Productivity Drives Technology Demand, Profitability

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As companies clamp down on IT spending, solution providers say the most profitable and high-demand products and services have two things in common: cost savings and productivity.

Solution providers expect managed services, software as a service and virtualization to drive increased profits in 2009, while end users are clamoring for more smartphones, wireless devices and increased availability of virtualization technologies.

That’s according to the results of the Channel Insider 2009 Market Pulse survey, which asked solution providers what they predicted would be the hottest and most profitable technology trends in 2009.

Managed services topped solution providers’ hot lists, with 39 percent of respondents saying the technology would be most profitable.

Jonathan Dambrot, managing director of security consulting solution provider Prevalent Networks, says his company has had enormous success with its BC0D (Business Continuity on Demand) service, launched in 2007, and expects that trend to continue.

Prevalent’s BCoD solution offers a hot site backup and recovery service with continuous data replication, ensuring the integrity and availability of critical business infrastructure and the data contained in those systems, says Dambrot.

“Disaster recovery has always been critical, and providing a security-based managed service can overcome a lot of the security obstacles customers face on a daily basis,” he says.

Ted Alben, vice president of business development and mobility at Netversant, says he believes lower-end managed services will gain some traction, certainly, but many companies that previously invested in managed services are feeling pangs of regret.

“Managed services is completely misunderstood by a lot of customers,” Alben says. “One of the problems is trusting that the people you’re paying to manage aspects of your business are going to do an adequate job of it—it’s taking on a huge amount of risk just to reassign responsibility,” he says.

However, Alben says that lower-end managed services will be popular, especially those firms that can offer decentralised, basic services that cover a broad base of easily addressed concerns.

The Market Pulse survey data showed that, after managed services, SAAS is considered the second most profitable offering. Alben agrees that SAAS is huge, and expects it will continue to grow in an economic environment where enterprises struggle to stay current and competitive while slashing costs and increasing efficiencies.

“Enterprises are realising there’s no reason for them to be responsible for creating software and maintaining the life cycles of that business software,” Alben says, and will turn to SAAS providers to fill that need.

However, he adds, many don’t take into account that a SAAS provider can introduce some level of external complexity, since the provider needs to work seamlessly with an enterprise’s existing infrastructure and personnel.

Rounding out the top three is virtualization, which solution providers say will continue its ascension as companies push harder to gain more efficiencies in their data centre.

“Virtualization is a terrific opportunity for enterprises to squeeze more out of the lemon, so to speak,” Alben says.

Channel Insider also polled solution providers to discover what technologies their customers were clamoring for in 2009.

Cell phones/smartphones topped the list, with nearly 31 percent of participating solution providers saying the technology would be hot for end users, followed by virtualization software (24.5 percent). Handhelds, wireless devices and PDAs finished off the top three (23 percent).

Alben says a common theme for these technologies is productivity, which can help drive increased cost savings for enterprises in a tough economic climate.

“The hottest technology in my opinion is tied to productivity,” Alben says, which could contribute to the need for end users to increase their demand for smartphones and wireless devices. He cites an experiment Cisco implemented, where employees used dual-mode wireless phones to save about 5 minutes of time each week.

While that might not seem like much—1 minute per employee per average workday—Alben says that across Cisco’s 7,000 employees they saved about £8 million a year.

For Dambrot, whose company specialises in the security field, the 2009 outlook is a bit different. He says he believes data-centric security, compliance and availability will be most in demand this year.

Security, though it didn’t make the top three on Channel Insider’s list, is still a big driver for companies today, says Dambrot. Customers’ need to comply with increased governmental regulation and an onslaught of security breaches will keep security profitable for his business and in demand from end users, he says.

Data loss prevention, in particular, is a concern, he says.

“Companies are taking a much harder look at how they relate to the data they are trying to protect,” he says. Solution providers need to help customers understand what data is present and closely monitor that data for unintended use or unauthorised access, Dambrot says.

And if an attack does happen, Dambrot says end users will increasingly need incident management technologies around security—the ability to aggregate monitoring and management logs into a single source that can identify not only where an attack is coming from but take steps to deal with it.

Most Profitable Technologies of 2009

Managed Services

39.1%

SAAS

20.8%

Virtualization

18.2%

Business Management/Productivity Software

17.1%

Custom Apps/App Dev

10.9%

Data Security

10.9%

Network Security

9.9%

Desktop/Notebooks/Thin Clinets

9.9%

Handhelds/PDAs/Wireless Devices

9.9%

Security Management

9.4%

Storage Infrastructure

8.9%

Network Infrastructure

8.9%

Server Hardware/Software

8.3%

Blade Servers

7.3%

Wireless Networking

7.3%

Application Integration

6.8%

Cell Phones/Smartphones

6.2%

eCommerce

5.7%

Servers

5.7%

Enterprise Applications

5.2%

Voice Networking

4.2%

Video Conferencing

4.2%

Peripherals

3.6%

Utility Computing

3.6%

Identity Management

3.6%

Operating Systems

3.1%

Network Management Software

3.1%

Storage Management Software

3.1%

Middleware

3.1%

Engineering Software

3.1%

Point of Sales

2.6%

Financial Management 

2.1%

Multimedia/Graphics Software

2.1%

Digital Signage

1.6%

Other

2.6%

Don’t Know

4.7%

 

  

   
   
   
   

Technologies in Highest Demand by End Users

Cell Phones/Smartphones

30.7%

Virtualization

24.5%

Handhelds/PDAs/Wireless Devices

22.9%

SAAS

19.8%

Business Management/Productivity Software

14.5%

Managed Services

13.5%

Wireless Networking

12.5%

Desktop/Notebooks/Thin Clinets

12.0%

eCommerce

8.3%

Voice Networking

7.8%

Blade Servers

7.8%

Video Conferencing

7.3%

Don’t Know

7.3%

Security Management

6.2%

Digital Signage

6.2%

Storage Infrastructure

5.7%

Application Integration

5.7%

Identity Management

5.2%

Data Security

4.7%

Network Security

4.7%

Servers

4.7%

Enterprise Applications

3.6%

Storage Management Software

3.6%

Custom Apps/App Dev

3.1%

Utility Computing

3.1%

Operating Systems

3.1%

Multimedia/Graphics Software

2.6%

Middleware

2.1%

Engineering Software

2.1%

Point of Sales

2.1%

Financial Management 

1.6%

Network Infrastructure

1.0%

Server Hardware/Software

1.0%

Peripherals

1.0%

Network Management Software

1.0%