This coming quarter is shaping up to be one of the toughest the local channel has seen since the 2008 financial crisis.
While buoyed by initial demand for work from home related equipment, the local tech sector is expected to see a downturn in Q4 2020. The most stark warning came from Forrester research analyst Sam Higgins.
“The real issue we have locally is our large channel market comprised of resellers and partners of large global enterprise vendors,” he said.
“As project investment stalls those firms who focus on pure consulting and implementation services will suffer the most with our forecasts showing this part of the local tech sector will be worst hit by a 3 percent downturn. At USD$247 million, this will make up 40 percent of the overall reduction in spending in 2020.”
While Forrester is the only firm to make any local industry-related COVID-19 impact predictions. A number vendors, distributors and partners have told CRN they have serious concerns about making numbers this quarter.
While sales of cloud applications are still strong and increasing in some cases, large infrastructure projects are all put on hold. This leaves a lot of cash on the table and one distributor is looking to add financing options to make it easier to access.
Ingram Micro launched its financial solutions offering globally in late 2019 by engaging a number of financial services companies.
The distributor is now on a new push to onboard local partners and their customers who need to free up cash in the current economic climate.
The new products include structured finance such as leases and loans for end customers for a period of one to five years and credit limit management.
In addition, the distributor is offering sale and leaseback. If a customer has purchased hardware in the last six months, they can refinance for the original purchase price. For assets older than six months, Ingram said financiers would look at providing funds at book value.
Talking to CRN in March, Ingram Micro ANZ CEO Tim Ament said the options would enable partners to maintain cash flow at a time when it has never been more important.
He added that simplifying the way partners transact with the distributor would be welcomed by the channel.
“That has been a global focus for us and the key is we have to show up as one,” he said.
“We spent a lot of time and effort making sure we can take all those capabilities and simplify it for our customers to take advantage.”
Ingram Micro ANZ’s new CFO John Dalgarno said the goal of the program was to allow resellers and their end customers to have the flexibility to upgrade their technology while maintaining cash and liquidity.
“Companies want to maintain their agility, but at the same time, we're going through a period of economic uncertainty so they want to be able to absorb future shocks,” he said.
“The best way to do that is for them to maintain liquidity for any potential future downturn.”
“A lot of the projects that were being planned in the market are now going to have question marks around them.”
“People are still going to want to try and drive innovation in the end users business. We've got to try and help them keep it rolling to keep things moving along and this is part of that, that strategy to support.”
Dalgarno said there would be more financing options brought to the local market in the coming months.
Financing is available to Ingram resellers and their customers with a registered ABN number subject to a credit assessment, the company said.