Budget Woes Spell Opportunity

Channel companies can make the hard sell in hard times

Its good to be an it analyst these days. A recent study shows that individuals in those jobs earn an average of $83,500 a year and enjoy plenty of employment opportunities.

The study by Money magazine and Salary.com rated IT analyst as the seventh best job in the United States, based on metrics such as pay, stress level, time flexibility, growth potential and creativity. The No. 1 occupation is also IT-related—software engineer, which commands average yearly salaries of $80,500.

Not bad.

That is, not bad unless you are an employer struggling to pay competitive salaries to professionals who could easily jump ship for a better-paying opportunity. In the case of IT analysts, opportunities abound, with job openings averaging 67,300 annually.

Its no wonder that IT budgets are increasingly taken up by salaries. While a high-tech company may not blink at what—by some standards—would be considered high salaries, companies in other fields feel the pinch. In some cases, they have to make the unenviable budgeting choice of whether or not to reduce capital expenditures to allocate more money for wages.

Research by CIO Insight, a sister publication of The Channel Insider, shows that companies in 2006 are expecting to spend a bigger chunk of their IT budgets on staffing and less on hardware and software compared with last year. Staffing costs on average gobble up almost 40 percent of IT budgets, according to the same survey.

In a perfect world, companies would boost not only their spending on staffing but also on software and hardware, and everybody would be happy. But the laws of corporate economics typically mandate that if you have to spend more in one place, you take it from somewhere else.

In the past, when channel companies focused primarily on product sales, these trends would be cause for concern. However, unless you remain too dependent on product business, this trend spells opportunity for VARs, integrators and service providers. Channel companies can make a compelling case to clients that they can reduce staffing costs by taking over IT functions.

Over the years, savvy channel companies have locked into relationships with customers who would call on them for product refreshes and maintenance work the customers could not handle themselves. Increasingly, those relationships are evolving into managed services arrangements through which providers take over IT functions at client sites. In the true definition of managed services, providers handle most of the work remotely through Internet connections. They typically employ technology by managed services platform vendors such as N-able Technologies, SilverBack Technologies and Level Platforms to monitor their clients computing environments for prevention purposes.

But even for those channel companies that have yet to offer remote services, current IT budget pressures present an opportunity. They still can save customers money by handling IT needs for which the clients otherwise would have to hire expensive IT professionals.

Of course, the ideal situation is to handle as much of the monitoring, maintenance and software updates remotely. This model reduces costs for customers and providers and is undeniably compelling not only for technical but also for business reasons—especially in light of escalating fuel costs. If you can avoid burning fuel to get to a customer site, that is a plus.

Salaries will continue to exert pressure on IT budgets, so as a channel company, if you dont have a plan yet to seize this opportunity, its time you did. Remember, your competitor across town could be a few steps ahead of you on this.

Pedro Pereira is a contributing editor for The Channel Insider. He can be contacted at ppereira@ziffdavis.com.