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A survey designed to measure the level of confidence in the channel's ability to grow value over the coming months has presented a robust outlook. The survey, undertaken by Knight Corporate Finance, shows a channel in rude health and growing quickly by understanding how to win new customers and look after exiting ones, according to Knight CF Director Paul Billingham.
"The channel is adept at cross selling multiple services and embracing next generation products to assist their customers in transforming to new technology," he said.
"They are sufficiently sophisticated to know when, and when not, to consider acquisitions versus organic growth and understand that if they reach the point that they are standing still, it may be time to consider an exit.
"Finally, in a demonstration of both health and maturity, they are seeking to recruit new staff but importantly invest in their existing staff and infrastructure."
Over 50 companies responded to the survey from across the spectrum of fixed and mobile telecoms, unified communications, and managed services. Of the sample over 85% felt optimistic about the sector of which 35% felt very optimistic with less than 5% feeling pessimistic. This level of optimism was backed up by 75% of respondents who revealed they had experienced growth of over 10% in the last year.
The channel's ability to both acquire and retain customers were viewed as key drivers of confidence, but notably almost two thirds of respondents cite the availability of new services as a positive influence in driving real value through their business.
Interestingly the switch to Hosted voice and IP services was viewed as one of the most positive influencers of confidence, whilst the market for telephone systems had a negative impact on confidence. This does seem to indicate the growing acceptance by both the channel and end users of IP telephony coupled with the accepted slow-down in the PBX market.
Competition had the most negative impact on confidence with respondents as concerned about competitors from different sectors as they are about direct competitors. Where the channel was previously split into distinct 'silos' the impact of convergence is bringing in new competition, as all parties start cross-selling services. Respondents felt that traditional fixed line resellers and mobile businesses represented the most significant competition. Interestingly the threat from Cloud Applications Providers was viewed as the next largest threat.
Over 75% respondents confirmed that new services were driving an increase in customer expenditure which seems to be slightly offset by competition, with over 50% saying that price changes were reducing customer expenditure.
Companies seem to have a widening portfolio of services available to their customers with over 70% of respondents already selling a mix of fixed line services, telephone systems, mobile services, data networks and inbound services, with 25% already offering some sort of cloud/SaaS product. IT services and datacentre services were being considered by 50% of respondents, but also had the highest number of 'not being considered' responses.
Over the next 12 months almost 90% of respondents plan to invest in organic growth and a staggering 55% would be seeking acquisitions to supplement their customer base and/or skill set, with around a quarter looking to raise funds to meet their objectives.
Tellingly only one party was planning to 'stay as they are' but over 20% have reached the conclusion that it may be preferable to consider an exit rather than stand still.
In a sign showing the robust health and maturity of the sector, almost half of respondents said that the recruitment of new staff would make their business grow in 2012, while further investment in existing staff and systems were the next most popular answers. Access to additional funds would give a boost to around a third of respondents, while fortunately only a couple of parties felt that a wholesale change of management was required.
Billingham added: "The results of this survey demonstrate that the channel is key not just in supporting the critical communications requirements of UK businesses, but with its continuing growth and investment, it is providing a real fillip to UK."
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