A new study by The 2112 Group finds partners are suffering significant disruptions amid the pandemic, but remain optimistic about their long-term prospects
Solution providers everywhere are suffering from the economic fallout of the COVID-19 pandemic, as the containment efforts are disrupting supply chains and crimping customers’ ability to maintain contractual obligations. Nevertheless, a new study by The 2112 Group finds most solution providers believe they will achieve or beat their pre-pandemic sales forecast for 2020.
In the COVID-19 Pandemic Impact on Channel Partners study by 2112, which publishes Channelnomics, 57% of partners said they expect to hit or exceed their original 2020 revenue targets. Of those optimistic solution providers, nearly 1 in 5 expects to grow its revenue by 11% or more by the end of the year. While such growth expectations are reasonable under the circumstances, the outlook is substantially different than the pre-pandemic expectations, which had 68% of partners expecting to grow by 10% or more this year.
Many solution providers report having a surge in business associated with providing “work from home” products and services. Partners say security, cloud-based services, and communications and collaboration technologies are best-sellers as customers race to maintain operations.
Solution providers’ confidence doesn’t mean they’re immune from the impact of the pandemic and its economic fallout. The study finds that the average solution provider has less than three months’ cash reserve to cover operating expenses and cash flow gaps. One-third of solution providers report having less than two months of cash on hand.
The confidence in meeting sales targets expressed by solution providers concurs with the findings of an earlier 2112 study, COVID-19 Impact on the Channel, in which 58% of channel professionals said they expect to meet or exceed their original 2020 channel revenue forecast.
General channel confidence is high despite a revised forecast by market analyst firm IDC, which anticipates global IT spending to decrease by 2.7% in 2020.
Despite solution provider optimism, the 2112 study finds that channel partners are under stress from supply chain disruptions, customers reducing services or canceling contracts, and cash flow disruptions. Solution providers are looking to vendors for payment deferments, extended lines of credit, and financial support during the COVID-19 economic downturn.
The survey closed just as U.S. government economic assistance programs came online. At that time, only 25% had applied for payroll protection and disaster relief.
Complimentary copies of the full report are available for download through 2112 Resources. 2112 is making all of its topline COVID-19 research available to the channel community for free.