."
SMBs investing in new technology and services means solution providers will need to expand to meet the growing demand. The CompTIA survey found that nine out of 10 solution providers are planning to hire new staff and one-third said they will add at least one new location to meet the demand from small businesses.
While new technologies such as IP telephony and virtualization will increase product sales, solution providers at the SMB Summit said managed services is where they see the greatest potential for revenue and profit growth.
"Services have always been the focus," said Todd Moran, director of client development at Computer Age, a small solution provider in Tampa, Fla. "Twenty years ago we gave away the service and sold the products. Today we can't do that because the margins are gone in products."