Joe Mertens Is Getting Sirius

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New president Joe Mertens, who, in his own words, "has been around Sirius for 23 years," joined the solution provider in 1984 in a sales role, and later ran its distribution business. In 1997, that business was sold to Savoir Technology Group, where Mertens worked through Savoir's acquisition by Avnet Inc., Tempe, Ariz., in 2000. Mertens stayed on at Avnet for a year, left to do some consulting, and then, in 2002, made his way back home to San Antonio-based Sirius.

Mertens talked with VARBusiness recently about his promotion and plans for the $622 million VAR.

VARBUSINESS: Employment figures are down, housing is still in a slump, and there's still a credit crunch. President Bush is promoting a new economic incentive program. From your perspective, what do you think the economy will bring in 2008?

JOE MERTENS: It will shape up to be a more challenging year. Our view is that IT spending will grow but only in very low single digits year over year. The scrutiny companies will give proposed projects will be like what we saw in 2001 [and] 2002. Only those projects with very quick and high return on investment will be approved.

We saw in Q4 in the financial services industry that many projects were pushed off. We will finish 2007 with double-digit growth. But our fourth quarter was down slightly on a year-over-year basis. The good news is that slowdown is diversified around a number of industries. Business projects that are specifically geared toward solving problems are the ones that are more apt to be approved. Other, more general ones will be pushed out further. Discretionary spending is not as likely.

VARBUSINESS: Has the credit crunch affected Sirius' business?

MERTENS: About 15 to 18 percent of our business is in the financial sector, so the credit crunch impacted certain customers. Those who were relying on funding to grow their businesses are having trouble finding funding today. However, those using leasing and internal sources of funding are not seeing such an impact. We are [urging] customers to look at leasing as an alternative. A larger percentage of our sales volume is going that way. However, there are companies that historically have not leased. Those companies that aren't used to leasing can slow the sales cycle down.

VARBUSINESS: Do you think we are heading into a recession?

MERTENS: I do think the U.S. is heading for, if it's not already into, a recession, driven by access to financial capital. It's cyclical, and Sirius has weathered these in the past. Often, the big, well-run companies survive better off. We've come back stronger--but no one wishes for it.

I'm seeing more VARs for sale right now, playing off their strength of last year, but worried about making it in 2008.

VARBUSINESS: Last September, Sirius bought Strategic Computer Solutions Inc. [SCS], Syracuse, N.Y., adding more than 130 salespeople and technologists in the Northeast. How is that panning out?

MERTENS: The SCS team is talented and bright. We are almost fully integrated between groups. It has been one of the smoothest integrations we've done.

VARBUSINESS: Are you currently hiring?

MERTENS: We are hiring software salespeople in regions around the country. We're adding staff in software and security. You can always hire people, but good hiring is a challenge. It's an area in which everyone has to concentrate. It's easy to add bodies, much harder to add good ones. If you asked people every year what the top challenge has been for the past several years, you probably would find hiring at the top of that list. That's especially true for the average VAR, who doesn't have access to offshore talent.

VARBUSINESS: Do you use offshore resources?

MERTENS: On occasion, but overall our projects are too complex and, generally, our clients like to have people on-site.