Scottsdale, Ariz. (Nov. 19, 2003) -- Taylor Macdonald, senior vice president and head of channel sales strategies for Best Software, painted a bleak picture of the current market for technology consultants, particularly resellers of accounting software, during a session at the Information Technology Alliance conference, here.

"During the 1990s we had a lot of demand, but the 1990s are gone forever," he said, before warning that IT consultant/resellers have to drastically change their business models to survive. He noted that while many IT consulting firms were enjoying 40 percent growth rates in the 1990s, sales growth in accounting software today is around 2 percent.

"Most firms are just marginally profitable today, that's why CPAs are getting out of this in the guise of Sarbanes-Oxley,” he said, referring to how some CPA firms have spun off their IT practices and said it was prompted by the Sarbanes-Oxley law that prohibits firms from providing consulting services to their audit clients.

Macdonald further said that "leadership fatigue" is striking many IT consulting firm managers. "They're tired of getting beat up today after 40-percent gains in the 1990s." said Macdonald, who was an IT consultant in the 1990s before joining Best's executive team.

He outlined several steps IT consulting firms should take to improve profitability. They include: revising consultants' salaries and working to get them to record more billable hours, firing less desirable clients while taking steps that improve the loyalty of good ones, and paying closer attention to accounts receivable. "We're fatigued, but we can exorcise fatigue by executing differently," he said.

-- John M. Covaleski

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