IDC Identifies Major Disconnect between Customer IT Financing Requirements and Channel Partner Capabilities

FRAMINGHAM, MA – March 24, 2009 – As IT channel providers search for opportunities amid volatile credit and capital markets, the gap between customer IT financing requirements and channel partner capabilities continues to widen. According to new research from IDC, success for channel providers (with $1 to $50 million in annual revenue) hinges on their ability to understand both the overall financial health of the channel as well as the availability of customer leasing and financing, inventory and receivables financing, and operationally oriented financial instruments, such as revolving lines of commercial credit and other business investment funding options.

A recent IDC survey of 43 U.S.-based channel partners with an average of 1,000 employees completed during February 2009 produced a series of research findings that both reinforced preconceived notions of how market volatility affects channel providers as well as research findings that surprised IDC's analysts.

* 64% of large channel providers participating in the study reported that their customers have more interest in IT financing and leasing programs than 6 months ago. At the same time, an astonishing 40% of these same channel providers reported that they do not anticipate the need to introduce and educate their customers on the benefits of leasing and financing as a ways to procure needed IT resources

* 11% of channel partners surveyed reported that they do not have access to capital to continue "business as usual." When the findings are segmented to examine different sized resellers, nearly 20% of resellers with annual revenues less than $5 million reported they had inadequate access to capital

* Quantifying the whipsaw effect volatile credit markets have had on IT leasing and financing sales programs (which were readily availability 18 months ago), nearly half of channel providers reported having more trouble getting customers financed in the current environment. This percentage rises to 73% among small partners.

"IDC believes that beyond a reseller’s human capital, access to financial capital and credit are the second most important business resources; therefore, understanding the real-time risks and opportunities confronting these critical segment of the IT solution chain will be an important bellwether for the entire IT industry," said Joseph Pucciarelli, program director, Technology Financing and Management Strategies. "The captive financing units for the major IT vendors have worked for many years to develop and deliver financing solutions to their solution providers. These latest research findings suggest significant gaps remain."

"In these times of economic volatility, some technology providers have tended to focus disproportionately on larger channel providers," said Janet Waxman, vice president, Infrastructure Channels and Alliances. "This research project once again has confirmed that the smaller channel providers, those with less than $5 million in annual revenue, have more optimistic economic expectations for 2009 despite having to overcome more severe consequences from the shifting capital markets."

Additional findings from this study will be presented during a complimentary IDC Web conference on Thursday, March 26, 2009 (1:00-2:00 pm EDT). Click here to register for IDC's Web conference. The full research findings will be published as a special study – Assessing the Business Implications, Risks and Opportunities of Today’s Volatile Capital and Credit Markets on North American IT Resellers – in April 2009.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 45 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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