The 2012 Presidential Election And Its Impact on the Channel

This past week and a half was filled with despair, hope and opportunity. In the past 10 days we faced Hurricane Sandy and its terrible aftermath, followed up by a vicious Nor’easter that dumped as much as 10 inches of snow on some areas in the tri-state area, exacerbating an already horrific situation. And in my neck of the woods we are back to the 1970s with the rationing of gas with an odd and even license plate plan.

In between, more than 100 million Americans exercised their voting privilege and President Obama was re-elected to another four-year term by a narrow popular margin.

There were so many personal and political happenings that some businesses basically went black as people struggled to get their lives and houses back in order. The severe weather clearly exposes the infrastructure problems facing this country. If the greatest city in the world can’t get power restored to people, schools and homes after 12 days, then what does it say about other areas? As I wrote about in my previous blog, solution providers need to use this as a serious conversation starter with their customers regarding storage, backup, and business continuity strategies. Look for IT spending on disaster recovery and cloud-based storage initiatives to increase in 2013.

But let’s also take a look into what the 2012 presidential election might mean to the solution provider channel. I know, and have spoken with, solution providers and channel executives on both sides of the political aisle. Some supported President Barack Obama and others supported Gov. Mitt Romney, and for different reasons. Some believe more government involvement in pushing for research and greener energy and technology will create jobs and be a boost for solution providers. Others I have spoken with feel the government needs to lighten up on regulation and create more tax breaks for businesses to fuel hiring and growth.

However, what both sides do agree on is that uncertainty is bad. And what is bad for business is bad for the channel. The two major areas of uncertainty that will impact solution providers immediately are the unknown effect that Obamacare will have on business’ health costs and what their tax rate will be in 2013.

Raffi Jamgotchain, President of Triada Networks, a solution provider in Northvale, N.J., said he is hoping more pro-small business policies will be put in place, now that the election is over but he sees negative forces at work that will stunt growth. “Unfortunately the healthcare mandate potentially has the ability to keep people from hiring and we already see some companies cutting full-time workers to part-time status so they don’t apply,” he said, adding that there will be more freelancers and 1099-type contractors looking for their own healthcare or alternative plans.

“In addition, the burden that government puts on small businesses in particular in terms of paperwork is a labor tax on the owner,” Jamgotchain said. “The owner will either have to hire someone or spend time dealing with bureaucratic red tape instead of working to grow their business or employ productive people.” Again, he, like others, is hoping President Obama will address these and other small-business pain points early in his second term.

Others said their customers are putting a hold on proactive technology spending as a result of the potential fiscal cliff the country is facing. The need for the government to raise money in 2013 is causing tremendous concern because the Bush-era tax breaks likely will expire and they are not sure what their new tax rate will be going forward. As a result, companies are sitting on the sidelines with many investments, projects and hires. This uncertainly, all I have spoken to agree, does not bode well for the short-term business outlook.

However, that being said, the channel is comprised of business entrepreneurs, tried and tested.  Once they know the playing rules, they adapt and excel.

“Success happens in spite of government and who is in power, not because of it,” Jamgotchain said. “Each of us as entrepreneurs make our own way and our own success.”

Is your glass half empty or half full?

Knock em alive!