"The outlook for North America is going to be soft for at least another year and it could be longer," said Ingram Micro CEO Greg Spierkel, adding that the credit crunch has not yet trickled all the way down through the markets, so its total impact is still unknown.
Spierkel, however, addressing VTN partners that target the small and medium-sized business (SMB) market, threw in a big "but" when it comes to demand in that segment. "Small businesses are still very positive," Spierkel said. While there may be some "pull-back," SMBs tend to treat solution providers as "trusted advisors," especially during tough times when there is no cash for IT staff. So he encouraged partners to find opportunity in helping their customers get through the storm.
Rather than deliver a run-of-the-mill keynote, Spierkel and COO Alain Monie answered questions submitted by the VTN council. Dominant themes were concerns about how the economy and credit crunch would affect both Ingram's own business and that of its partners.
Ingram will be reporting financials next week, so executives didn't get into specifics, but Spierkel assured the crowd of more than 400 that the company is "sitting on a fair bit of cash" and that credit lines to partners are in no immediate danger.
That said, Monie advised VTN partners to focus on their own "access to liquidity" to prep for rough times. Customers will take longer to pay, and partners should begin working with credit and finance advisors (including those from Ingram) to make sure they have the processes in place to handle what could come. Partners will also have to closely consider lines of credit they extend to their own customers, he said.
Monie also urged partners to focus on selling solutions that directly improve the business process rather than exciting technology advances that will have an impact five years down the line.
Monie later said in a private interview that partners could help customers cut costs by "taking the waste out of what people do." One example would be to automate processes that now require manpower.
Spierkel acknowledged that VARs also struggle with shrinking hardware prices and lower revenue. And Monie noted how partners are working to change their business models to offer managed services and hosted applications.
Since the VTN conference kicked off Wednesday, there has been lots of talk among solution providers about how Software as a Service (SaaS) would affect them, and Monie was asked to address that during the keynote.
Monie said SaaS is not taking off quite as quickly as many believed, but he noted that it must be taken seriously. Partners must bone up on the sales skills required for long-term subscription-type relationships with customers. And partners must learn to work in a new revenue model in which money is received in smaller amounts over the long term, replacing one-time windfalls of cash for large hardware deals.
Ultimately, the trick to survival is to be quick at reacting to change, Monie said. Companies have to be "as nimble as they can" and "not spend too much time guessing."