Price slashing on IT contracts and customer demand for fixed price contracts has hit manic proportions as the economic downturn continues to bite, technology integrator Avanade has warned.
Avanade - the joint venture between Accenture and Microsoft set up in April 2000 to deliver Microsoft technologies to high-end customers - has admitted it is unable to compete with price reductions (in some cases of up to 40 per cent) being offered by some competitors.
UK sales and marketing director George Thaw told vnunet.com: "Like any business, margins get eroded. In the old days we would compete with the old e-business integrators, but now a lot of them have disappeared and we're going head-to-head with the likes of Cap Gemini Ernst & Young and KPMG - companies with much deeper pockets."
But Avanade's UK operation is bullish about future prospects, despite admitting that corporate acceptance of Microsoft technology at an enterprise-level is slow.
The company says its latest financial figures show a 30 per cent increase in revenues in the last 12 months.
"There's natural caution out there. Most people see the value of .Net but they tend to work on smaller projects - people need to get comfortable with proofs of concept," Thaw said.
He added that it was unlikely Avanade would be pulled back into Accenture as a Microsoft-specific division. "It works well for all parties - it's the best set-up. The scale of business at Accenture can be intimidating for some customers."
In addition to Windows XP and Exchange projects, Avanade's focus over the next year would be on the concept of mobility and anywhere-working, Thaw explained.
"By that we mean being able to do business-class transactions anywhere - in the office, at home, in an internet café, on an iPaq - delivering the same security across all these devices," he said.
But broadband and wireless availability would be the key to success, Thaw acknowledged.
"The reality is that Global System for Mobile communications isn't 100 per cent available. The reliability thing has been missing up until now - that's an areas we want to push.
"Ubiquitous broadband access is the thing everyone is looking for. The lottery system BT uses for establishing ADSL exchanges is mad," he said.
Thaw also welcomed moves by Microsoft to address customer concerns about changes to its licensing policy.
"Microsoft got it wrong," he said. "I have some sympathy - they wanted simplification, but most customers saw it as putting the price up. I'm pretty sure they'll take steps to get it right."
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