Veitch Speaks: When slump comes, spare IT

Although it is difficult to evaluate IT spending, those enterprises that cut back on it to beat the economic blues will suffer in the long term, says Martin Veitch.
Written by Martin Veitch, Contributor on

There are only three certainties in life: death, taxes and IT spending, said Computacenter chief executive Mike Norris. His words made for a lively quote and were instantly picked up by the media fawning over a British company that had succeeded in building a high-profile deal with mighty Microsoft.

Since Norris's phrase, however, attention has swung towards the macro economy. With the wintry wind of a recession starting to blow down the necks of enterprises, it's timely to look at how any coming downturn will affect IT spending, and whether Norris's assumption is justified.

There are so many opinions on how serious the downturn will be and where it will hit hardest that current businesses' plans are necessarily provisional and will have to be amended in the light of what actually happens. It's arguable that a large part of the suffering will be caused by the media. After all, if we are always being told that the recession is coming, there is bound to be planning for a downturn in consumer spending, which will affect production, which will affect the supply chain... Still, your boss and the bean counters aren't going to let you off doing a budget, so plan ahead you must.

If you want to understand the future, look to history. It tells us that recessionary times don't always mean a downturn in IT spending - just different priorities for the money available.

It's business lore that IT spending is a means of differentiation. If everybody is building mousetraps and you can find a cheaper or better way to build your mousetrap through technology, that's a real business gain.

OK, so it's difficult to develop a matrix that shows exactly how much you saved and how much was the result of IT spending. But then there are still people who dispute that IT has had a beneficial effect on business efficiency. Well, I can't tell you how much you saved by having word processing and spreadsheet software instead of quill, parchment and time sheets. I can't tell you what your gain was when you swapped set squares for AutoCAD. But then I've never been to the North Pole, but I know it's pretty cold there.

Only a Luddite would argue that IT spending should be the first casualty of budget cutbacks. Senior IT managers understand that and most report some success in communicating that fact to the purse holders. It's spending smarter and not spending less that is the key to overcoming difficult market conditions.

Thankfully, spending smarter is becoming more viable. Proprietary systems are on their last legs. The move is towards server consolidation and running multiple operating systems and services from the same box. Listen to what's happening at the same companies that were once guilty of locking in users - IBM, Digital, ICL and Data General. You'll hear them all singing from the same hymn sheet. Internet protocols also call for openness and a value-oriented flexible set of standards for implementing cost-saving solutions such as groupware, messaging, conferencing and voice telephony. Market forces are driving down the cost of hardware across the board.

Sitting out the recession by sitting on IT won't wash - the time to invest is when the market is low.

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