Tuesday, July 13, 2010

The effect of business uncertainty

Over the last few weeks I traveled across the USA visiting several clients of ours. Many of the clients told me how tight their budgets were and blamed it on the uncertainty facing their business sector. In particular the medical and natural resources customers I met with were very concerned about the next 12 months.

Over dinner in Dallas with several clients I heard how our customers are planning how to remain profitable when gross revenue is down 10% in 2011. Additionally, they expect the cost of medical insurance and taxes to increase by about 10% in 2011. These folks are planning to remain profitable in a dismal business environment and that takes a lot of creativity and out of the box thinking.

Our typical customer is increasing their usage of our independent NetApp service and support and increasing the life cycle of their NetApp storage equipment. They expect that will reduce their costs of storage and support by 30% next year. So, even if their budget declines they will be able to maintain their QoS.

Thomas Sowell seems to have also noticed the issue: (http://www.investors.com/NewsAndAnalysis/Article.aspx?id=540126&p=2):

When you hire somebody in this environment, you know what you have agreed to pay them and what additional costs there may be for their health insurance or other benefits. But you have no way of knowing what additional costs the politicians in Washington are going to impose, when they are constantly coming up with new bright ideas for imposing more mandates on business.

One of the little-noticed signs of what is going on has been the increase in the employment of temporary workers. Businesses have been increasingly meeting their need for labor by hiring temporary workers and working their existing employees overtime, instead of hiring new people.

Why? Because temporary workers usually don't get health insurance or other benefits, and working existing employees overtime doesn't add to the cost of their benefits.

Rational business executives are desperately looking for cost reductions as a business survival strategy, but they need to reduce costs without increasing risk. Zerowait’s products, services and support are viewed as part of a solution in an uncertain business environment thanks to our staff’s reputation for high availability service and support. Over the last couple of months requests from customers for our help in NetApp migrations and implementations has increased as companies hesitancy to hire full time engineers increases. Viewed in this light the increase in Zerowait’s business this year makes a lot of sense.

If your storage budget is getting squeezed, maybe it is time to call Zerowait .

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