Just when you thought the good times were back again, Cisco comes out with an earnings report and forecast that don’t exactly instill confidence in the tech world. That’s just one of the big stories in the Channel-Lands this week, and thankfully not all the headlines are grim.
Cisco Earnings Shake Tech Confidence
Cisco Systems has long stood as bellweather of the tech market’s health, so it came as no surprise when Wall Street analysts were spooked by the networking company’s soft quarterly earnings report and forecast. CEO John Chambers says Cisco revenues will grow between 9 and 12 percent in fiscal year 2011, while analysts had expected a little better than a 13 percent increase. Further, Cisco’s margins slipped from 65 percent to 62 percent.
These numbers may seem little more than shifting slightly to the left, but the context around these numbers is what’s worrying the market – and what should concern the channel. The market has been working on the presumption that growth would come since pent-up demand built up during the recession, thus returning the tech market to robust revenue levels. Tech analysts equally expected strong growth from the government sector, flush with stimulus money.
Cisco’s earnings revealed softness in the tech market that quickly eroded confidence in the tech market recovery. First, the slowdown in Cisco sales and revenues reflects a general lack of confidence in business to invest in new systems and infrastructure. Second, Cisco also reported lackluster sales in the public sector, as cash-strapped state and local governments cut back on spending; national governments in the U.S., Japan and European nations also are cutting back IT investments.
Is this really cause for alarm? Wall Street sent tech stocks lower after the Cisco forecast. But Wall Street is finicky. Nevertheless, IT spending isn’t expected to return to pre-recession levels until 2013. The Cisco forecast is just another reminder that the tech market isn’t out of the recession woods yet.
HP Requires New Ethics Training in Wake of E-Rate Scandal
Hewlett-Packard is requiring all partners bidding on government E-Rate contracts to complete rules and regulation training. The new requirement comes in the wake HP’s settlement with the Federal Communications Commission over fraud charges in bids involving two Texas partners.
HP agreed to pay the government $16.25 million to settle charges that HP sales representatives and two solution provider partners engaged in unfair practices in E-Rate bids with the Dallas and Houston school systems. E-Rate is the government program that provides funding to extend broadband service to school systems. The complaint alleged that the two solution providers in 2004 treated school officials with gifts to get inside information on bidding processes and influence contract decisions. The two contracts were unrelated, but worth a combined $17 million.
To guard against relapses, HP is requiring all of its solution providers engaged in E-Rate programs to complete training on the rules of engagement by December 31.
New Microsoft Association Launches
Microsoft partners have another avenue for collaboration and business development needs – the newly minted Microsoft Partners for One World of Results (MPOWR). The new association of Microsoft partners and resellers launched this week with a Web portal and online magazine. The group’s mission is to foster partner-to-partner collaboration on key Microsoft products and technologies.
MPOWR joints several other Microsoft and industry associations focused on collaboration, business development and technology understanding. Bill Luisi, the group’s cofounder and vice president of sales at Teknion Data Solutions in Texas, tells CRN that MPOWR will focus on streamlining the process of bringing new Microsoft products to market.
“Most partners have a limited number of competencies,” said Luisi. “Teknion Data Solutions focuses on business intelligence and custom application development, but we’d love to partner with partners that are doing work in CRM, ERP and mobile computing.”
MPOWR is not associated with Microsoft, which has a number of internally developed and third-party associations for supporting partners.
HIT Funding Likely to Survive Power Change
In case you hadn’t seen the headlines, Republicans retook control of the House of Representatives and narrowed their minority status in the Senate in the midterm elections. Top on the GOP agenda is staunching government spending and rolling back several of President Obama’s initiatives, including health care reform. And this shift to the right got many people speculating that federal funding for health care IT would land on the chopping block.
CompTIA investigated these concerns and found them largely unfounded. In 2011, qualified health care providers will be eligible for subsidies up to $44,000 for the meaningful implementation of electronic health care records systems. CompTIA’s public advocacy team called lawmakers on both sides of the aisle and found little appetite to disrupt this program. Both sides of the political spectrum largely believe this is a worthy program.
The bipartisan support for HIT funding is good news for solution providers looking to sell software, managed applications and infrastructure to health care providers.
As for the overarching Obama Health Care Reform initiative, well, that’s clearly in the Republican’s gun sights. We’ll have to wait and see how that plays out.
Importance of Customer Satisfaction
Finally, we often hear about the importance of customer satisfaction and listening to customers in building and operating businesses. This week, customer service and satisfaction rose to the top of channel chatter with Autotask releasing a new tool that automates customer satisfaction surveys. Even better, the tool automatically populates ratings in solution provider’s PSA dashboards. This means, account managers and executives can see exactly what their customers think of them before they pick up the phone.
I mused about the utility and importance of this tool in my blog, Channelnomics. MSP Mentor’s JoePanetteiri chimed in on the topic, adding conversations he’s had with CharTech CEO Alex Rogers on the subject and how ConnectWise CEO Arnie Bellini implored solution providers to listen to their customers at last week’s IT Nation conference.
Customer service and ensuring satisfaction is something that never goes out of style and will always have utility. How are you measuring and improving upon customer satisfaction?
Well, that’s all the week’s news from Channel-Lands where all the technology works, all the deals are profitable and all of the companies are above average. If you want to follow me on Facebook or Twitter, feel free to connect. Share your suggestions and news with me at lmwalsh@the2112group.com.
