Circle the Date

Many financial pundits are trying to predict when the high-tech market will recover. In my mind, only one date really matters: May 8, 2002. On or around that day, Cisco Systems will announce results for fiscal Q3 2002.

My preoccupation with that distant date is easily explained. Youll recall that Cisco announced its first-ever quarterly loss in May 2001. As Ciscos stock plummeted, the economic slowdown spread from Wall Street to Main Street, U.S.A. But bad financial news also provides one long-term benefit: Ciscos awful results from last May should make for an easy earnings comparison once May 2002 rolls around. (If not, were all in deep, deep trouble.)

With all due respect to Microsoft and Intel, Cisco remains my bellwether for corporate IT spending. Unlike Wintel, virtually all of Ciscos revenue comes from businesses and service providers. Until Ciscos quarterly results improve, I think many IT consulting firms are in for more pain and belt tightening.

Its a good bet that many customers wont make big IT investments until early next year, due to mounting staff cuts. Nearly 900,000 people lost their jobs between January and May, according to The Wall Street Journal. The cuts have left many companies with thousands of idle PCs and servers, and more network bandwidth than they can possibly consume.

If your Cisco sales are slowing, one option is to focus on application development and application integration. Fact is, applications are the driving force behind all IT spending. Everything else in an IT infrastructure—PCs, servers, printers, switches, routers, storage, and so on—is of little importance without applications that provide quantifiable return on investment.

Thats where you come in. If you dont have an application-integration practice, its time to launch one. Get to know companies like BEA Systems, Great Plains Software, PeopleSoft and Siebel Systems, which have weathered the economic slowdown better than most technology companies. Also, keep a close eye on our RFP Showdown section, where Smart Partner readers describe their own custom applications.

Cisco may spark a tech rally come May 8, 2002. Until then, find some application expertise—fast.