An up cycle for IT-service companies

‘Companies are waiting so long that their equipment is failing.’

Companies are finally opening their wallets to upgrade information technology and local service firms, including NetCenergy, East Coast Technology Group, Bentley Information Technology Systems and RCC have all gotten a boost. More

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FOCUS: TECHNOLOGY

An up cycle for IT-service companies

‘Companies are waiting so long that their equipment is failing.’

PBN PHOTO/MICHAEL PERSSON
IN DEMAND: Director of Information Technology Issy Ramos, above wearing a tie and glasses, supervises technicians at Bentley Information Technology Systems.
Posted 2/6/12

Companies are finally opening their wallets to upgrade information technology and local service firms, including NetCenergy, East Coast Technology Group, Bentley Information Technology Systems and RCC have all gotten a boost.

Last year saw a 6.9 percent increase in spending on information technology worldwide, according to information technology research firm Gartner. The forecast for 2012 projects continued, though smaller, gains of 3.7 percent.

Beneficiaries pointed to a host of reasons that may have contributed to the increased spending, including the cyclical nature of IT upgrades, federal tax changes that encouraged IT spending before the end of 2011 and even decisions by smaller companies to lay off their in-house IT person and hire freelance providers.

“We often see a flurry at year-end. There is a pent-up demand,” said Michael A. Rudnick, president of RCC in Providence. “Companies are waiting as long as they can – they are waiting longer than they used to for replacement of equipment. Depending on the type of company, they’re making purchases now because the market is more solid – not necessarily more positive. But some companies unfortunately are still holding off, much to their detriment,” said Rudnick.

“The reason I say much to their detriment … is our philosophy – as well as industry recommendations – is that you replace equipment within three to five years. We have seen companies benefit financially by adopting that and suffer when they haven’t,” Rudnick explained.

Rudnick said one of his clients held onto computers for six or seven years, and when it finally upgraded, RCC saw its monthly billable hours for that company decline by five hours.

“If they have older computers, we’d have more work but we always – 100 percent of the time – want them to get the newer computer. Quite frankly, it’s not work we like. [They] end up spending $200 to $300 on a four-year-old computer … we don’t feel good about it,” he said, estimating that his company’s income saw a 20 to 30 percent increase last year.

Cumberland-based East Coast Technology Group has seen a net increase in revenue, but looking at the individual factors tells a different story. Hardware sales have gone down by about 20 percent while services have gone up about 35 percent, said Steven J. Gietz, president.

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