Coronavirus Driving ‘Massive’ Surge In Tech Purchases: The Channel Company Research

“The sudden need to enable millions of employees to work from home has created a massive spike in technology purchases from IT decision-makers that the channel is rushing to fill,” said The Channel Company CEO Bob Skelley.

The coronavirus lockdown with 265 million Americans in 32 states ordered to stay at home has created a “massive” surge in work-at-home technology purchases and shortages of products, including laptops and PCs, according to a survey of solution providers and IT decision-makers by CRN parent The Channel Company.

Seventy-one percent of managed service providers and 49 percent of VARs/systems integrators said they are seeing a spike in customer requests for work-at-home products and services as a result of the coronavirus pandemic, according to a survey of 320 solution providers conducted from March 20 to March 25.

That data was backed up by IT buyers, with 52 percent of midmarket IT professionals saying they have increased IT spending in order to quickly build out work-at-home solutions for their employees, according to The Channel Company survey of 135 IT professionals during the same period.

[RELATED: Coronavirus Is Creating A Global ‘Work-At-Home’ Culture]

Sixty-six percent of IT professionals, meanwhile, said their companies experienced a spike in IT needs in order to support work-at-home employees in the wake of the coronavirus pandemic, according to The Channel Company survey.

“The sudden need to enable millions of employees to work from home has created a massive spike in technology purchases from IT decision-makers that the channel is rushing to fill,” said The Channel Company CEO Bob Skelley in an interview with CRN. “MSPs, VARs and systems integrators are coming to the rescue of customers moving to quickly build out work-at-home infrastructure and services.”

This crisis is driving increased demand for all kinds of hardware and software, from PCs and laptops to servers, storage and networking gear to cloud services, according to The Channel Company survey. “There is a flood of new products and equipment going out to support a new mobile workforce, from the devices on the front end to archiving, storage and infrastructure on the back end—all of it to provide seamless and secure work-at-home,” said Skelley.

Top executives from HP Inc., Dell Technologies and Lenovo have all confirmed the spike in demand for work-at-home technologies in interviews with CRN.

HP CEO Enrique Lores told CRN that the pandemic has sparked “strong demand” for PCs and work-at-home/learn-from-home technologies. “As the activity has shifted to the home, all of our products in that space really have been in high demand,” he said.

HP has been supply constrained but expects to be at “full capacity” in the second quarter as long as there is not a rise in coronavirus cases in China, said Lores.

Dell CEO Michael Dell told CRN that “demand for work-from-home solutions is very strong” in the wake of the pandemic. “Our supply chain is in relatively good shape, particularly in notebooks, where we think that’s certainly a place where we’re seeing demand shortages because of the work-from-home strategy,” said Dell.

Matthew Zielinski, president of Lenovo’s North America Intelligent Devices Group, told CRN that Lenovo has also seen a “surge of demand” for PCs in the wake of the coronavirus pandemic.

Supply has been constrained, but "I'm happy to say that we've seen significant improvements in our factory outputs," Zielinski said. "In March, I think we've seen better-than-expected improvement as things have started to come back online in China."

IT decision-makers were left no choice but to increase spending to quickly get their employees enabled to work at home, said Skelley. “This was an absolute imperative for businesses,” he said. “IT decision-makers had to respond to keep their companies up and running, and the channel was called on to make it happen. We have all been forced to move to work-at-home in a much more aggressive manner than we ever would have without this crisis. And what we have found out is that work-at-home works.”

The rush for work-at-home infrastructure has led to significant supply constraints throughout the IT ecosystem, especially on PCs, laptops and monitors, said Skelley. In fact, 71 percent of solution providers said they are experiencing supply issues in at least one technology category. “Demand is outstripping supply right now for the infrastructure needed to ensure people can work efficiently and securely at home,” said Skelley. “Infrastructure matters in a crisis like this.”

The tight supply constraints have hit MSPs the hardest, according to the survey. Sixty-five percent of MSPs—50 percent more than other solution provider categories—are experiencing supply issues with mobile devices and laptops because many of them have few hardware relationships, according to the survey. “It’s pretty ugly in terms of supply for most client devices,” said the CEO of an MSP, who did not want to be identified. “It is a big challenge to get client devices right now. There are lengthened lead times for everything, and we expect that to continue for some time.”

