Posted by: peterhact | December 5, 2010

Will Canberra ICT be impacted by small business decline?

The small businesses in canberra’s ICT community seem to be going through a bit of a shakeup. These smaller companies have managed to survive the global financial crisis, but some have been damaged by the experience.

Coupled with the impact by the gershon report and new large players moving into town, most have started looking to get out and get paying jobs – at least, removing the burdens of running their own companies in favor of working for someone else who can worry about it instead.

While there doesn’t appear to be any damage to the industry on the surface, the impact for a long term perspective is that innovative ideas and diverse approaches to market will decline. The ideas that these people will have in a larger company will get swallowed up, perhaps to surface as a monstrosity of the original simple idea or shelved like a cold case file.

I have been “out” of distribution for a few months, and already have seen a couple of guys close or sell out. They are looking at ways to keep wages coming in for their families to survive and prosper, and a small business in a sea of a multitude of resellers vying for the same business just won’t let them do it.

I blame the re-introduction of panel contracts. That’s right, you heard me, RE-Introduction. Back when i was a snot nosed sales guy starting in ICT, I was learning about DeSINE and then the PE contracts, the panel period contracts back in the ’90s.

What benefit does a panel contract give to a reseller, managed services provider or a consultancy firm? not much.

What benefit does it give a government department? a cheap price for the product or services up front, but no support, advice, opinion or innovation further down the track.

Panelists rely on price, lowest wins mentality, and the work we have put in over the years to educate that the price isn’t the most important aspect, rather a part of the overall offering is for nothing. Back to lockdown scrabbling for business or eking out a living on the “rats and mice” left over by the large businesses who aren’t interested in selling 100 cables or a couple of printer cartridges.

The rot set in after companies came to canberra with crazy prices to win business, then found that there was no way to increase margins, they were trapped by a now picky client. (they weren’t like that till after the crazy pricing discount days came in)

So, small business keeps on fighting for growth, they get bought by competitors, realise there isn’t a market to be had anymore, financial security is out the window, and vanish overnight. there are many people in canberra who have the skills that government is crying out for, they just don’t want to drop their value to match the government permanent rates, they are in corporate jobs at their true values.

Perhaps the biggest virtual slap in the face came from the Data#3 whole of government microsoft deal. now the resellers can’t even engage with their existing clients for microsoft business, it is sewn up at a far greater discount than they ever can achieve.

So what now? where will the innovators go? where will the diversity and niche offerings come from? Why isn’t the government making good on the SME involvement plans that they tell us are in place?

I hope that there is a solution for the sake of the SMB reseller, or they will go, and their ideas will too.

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