Breaking the Mould to Survive the Crunch

2009 has had a bleak beginning. The news of doom for the UK economy seems to be growing every day. The implications for IT departments are clear: they are under more pressure than ever to cut spending – but, at the same time, they are still expected to deliver more value to the business. Inevitably this is placing the channel under substantial pressure as resellers risk going to the wall while competing for ever decreasing pots of budget. As Computacenter’s recent withdrawal from PC distribution has shown, resellers need to adjust their business models if they are to come out of the current recession with a sustainable business. However, for those that don’t have the ability or luxury of being able to pull out of entire lines of business, what else is available? David Pratt, COO at ThinkGrid believes ‘business IT on demand’ offers an entirely new opportunity to regain margin and build new revenue streams during the downturn.

“The channel has to realise that to remain competitive it is necessary for them to start behaving differently. ‘business IT on demand’ is basically a hosted IT infrastructure that customers subscribe to in a ‘pay-as-you-go’ model. It offers a lifeline to resellers that are struggling to survive during a time of economic recession and continued decline in margins from PC and server sales.”

How does it work? Instead of selling the hardware and software needed to build an IT infrastructure, resellers offer customers a ‘business IT on demand’ service. The customer benefit is that they no longer need to make large upfront CapEx investments in PCs, servers and supporting software licenses. They simply continue to use their existing IT, but access the latest desktop operating system, applications and stored data from ThinkGrid’s enterprise-class hosted infrastructure.

“The beauty is that cash strapped customers only pay for the IT they use, can scale up or down as needed and move a CapEx cost to a far more manageable OpEx entry, which is ideal for the bean counters. For the channel, this opens the door to double digit margins and recurring revenue streams. It is ideal for those resellers that are finding that customers simply do not have the cash to make upfront investments in technology at the moment. This is because when IT is supplied on demand, there is no need for investment in hardware, software or administration, which in turn removes a major cost for resellers and their customers. By offering ThinkGrid, or a white label version of it, resellers have a low-cost and simple route-to-market that can quickly lead to revenue from other high-margin services such as consulting and training. They will also find that business is ‘stickier’. Rather than shopping around for expensive, one-off IT purchases, customers will be providing a guaranteed monthly income – a predictable revenue stream that offers a degree of security in these uncertain times.”

Virtual Planet is one of the first resellers to offer ThinkGrid’s ‘business IT on demand’ and as a result has already experienced significant benefits with this approach. David D’Orazi, CEO at Virtual Planet thinks that geographical boundaries that previously prevented resellers from exploring other markets are also removed.

“ThinkGrid’s ‘business IT on demand’ allows us to target the global market, as the infrastructure is available from anywhere in the world. This is because the hosted nature of the offering means that any user can access their entire desktop over any PC that is connected to the Internet. At Virtual Planet, we have seen lots of interest in hosted solutions – businesses are clearly looking for an alternative way to buy and use IT. Our hosted offering based on ThinkGrid is providing an alternative; customers don’t need to make expensive CapEx investments but can still get the latest technology.”