A Slower Economy Is Just What We Need

By eweek  |  Posted 2001-01-15

I really meant to winterize my Colorado home by Thanksgiving, but I was having too much fun writing about all the exciting tidings in our industry and winning several pool tournaments.

Then I got my December utility bill, which was 50 percent higher than the previous month. I didnt walk, but ran to the hardware store for plastic window film and weather stripping. Now I feel snug, warm and virtuous.

Likewise, the looming slowdown in IT spending will be good for all of us after the crazy go-go market of the past five years. Its high time to stop partying and get our houses back in order.

Customers will be more cautious about spending money, but theyll also be more realistic about the results they expect. "Setting reasonable expectations" was the most common challenge cited by solutions providers last year; it seems many customers thought technology would give them global domination overnight. This year, customers will be happy just to save a few dollars and plug the chinks in their IT weather stripping.

Of course, the clueless will always be with us. I almost cracked a rib when I read that General Motors wants to become an ASP, renting its internal applications to other automotive players. Would you buy a used IT system from a car salesman?

Vendors will cut back on expensive direct sales forces and renew commitments to their independent partners. The most successful vendors will be those who invest in training, supporting and working closely with the people who specify their products. When it gets cold, it makes more sense to insulate the windows than to turn up the heat.

Smart solutions providers will finally be heard as the din raised by starry-eyed "paradigm shifters" dies down. When economic times get tough, nobody wants their paradigm shifted. They want to stick with whats tried-and-true, but do it for less money and at better quality.

PhatPipe, this weeks featured solutions provider, is a good example of how to prosper during a period of tight money. Theyve found a niche that was ignored by cherry-picking broadband access providers, and are filling it at one-third of the going rate. Their infrastructure is technologically elegant and economical. Most importantly, their partnering strategy gives them a virtual lock on customers and high-value services to sell after their broadband pipes are installed.

Small businesses offer the most profit potential because they can realize the biggest productivity gains and cost savings from IT investment. Computer telephony integration, Voice over IP, simple customer relationship management, and other managed services are the easy sales in the small-business market. Your challenge is to develop solutions that are easily installed and efficiently maintained, so that you can install and service a lot of small customers at a modest profit each.

Forget about B2C and all but the most imperative B2B applications. Small automotive parts suppliers may need to integrate with the Big Three, but most mom-and-pop operations can do without supply-chain automation for a couple more years.

Dont forget that slower growth does not mean decline. Trees grow bigger and live a lot longer than weeds.

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