Prioritise To Beat The Recession
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Comment Article VNUNet – Prioritise to beat the Recession By Clive Longbottom, Service Director, Quocirca Ltd The indications are that 2008 is going to be a tough year for many on the financial front. A mix of geopolitical issues (continuing tensions in the Middle East, increasing unrest in Africa, a move back towards Cold War politics in Russia) and chaos in the financial markets driven by selfinflicted sub-prime debt wounds, has tipped an unstable global economy towards what is looking more like a precipitous decline. How deep a recession we face will depend on how politicians, central banks and the financial sector respond. It could (and should) be fairly simple. The price of oil is abnormally high. Yes, the uncertain political agenda has to have some impact, but there is no shortage of oil at the moment, and Opec has stated that it could pump more oil into the markets if required. The price is driven by the speculators and is far more about playing financial games than anything to do with supply and demand. The sub-prime problem should be faced down as a learning exercise by the banks; swallow hard, figure out that lending money to people who can't afford to repay is not good practice, and move on. But it seems far more likely that myopia and the inability to see beyond Wall Street's 12-week event horizon will drive knee-jerk reactions that will result in the very recession that so frightens the politicians and the financial wizards. With the banks tightening lending to consumers and businesses alike the spiral of a downturn in revenues, and a lack of capacity to gain access to lines of credit and other financing, will mean that all members of the supplier-customer value chain suffer. This will place stresses on organisations to impose stricter controls on their own expenditure. For many one of the prime targets for cutbacks will be, as always, IT. The projects that are likely to be hit hard are large, infrastructure refresh initiatives, such as upgrading to Microsoft Vista.
© 2008 Quocirca Ltd
With little in the way of a solid value proposition to make organisations feel that Vista is a necessary investment (after all, XP works well enough, thank you very much), this delay will be a simple decision to make for many. But it could have a knock-on effect to Office 2007 implementations, where many organisations had been banking on a single desktop refresh to the Microsoft stack, and may baulk at the perceived lack of benefit/cost of implementing just Office 2007 on existing XP platforms. Other projects seen to be nice-to-haves rather than imperatives may well be canned, and the large application companies such as Oracle and SAP may well see upgrades being delayed as a means of saving money. This extension to application version cycles could then have further impacts on the vendors. Not only will they have to deal with supporting an increasingly old code base, but they will struggle in moving the user base to more modern and flexible architectures, such as SOA, so building up further issues for the future. Another area that may see a change in priorities is green IT. The arguments will have to be based even more strongly on 'green + cost savings', rather than just green, and many fledgling green projects may find themselves quietly shelved in the quest to save money, leaving standard power and cooling initiatives as the main focus. Even virtualisation may find itself held back, as this can require more broadscale changes to the overall platform. On the upside, organisations may see softwareas-a-service and other forms of incremental outsourcing as a more valid way forwards. This could then run the danger of early outsourcing failures, where the main drive was purely around cheaper direct costs. 'Cheap' hosted solutions often prove a false economy. The impact to an organisation's brand through systems that are poorly managed, or provide low levels of flexibility, customer support or capability to move with the times, may show
http://www.quocirca.com
+44 118 948 3360
Comment Article that such 'solutions' can prove to be an ineffective means to cut costs, but the best way to save your way out of business. The next couple of years will see these cutbacks and delays force many organisations to fall by the wayside, due to the mainly US credit crunch causing a recession which will have a knock-on effect in many other countries and regions. This includes Asian countries such as India that have become more dependent on western countries for outsourced business. IT vendors will face their biggest financial problems since the dotcom bust, and some will not make it through to 2009. For the canny organisation wanting not only to survive the recession but to do well out of it, the key will be to prioritise investments. The business comes first, and it is ensuring that the business can ride out the troubles that counts. Identify where the biggest bang per buck is likely to be, and where investment is required for the business to survive.
Outsourcing low-end processes makes sense, and can remove the need for IT skills to be used in keeping systems running for little added value. Spot-functionality can be brought in through the utilisation of software-as-a-service capabilities from specialised vendors. In-house systems can be optimised with rapid returns on investments through the application of virtualisation. Incremental updates can wait. In the majority of cases, the added value will be insufficient to warrant the investment of time, resources and money. Be prepared to be fleet of foot, even looking to use tactical, low-cost solutions to tide you through to the better times, when more expensive, strategic expense can be warranted. 2008/9 need not see the return of recessionary IT, as we saw in the mid to late 1990s. Those who manage their IT budgets effectively, choosing where IT investment needs to be made, should be able to ride out the madness caused by those who find it difficult to see further out than Wall Street's myopic 12-week cycle.
