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Encouraged by optimistic economic reports, we admit weve been fantasizing about a long-awaited upturn in enterprise IT spending. With Federal Reserve Chairman Alan Greenspan predicting a shallow and short-lived recession, could a loosening of the technology budget purse strings be far behind?
The answer, apparently, is yes. The latest vendors to report revenue and earnings shortfalls were IBM and PeopleSoft, two key companies that, unlike many of their competitors, had managed to continue reporting at least moderate growth. IBM, which projected first-quarter earnings per share would fall by as much as 22 percent below Wall Street expectations, blamed “a continued slowdown” in customer buying decisions. PeopleSoft, similarly, blamed a “cautious economic environment” for lower-than-expected software license revenue.
Prudence is certainly a virtue. IT managers who fail to keep their eyes focused on the bottom line and who cant find a way to do more with less will soon become ex-IT managers.
At the same time, IT managers should avoid falling into the trap of ignoring longer-term strategies and critical emerging technologies in a single-minded focus on cost cutting. When the economy does finally reawaken, prompting enterprises to once again ramp up new, IT-enabled business models, companies that have already gained experience with important Web services technologies such as UDDI and SOAP, for example, will have a decided time-to-market advantage. So, too, will enterprises that have taken the time to evaluate and develop a strategy for deploying technologies such as CRM, server blades and online collaboration.
Some IT managers understand the need to invest in emerging strategic technologies even in tight economic times. Enterprises such as e-marketplace E2open and investment banker Robertson Stephens, for example, are pressing ahead with internal UDDI deployments (see “Web Directories Dial In“). More IT managers would do well to emulate them.