Spend It Like Beckham
BackBy Carmi Levy — May 6, 2009The never-ending wave of bad-news headlines is prompting many of us to run for the hills. And it’s understandable if we all decide to spend the next few months — or years — with our heads buried in the sand. There’s no great shame in that.
But there’s no glory, either. And there’s probably a whole lot of risk.
As tempting as it may be to emulate the turtle and simply ride out the storm, technology decision makers risk dooming their companies that way. As heretical as it sounds, companies that can afford to increase spending on technology should do it — or risk losing a golden opportunity to build a foundation for future growth. While your competitors are cowering, you can either aggressively move to out-innovate them, or run the very real risk of being trampled when things eventually bottom out and head toward recovery.
I can see the rolling eyes already. Hear me out. Two simple observations might help:
1. From adversity comes opportunity. Times of great economic distress are typically great incubators for serious leaps forward:
• The Great Depression drove aviation into the mainstream.
• The PC revolution’s roots lay in the early ’80s recession.
• The Internet hit its stride following the early ’90s downturn.
• The Internet bust at the turn of the millennium drove the simultaneous booms in broadband and mobility.
2. Market leaders continue to spend big. Research In Motion (RIM), maker of the BlackBerry, is hiring 3,000 people to fuel its global growth. While most tech companies are rapidly shedding talent to match falling revenues, RIM’s consistent subscriber growth leaves it with more than sufficient cash flow to buck the trend.
Is there something RIM knows that everyone else doesn’t? Is there some reason why it’s got the pockets to pay for growth when competing leviathans such as Nokia are bleeding market share? If governments can buy their way out of a recession, why can’t for-profit companies use the same strategy?
On reflection, there’s no reason why they can’t. After all, once you get past the hyperbolic headlines, you will realize some areas are actually growing — a lot. A recently published report from Veronis Suhler Stevenson, a private equity firm, projects strong growth in some key data-service areas through the rest of 2009.
For example, Internet and mobile services will grow by 9.1 percent, and while that’s down from 11.6 percent in 2008, close to double-digit growth in any sector these days is worth celebrating. Companies will spend 5.1 percent more on professional and business information, too.
After analyzing the performance of 700 companies during an economic downturn, management consultants at McKinsey & Co. concluded that passive strategies do more harm than good. They advised companies to use the recession to improve their competitiveness and position themselves for the eventual recovery.
Sun Microsystems CEO Jonathan Schwartz sings much the same tune. He has said now is the ideal time to take risks that may seem a little “out there” during better times. Experimental technologies such as open source software can potentially save the bottom line, but only if organizations are willing to roll the dice and give them a try. With little else left to lose, more forward-thinking CIOs may want to shed conventional wisdom and focus on radical reinvention.
George Colony, CEO of Forrester Research, has said technology already is reshaping companies in preparation for the end of the current crisis. That only applies, of course, to companies willing to make the investment in the first place. He points to companies such as Wal-Mart, which is using social networking to improve customer service, and FedEx, which is investing in higher-efficiency data centers. Other organizations are shifting their marketing focus toward online advertising, allowing much more granular performance measurement than traditional vehicles. In all these examples, leaders have chosen to lead, not follow.
Virtualization, mobility, green tech and software as a service (SaaS) all will reshape the tech agenda through 2009 and into 2010 as companies across all sectors grapple with ongoing market turbulence. The organizations that have the courage to make these investments stand a greater chance of surviving and thriving than those that choose to do nothing.
Carmi Levy is a technology journalist and analyst with experience launching help desks and managing projects for major financial services institutions. He offers consulting advice on enterprise infrastructure, mobility and emerging social media. He can be reached at email@example.com.
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