The 2112 Group Forecasts North America IT Channel to Grow At Least 6% in 2015
According to 2112’s new 2015 Midyear Channel Performance Report, solution providers are expanding at substantial rates even as the rest of the IT market is seeing sales slow
A new report by The 2112 Group, the 2015 Midyear Channel Report, finds the North America IT reseller channel will grow at least 6 percent in 2015, as solution providers expand sales, revenue and profitability at rates ahead of their 2014 pace and greater than their OEM/vendor partners.
The 2112 Group’s 2015 Midyear Channel Performance Report reveals solution providers – primarily managed service providers, value-added resellers and solution providers – are seeing sales climb mostly on the strength of their IT managed and professional services. As many managed services operate on a recurring revenue model, their revenue and profitability are accretive, bolstering growth far above the market average.
“The global IT industry is forecast to contract in 2015 as spending slows, cloud services displace legacy infrastructure and current fluctuations impact budgets. The IT channel – resellers and managed service providers – are increasing their revenue, though, through recurring-revenue services that build up over time. The result is growth even when the rest of the industry is facing a stall,” said Lawrence M. Walsh, CEO and chief analyst of The 2112 Group.
The 2015 Midyear Channel Performance Report reflects more than just unbridled growth, but also the optimism and confidence of the IT channel amid economic uncertainty. The majority of IT solution providers are expecting robust growth and believe they can weather economic and technological disruptions.
The following are some of the highlights:
- Nearly one-half of solution providers say average deal values are increasing compared to 2014
- Two-thirds of solution providers say their first-half sales pace is ahead of the same period in 2014
- Seven out of 10 solution providers expect 2015 profits to increase at least 6 percent over 2014
- Three-quarters of solution providers expect full-year 2015 sales to increase at least 6 percent; with one in four solution providers forecasting sales growth to increase at least 15 percent.
The data contained in the 2015 Midyear Channel Performance Report suggests solution providers’ growth is causing new challenges. Solution providers report being challenged in finding new customers and recruiting and retaining qualified technical talent to keep their growth momentum going.
“While vendors are struggling to make the transition to cloud services and recurring revenue models, solution providers are capitalizing on their services to off-set declining product sales and margins,” Walsh said. “For solution providers, The 2015 Midyear Channel Performance Report is validation that their investments in services are paying off. For vendors, the report is a calling card to devise ways of tapping into partner services that support changing channel economic dynamics.”
The full 2015 Midyear Channel Report, is available for download on the 2112 Web site or by request at [email protected]. The full report contains detailed information for 2015 channel performance on first-half sales growth, second-half sales forecasts, sales cycles, and leading challenges.
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