After some interesting conversations in the past month or so, I have come up with two radical ideas that could tailor the channel and the IT industry to fit the times. The first is that people in the channel (and the IT industry as a whole, for that matter) should reduce their working year to eight months at the most and possibly cut it down to four. I’ll explain why in a minute.
The second, which is partly related, is that a lot of public sector business seems to be getting compressed into the last three months of the year – it would appear to me that the troika is to blame – and maybe we should do something about that too.
So let’s start with the channel. Some of the people I have spoken to have reported back that nearly all of their business is being done in the last month of each quarter. Canny customers are waiting, knowing that most IT suppliers are going to be more open to do deals at the end of the quarter because of the pressure they are under to report their financial figures on a quarterly basis.
This isn’t new in that the suppliers have always had to do this, but it is different in that so many customers are holding off for as long as possible instead of just buying equipment when they think they want it. Why? Well, the economic situation isn’t helping. Some of them are much more loath to part with their cash and aren’t going to do so unless they get a good deal. They also know that vendors are going to want their money more than perhaps they did in the past because there aren’t as many customers and they just aren’t spending as much.
Quarterly
So there’s an argument for saying that what IT suppliers and the channel should do is just hold off until the third month of the quarter and then go to customers with their best deals because for much of the other two months in any quarter they could be just wasting their time.
Still, I’m inclined to think a four-month year might be just a little bit too short, so we could settle somewhere between four and 12. So, let’s say we use the first and last month of every quarter. The first month is when IT suppliers and channel partners go and talk to customers, get the message out, learn what they’re looking for and do a bit of the ‘relationship building thing’. Then they don’t come to work for the second month and return for the third, which is for actually doing the deals, closing sales and delivering goods.
Look at it from a productivity point of view. If people aren’t doing a lot of business in the first and second months of a quarter, does it really make sense to have them actually at work as much as they are in the final month of the quarter? So why not put all the work of the first two months into the first month instead?
So you’re probably thinking, "well I never thought of that before" and you’re probably thinking there’s a very good reason why. You’re probably right but I can’t quite work out what it is.
So now on to the second thing: the effect of the troika on public sector deals. I’ve heard some people say that they did as much as 40% or 50% of their annual business in the fourth quarter. Quite a few have put this down to a big rush to spend from public sector customers. Again, this surge to spend it or lose it is nothing new when it comes to the public sector, but the scale of it is.
I think I know why. The main difference between the situation before 2010 and today is the presence of the EU-ECB-IMF troika. Irish governments post-bailout may well propose budgets and enshrine them in law, but those budgets have to be rubber stamped by the Troika. Not only that, should the Department of Finance’s figures look off, the Troika has the power to tell government to make cuts or raise taxes to correct them.
Public problems
Now I’m going to imagine I’m someone in procurement in the public sector: Before the crisis I had a number of projects and a budget I could be confident in. Today, I might get an indication of what is available for me to spend, but the government can’t guarantee funding will be in place when I need it.
So I have to wait, and wait. Why? Because there is no guarantee that the Troika will agree for me to spend that money until enough of the year goes by for them to be satisfied that the Irish government and economy is on track to meet the projections for the year. So things get dragged out for longer and then, when the all clear comes, it’s got to be done quickly because there’s less time left in the year to do it.
If your business is predominantly based on selling to the public sector and you want to be radical, you could have people working in January and February to talk to customers and then everyone could take the next seven months off and come back in October and work until the end of December.
Mad? Probably, but then so is the situation we find ourselves in at the moment.
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