The shortage has solution providers—particularly MSPs—“open to new relationships more than they ever have been before because they want to make sure they have the products and solutions they need to fulfill customer demand,” said Skelley. “Partners desperately need these new relationships to get their customers through this crisis. There is a voracious appetite right now to add these new partnerships.”

Topping the list of hard-to-get products are mobile devices and laptops, with 74 percent of solution providers looking for alternative vendors, followed by servers at 67 percent, storage at 64 percent, security/business continuity at 63 percent, and networking at 60 percent, according to the survey.

MSPs, for their part, said they are seeing the biggest surge in demand in remote management, mobile devices and laptops, cloud services, security/business continuity and networking, according to the survey.

Seventy-five percent of solution providers surveyed said the “boom” will last up to three months, and close to 20 percent believe it will last longer, according to The Channel Company survey.

Skelley, for his part, expects the work-at-home investments to continue for many quarters to come as companies grapple with a “permanent change” in work culture. “What we are seeing now is the tip of the iceberg,” he said. “We are going to see a lot more investment in technology advancements and innovation aimed at making sure companies are better equipped to handle a mobile workforce. I believe this crisis is going to have long-lasting impact, fueling investment in mobile infrastructure for many, many quarters to come.”

HP’s Lores also believes the coronavirus will have a “permanent effect” that will translate into strengthened demand for all of HP’s products beyond the current crisis. “In any crisis, there are tailwinds and headwinds,” he said. “Clearly, this is a significant tailwind that we think is going to help us to reposition our business going forward.”

ACP CreativIT, a solution provider based in Buffalo Grove, Ill., has seen its sales quadruple in the first quarter compared with the same period last year as it has moved to a 24/7 operation to meet the demands of customers, some of whom are working on the front lines of the coronavirus crisis, said ACP CreativIT CEO Scott Dunsire.

“We are cranking,” said Dunsire. “We have been working seven days a week around the clock to assist customers with the shipment of thousands of devices, including laptops, desktops, thin clients, monitors, audio-visual solutions, webcams and the managed services to go along with the devices, like monitoring access points and bandwidth.”

The buying surge has come from a significant increase in IT spending for work-at-home solutions as a result of the coronavirus, said Dunsire. “Products are the gateway to enable workers to be productive at home,” he said. “Employees have been locked out of their workplaces, but they still have to do their jobs.”

Dunsire said he has been startled by the size of the IT spending increase as companies scrambled to enable work-from-home computing. “This showed how unprepared a lot of companies were for work at home, thus the spike in demand,” he said. “What this unfortunate situation has done is given business leaders a lot of confidence that we can effectively do business remotely leveraging all the great technology tools available.”

Among the ways that ACP CreativIT has helped customers is by shipping 7,000 thin clients and 20,000 monitors for a call center and 3,000 devices for a health-care provider that were asset-tagged, put in backpacks with accessories and shipped over three days, many to individual locations for work-at-home.

ACP CreativIT—which is made up of Arlington Computer Products and Camera Corner Connecting Point—is also working on an audio-visual conferencing solution for a coronavirus testing company.

At Camera Corner Connecting Point in Green Bay, Wis., employees at the company’s retail store are meeting with customers on an appointment basis from 8 a.m. to 1 p.m. Installers and engineers, meanwhile, are still helping essential businesses.

“Not one of us has refused to help when called upon,” said Camera Corner Connecting Point CEO Rick Chernick in a memo to employees. “We are doing our part. … To beat this thing we need to have two things: trust and faith, having those two things we will be successful.”

Dunsire said he could not be more “proud” of how the full ACP CreativIT team has responded to the crisis. “Everyone in the organization has stepped up and chipped in, even with areas that are not their responsibility, to help solve customer challenges,” he said. “We had an all-hands-on-deck in our warehouse helping process thousands of units so we could get the job done for our customer. That included people in finance and operations that lent a hand.”

