Blog post

Economic woes mean cutbacks for some, investment for others

By Gene Phifer | October 19, 2008 | 2 Comments

I was chastised last week by an attendee at Gartner’s Symposium for our analyst keynote address.  He said that we were telling everybody to cut back, retrench, delay big IT investments and to generally get very frugal due to the economic meltdown.  His beef was that those that continue to cut back past the trough in the economic curve will be investing behind their competitors that start investing just prior to or at the bottom of the trough, and that this would cause serious competitive disadvantage.

He was right.  I don’t think our analyst keynote address was overly negative, just very pragmatic.  But like all situations, the application of our advice varies across industries, company sizes and regions. 

The key is timing.  If significant IT investments are made while we are too far away from the bottom of economic trough, the resulting IT expenditures may cause serious damage to overall company finances.  If these IT investments are delayed until after the recovery is well underway, competitors would get a head start, potentially causing loss of market share.   This is especially true in industries where IT is the driving competitive advantage.

I appreciate the advice of the Symposium attendee, and hope that companies apply our advice based on their specific situation.

Now if we could only get that timing thing right!

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  • Whit Andrews says:

    Gotta accelerate through the curve — I remember that from driving class at AAA when I was 16. (That’s, like, 10 years ago!) Gotta accelerate through the curve! Now if I could only remember WHERE in the curve to touch the gas pedal…

  • Eric Knipp says:

    Where to start on this? My gut tells me that cutting IT across the board is both impractical and risky. If I had to pick a few bullets though ..

    1. Infrastructure needs to be made to last longer than expected. Let’s face it, these laptops and servers don’t have to be thrown out every 3 years. We’re starting to run up against limits in Moore’s law, I can’t tell a huge amount of difference between my current laptop and my last one. SQL 2005 is a huge improvement over SQL 2000, but do you really need 2008? Don’t upgrade just because the vendor wants you to – the new release better include plenty of value. Ditto for other types of infrastructure.

    2. Experienced people are hard to replace. If you protect yourself from cuts in one area, make this it! It takes at least a year for a technical person to not be a time drain on the rest of the team, much less productive at full capacity! If you use the downturn as an excuse to cut fut, I can understand, but beyond that, beware.

    3. Spend hours on software development/IT management best practices projects – getting your organization lean, strong, and ready for the upturn that is going to come eventually. During an expansion there’s too much work – standards get ignored to make a deadline. Over an extended boom as we’ve seen the last ten years (with a temporary pause in 2001), there are bound to be a lot of dusty corners that could use a little sweeping.