Meta founder advises detox for 'hungover' companies

Businesses can use IT to manage bad contracts and haul themselves out of trouble, says Meta Group's Dale Kutnick

Managing IT well in a downturn is all about managing supplier relationships well. However, many companies are still paying the price for "drunken [spending] sprees" in the late 1990s, locking themselves in unhealthy contracts.

So says Dale Kutnick, Meta Group founder and co-research director, in London this week to talk about how companies can use IT to haul themselves out of current predicaments. He said: "Supplier relationships are even more important in a downturn than when things are going well."

His advice is to reduce numbers of suppliers and manage demands on the IT function from other parts of the business carefully -- do you really need more storage for email or more reports run each Friday? -- while not taking an eye off customers.

But it isn't just about the IT department or chief information officer. "The IT organisation can help management figure out what to do but it can't do it for them," Kutnick added. There are obvious steps to take in a downturn, such as identifying applications that are no longer needed but which are still being licensed.

Between 1995 and 2000 Meta has calculated companies increased their expenditure on IT as a percentage of revenue by about 15 percent. For example, retailers upped their spend from 0.8 to 1.3 percent of sales.

However, Meta's Kutnick isn't saying investments were always a waste. "Clever" users of IT such as Dell, Federal Express and Wal-Mart are still reaping the benefits, he said.

And as for all those analysts who predicted trillion dollar markets back in the days of the dot-com boom, did they feed the IT spending frenzy?

"Were we cheerleaders of all this bullshit or did we call it the right way? You can go back and check what we put out," said Kutnick.

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