ACP CreativIT teams have been working with distribution partners including Synnex to help track down inventory and provide availability dates on products in tight supply to customers, said Dunsire. “Synnex has been very proactive with us,” he said.

Dunsire said he expects the robust demand to go into the second quarter in large part due to the shortage of some products, but the outlook for the third and fourth quarters is uncertain. “Right now laptops, desktops, thin clients and webcams are in extremely tight supply,” he said.

GreenPages, Kittery, Maine, No. 201 on the 2019 CRN Solution Provider 500, has seen a 50 percent increase in sales above what was forecast as a result of the work-at-home blitz in the wake of the coronavirus crisis, said GreenPages CEO Ron Dupler.

“COVID-19 [coronavirus] came on really quickly, moving from a concern to something that hit like a sudden boom,” he said. “We saw a huge need for equipment and services as our customers scrambled to work from home the week of March 16. A lot of businesses weren’t ready for this. It caused all sorts of challenges.”

GreenPages experienced a 60 percent spike in help-desk managed services calls as customers moved to work-at-home scenarios, said Dupler. “A lot of our clients had the technology to provide remote services, but a lot of the users were not used to accessing them, so when they started logging in from home, they needed all kinds of support,” he said.

GreenPages has also seen a sharp spike in work-at-home software licensing for VMware, Citrix, IGEL, Microsoft Windows Virtual Desktop and Amazon Web Services Workspaces, said Dupler. “All remote workforce solutions, from accessing corporate applications and services to technologies like Zoom, Skype and WebEx, are hot right now as customers try to flex for work at home,” he said.

GreenPages is also helping customers that are on the front lines of the health-care response to the pandemic. It has deployed IT personnel to hospitals to augment their security and networking teams. “Early on when this hit, we got calls for personnel to augment hospital IT staffs who were bursting to get ready for a huge influx with new beds and more doctors,” said Dupler. “We are helping to support the hospital IT staffs’ mission, which is technology enablement of these health-care organizations. It’s a very sad time, but it’s an important mission for these IT teams.”

GreenPages also played a lead role in providing help-desk services for a customer that supports hospitals, said Dupler. “Together our team and their team did a good job getting through it,” he said. “We had to scale up to meet the spike in ticket and call volume. We repurposed people internally to support that mission.”

GreenPages takes a “lot of pride” in servicing health-care customers during the crisis, said Dupler. “Health-care workers are like the Army during World War II,” he said. “They are on the front lines putting their lives on the line for us all. There are people on our team going on-site getting the job done. We are very proud of those people for their commitment.”

The fear among solution providers is that customers pull back IT budgets after the increased spend for work-at-home solutions. Thirty-five percent of the IT decision-makers polled by CRN said they are currently laying off or considering laying off employees. Furthermore, 51 percent of those IT buyers said they were implementing or considering a hiring freeze.

Dupler said the economic impact of shutting down the economy for more than a month is an issue for the channel. “We could see softened demand along with huge supply chain issues as well,” he said.

GreenPages is even doing emergency planning scenarios as part of its business continuity plans to ensure it is prepared and “battle ready” for whatever comes next, said Dupler. He is hoping the federal stimulus package will provide a boost to customers and the channel in the midst of the coronavirus crisis. “We’re waiting to see the details on the stimulus package, and we’ll create an action plan based on that,” he said.

The pandemic has brought home just how important technology solutions and services from the channel are in helping businesses of all kinds get through a crisis, said Dupler.

“Technology has never been more important than it is right now,” he said. “On the back side of this crisis it is going to be even more important. Our mission is more important than it has ever been. Great solution providers that can deliver a robust suite of services to help customers adapt to things like this are going to be really, really valuable.”

Ultimately, The Channel Comapany survey results shine a spotlight on the critical role MSPs and other solution providers play as “essential service providers,” said Skelley.

“At the end of the day, the channel and their can-do attitude with their ability to pivot, adjust and adapt is what allowed businesses to quickly meet work-at-home demands,” said Skelley. “It was the channel that got into the trenches and put in place the infrastructure and solutions so customers of all kinds could continue to run their businesses.”