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Network budgets to grow in 2010, but VARs must deliver solutions

In a recent purchasing intentions survey, SearchNetworking.com's readers said overwhelmingly that they will increase their spending on networking products in 2010. If channel partners want to get a share of this spending, they must position themselves as solution providers. Networking professionals still need to know they're solving problems and delivering value with each dollar they spend.

Despite the uncertainty of the global economy, 43% of networking professionals say their spending on network products will increase in 2010, according to a purchasing intentions survey of 781 readers of SearchNetworking.com.

Just 20% of respondents said they would decrease their spending in 2010.

Even with this positive news, channel partners still need to go the extra mile to close a deal. They can't just offload new products. They need to be solution providers. Network managers may have money to spend on switches, access points and management software, but they have to jump through more hoops before they can write a check for a VAR.

When asked how the global economy has affected their network purchasing, nearly 20% of respondents said they are proceeding with planned projects, but some purchases have been delayed. Another 15% said that although their budgets have not been cut, it's hard for them to get new projects approved. And 12.5% said that some project budgets have been cut while others have not.

So how does a channel partner make sure that customers can hold onto their budget and spend it on the technology they need?

Randy Scadden, an information technology engineer at Idaho Technology Inc. in Salt Lake City, said he wants his VARs to come to him with business solutions, not the latest and greatest technology.

"And also, how quickly after deployment can we recoup our costs?" he added.

Payback on a project doesn't have to be in dollars only. If a VAR can show him how he can reap some soft benefits like improved productivity, that will be a help to him as well, Scadden said. That's what being a solution provider is all about.

Total cost of ownership (TCO) and return on investment (ROI) are a good starting point, according to Michael Eberhard, a wireless network administrator at Ewing Irrigation Products in Phoenix. But he said VARs also need to come to him with a message that goes beyond the speeds and feeds of the latest switches and routers. He wants business solutions.

"I feel that I want to hear more about how [a VAR's] products can help me improve my current processes," Eberhard said. "I don't want to have to rip out everything I have now to install something different that does a similar job."

With respect to providing solutions to business problems, SearchNetworking.com asked its readers to list all the factors that are driving their networking investment.

  • 32.4% said network security needs are pushing their investments.
  • 26.9% identified disaster recovery and backup requirements.
  • 21% mentioned growth in remote and branch offices.
  • 17.4% identified support of virtual environments.
  • 14.3% mentioned supporting mobility.
  • 13.7% identified voice and data convergence.

Concerning the areas where networking professionals are increasing their spending, network security was top of mind for most readers. More than 55% said they would increase network security spending in 2010, including 10.4% who said their network security spending would increase by more than 25%.

More than 51% said they would increase their spending on data center networking in 2010, and 45% said they would raise spending on wireless networks. Another 48.5% said they were increasing their spending on network performance management tools, and 43% said they would spend more on IP telephony. And finally, 47% said they would increase spending on application delivery technology.

Scadden said his company is looking to replace its old TMD phone system.

"We're looking at some new telecom technology as far as upgrading our core telephone infrastructure, whether it be a VoIP system or some kind of hybrid, because we still have a lot of legacy. We're kind of weighing our options there," he said. "We've kicked around unified communications. It's something we see value in, but we have a dilemma. We fear that by the time it's fully deployed, people will be ready to move on to the next big thing. We're going to rely on our VAR to get ahead of that."

Eberhard said he has been evaluating 802.11n wireless access points as a way of improving the coverage area in his company's wireless LAN.

A customer of Cisco networking gear, Eberhard said he typically buys Cisco products from a VAR, but occasionally he'll turn to sites like eBay to get reconditioned networking equipment, and there is more pressure to do that in the current economy. The recession hasn't forced any budget cuts, he said, but he does have to go to upper management for approval of bigger projects. There is also more demand for him to keep hardware running as long as he can.

"We try to repair what we can, replace it with currently owned if it can't be repaired, and then replace it with new if the other two things fail to resolve the problem," he said.

For networking professionals facing this kind of pressure, VARs that can offer a low TCO and a strong hardware support model will have an edge. That's why vendors like Nortel and Extreme have recently tried to emulate HP ProCurve's portfolio-wide lifetime warranty policy. These vendors haven't offered the same level of warranty that ProCurve delivers, but they do offer VARs an edge against vendors like Cisco.

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