Channel Shift Adaptation Peter Cannone, CEO, OnForce
In the first half of 2009, we saw a convergence of economic trends that have greatly impacted solution providers and VARs. From increased unemployment, shaky consumer confidence, and the continued shrinking of various growth markets, there is no doubt that the economic slowdown is causing businesses of all sizes to remain cautious in their spending.
Businesses are still holding back on purchasing new equipment and instead are focusing on maintaining and repairing their current infrastructure. In turn, VARs are adapting to accommodate this shift in demand, and are looking for ways to provide services that offer compelling value.
When we released our Q2 OnForce Services Marketplace Index (OSMI), a comprehensive analysis of all our service events this year across North America, we saw several trends that are key for VARs to keep in mind as they try to weather this slowdown.
"Fix not Buy" Prediction Holds True in 2009:
Toward the end of 2008, and into the first half of 2009, we saw a market shift in consumer and business behavior, as a new money-saving mindset took hold and people looked to extend existing IT infrastructure as opposed to buying new.
On the OnForce platform, we saw break-fix requests account for 63 percent of all work orders in the first half of the year, compared to only 27 percent of work orders that can be categorized as new installs.
As companies look to ride out the economic downturn, we anticipate the amount of break-fix work to continue to dominate for the remainder of 2009. However, we do expect to see a rebound in installs early next year.
We are Entering the New Services Economy:
With continued downsizing and belt-tightening, companies of all sizes now have an oversupply of computer equipment in their offices. This surplus needs to work its way through the system, but like many industry analysts, we believe there is pent-up demand to maintain this equipment. Companies are not buying new infrastructure, but looking to fix and preserve what they already have in place. Service organizations that can help with this demand will stay highly competitive.
Additionally, as enterprises are working with reduced IT resources, they are turning to OnForce to fulfill maintenance and service orders. Many have gotten even more creative and leveraged OnForce for micro-staffing purposes, which enables them to find qualified technicians for longer term projects, lasting from two weeks to a month.
Predictions for Second Half 2009:
While we are maneuvering through murky economic waters, there are still tremendous opportunities that VARs can take advantage of in the coming months. One area that we expect will be hot is asset recovery services as businesses shed their computer equipment that cannot be repaired.
In terms of technology, it will also be advantageous for VARs to look at new opportunities in the CE space as companies are still reacting to the Digital TV transition from June. In fact, OnForce customers have seen a major uptick in the installation of high-definition antennas, as cable television has become too expensive and many consumers are canceling their satellite and TV agreements.
Remain Positive and Continue to Innovate:
Similar to what we saw in 2000, it is going to take anywhere from nine to 12 months to clean out the existing infrastructure pipeline. But we do believe it will happen at some point in 2010. In the meantime, in order for VARs to remain profitable and competitive, they will need to consider new service alternatives, and adjust pricing to meet their customers' thresholds.
Peter Cannone is the CEO of OnForce (www.OnForce.com) a national network that provides access to onsite IT and CE service technicians, connecting service demand with local supply through an online marketplace.
In the first half of 2009, we saw a convergence of economic trends that have greatly impacted solution providers and VARs. From increased unemployment, shaky consumer confidence, and the continued shrinking of various growth markets, there is no doubt that the economic slowdown is causing businesses of all sizes to remain cautious in their spending. 