Rather than rushing to cut IT spending, look at how targeted IT investments can help maintain the customer base, minimise the cost of sales and maximise the conversion rate of prospect to customer.
© 2008 Quocirca Ltd
http://www.quocirca.com
+44 118 948 3360
Comment Article About Quocirca Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of realworld practitioners with first hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption – the personal and political aspects of an organisation’s environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to advise on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocirca’s mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time. Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocirca’s clients include Oracle, Microsoft, IBM, Dell, T-Mobile, Vodafone, EMC, Symantec and Cisco, along with other large and medium sized vendors, service providers and more specialist firms.
Details of Quocirca’s work and the services it offers can be found at http://www.quocirca.com
© 2008 Quocirca Ltd
http://www.quocirca.com
+44 118 948 3360
© 2008 Quocirca Ltd
With little in the way of a solid value proposition to make organisations feel that Vista is a necessary investment (after all, XP works well enough, thank you very much), this delay will be a simple decision to make for many. But it could have a knock-on effect to Office 2007 implementations, where many organisations had been banking on a single desktop refresh to the Microsoft stack, and may baulk at the perceived lack of benefit/cost of implementing just Office 2007 on existing XP platforms. Other projects seen to be nice-to-haves rather than imperatives may well be canned, and the large application companies such as Oracle and SAP may well see upgrades being delayed as a means of saving money. This extension to application version cycles could then have further impacts on the vendors. Not only will they have to deal with supporting an increasingly old code base, but they will struggle in moving the user base to more modern and flexible architectures, such as SOA, so building up further issues for the future. Another area that may see a change in priorities is green IT. The arguments will have to be based even more strongly on 'green + cost savings', rather than just green, and many fledgling green projects may find themselves quietly shelved in the quest to save money, leaving standard power and cooling initiatives as the main focus. Even virtualisation may find itself held back, as this can require more broadscale changes to the overall platform. On the upside, organisations may see softwareas-a-service and other forms of incremental outsourcing as a more valid way forwards. This could then run the danger of early outsourcing failures, where the main drive was purely around cheaper direct costs. 'Cheap' hosted solutions often prove a false economy. The impact to an organisation's brand through systems that are poorly managed, or provide low levels of flexibility, customer support or capability to move with the times, may show
http://www.quocirca.com
+44 118 948 3360
Comment Article that such 'solutions' can prove to be an ineffective means to cut costs, but the best way to save your way out of business. The next couple of years will see these cutbacks and delays force many organisations to fall by the wayside, due to the mainly US credit crunch causing a recession which will have a knock-on effect in many other countries and regions. This includes Asian countries such as India that have become more dependent on western countries for outsourced business. IT vendors will face their biggest financial problems since the dotcom bust, and some will not make it through to 2009. For the canny organisation wanting not only to survive the recession but to do well out of it, the key will be to prioritise investments. The business comes first, and it is ensuring that the business can ride out the troubles that counts. Identify where the biggest bang per buck is likely to be, and where investment is required for the business to survive.
Outsourcing low-end processes makes sense, and can remove the need for IT skills to be used in keeping systems running for little added value. Spot-functionality can be brought in through the utilisation of software-as-a-service capabilities from specialised vendors. In-house systems can be optimised with rapid returns on investments through the application of virtualisation. Incremental updates can wait. In the majority of cases, the added value will be insufficient to warrant the investment of time, resources and money. Be prepared to be fleet of foot, even looking to use tactical, low-cost solutions to tide you through to the better times, when more expensive, strategic expense can be warranted. 2008/9 need not see the return of recessionary IT, as we saw in the mid to late 1990s. Those who manage their IT budgets effectively, choosing where IT investment needs to be made, should be able to ride out the madness caused by those who find it difficult to see further out than Wall Street's myopic 12-week cycle.
Rather than rushing to cut IT spending, look at how targeted IT investments can help maintain the customer base, minimise the cost of sales and maximise the conversion rate of prospect to customer.
© 2008 Quocirca Ltd
http://www.quocirca.com
+44 118 948 3360
Comment Article About Quocirca Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of realworld practitioners with first hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption – the personal and political aspects of an organisation’s environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to advise on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocirca’s mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time. Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocirca’s clients include Oracle, Microsoft, IBM, Dell, T-Mobile, Vodafone, EMC, Symantec and Cisco, along with other large and medium sized vendors, service providers and more specialist firms.
Details of Quocirca’s work and the services it offers can be found at http://www.quocirca.com
© 2008 Quocirca Ltd
http://www.quocirca.com
+44 118 948 3360
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