Recession: It's not all bad, especially for IT
Recession - it's a dirty word, no doubt about that. But where information technology is concerned, it may not be all bad, as it drives IT providers and consumers with the impetus to closely examine what they are using, and more importantly, how they are using it.
What recession does rather effectively is to drive managers to consider efficiency and optimisation above all else. They can no longer afford wastage, not on IT or anything else. There is a flight to value, where those suppliers and services that deliver proven value are chosen above any others. Risk mitigation comes to the fore; intelligent decisions based on hard facts replaces any speculative purchases.
While this may imply that innovation is put on a backburner, since new business or service delivery models inevitably carry with them some risk, this is not necessarily the case. The IT industry is such that innovation takes place constantly, but adoption can take years, requiring critical mass, maturity or the alignment of the various elements (like connectivity) which make up a solution. CRM and business intelligence, voice over IP for instance - these are concepts created decades ago, but which are only recently enjoying widespread adoption.
Which brings us to software as a service and cloud computing. Again, these concepts are not new, but adoption to date has been somewhat slow. In a market where efficiency wasn't a real necessity, since there was plenty of money to keep everything afloat, there wasn't any pressing need to change the way applications are hosted and used. When more capacity is required, no hassle - buy another array, never mind that the capacity is only 20% used.
That goes for applications that support competitiveness, too. In a market where there is no shortage of custom, just being in business is enough. But when times are tight and customers are few, it is only those businesses that are able to deliver outstanding customer service, which are likely to survive.
So it is that the recession is compelling smart managers to look at investing in the tools - BI and CRM, specifically - which allow them to outperform the competition. They are also looking at the most efficient and cost-effective way of buying these tools. Suddenly, SaaS is a lot more attractive, with its low-risk set-up and acquisition, zero capital expenditure and no maintenance overhead.
What is happening as a consequence of the recession is not necessarily a drop in the spend of IT departments, but rather a rethink of how and where money is spent. Value is the watchword; prioritisation of that which will deliver value - and fast - is apparent. And those IT companies which are able to respond accurately to this changed perception of what their customers want are continuing to do good business.