Will the Upturn in Economy Pay Off for IT?

IT needs to make better times count, writes Eric Lundquist.

The news is good: the economy is growing strongly once again. But does that mean the good old days of IT spending will return? Not if the good old days means throwing tech dollars at lots of projects and hoping one of them works. As in every economic recovery, the winners will be the companies that recognize a rebounding economy is not an opportunity to repeat the mistakes of the past but a chance to take advantage of new realities in business and IT.

The most striking economic good news was a government report that showed the U.S. gross domestic product grew at a 7.2 percent annual rate in the third quarter—the strongest pace since the first quarter of 1984. Within a week, research organizations covering individual economic sectors were out with reports on what the upbeat news meant for their industry. Last week, researchers at International Data Corp. issued a release stating that after two years of decline, the IT and telecom industries are on the rebound. The IDC analysts state that next year IT spending worldwide is expected to grow by 5 percent, to $916 billion, with telecom spending due to grow by 4 percent, to $1 trillion. That shift is great news to an industry that fell off the cliff after the dot-com bust.

Translating those numbers back to the reality of daily IT operations and budget planning is the task now faced by technology planners. If a more robust economy allows you to finally get rid of some of those servers and desktops wheezing along since the Y2K remediation, so much the better. If the budget controllers are finally more benevolent toward long-dormant application development projects, so much the better.

If the attitude is youve gotten this far without any budget increase, so why not go another year, that is difficult. If the attitude is why not continue outsourcing all the IT operations, that could mean you get replaced.

While the evidence of an economic rebound appears plentiful, the evidence that the rebound will lead to IT job growth is far less available. Making sure that any increase in IT budget has a strong and visible benefit for your company is a priority.

Like most IT pros, eWEEKs Corporate Partners are subject to prevailing economic and technological conditions. In general, their stance is one of wait and see.

"Until we see the upturn reflected in our own business, it does not matter how well the economy is doing," wrote Jorge Abellas-Martin, senior vice president and CIO at Arnold Worldwide.

A similar view was voiced by Robert Rosen, CIO at the National Institute of Arthritis and Musculoskeletal and Skin Diseases. "Id be surprised if one quarter makes a difference. It doesnt for us. Part of the anomaly may be explained by spending money in Iraq. Unemployment is still bad, especially in the tech sector if you ask my unemployed friends," Rosen said in an e-mail exchange.

Then there was this variation on the theme from Kevin Wilson, product line manager for desktop hardware at Duke Energy. "For large corporate IT shops, [the quarterly upturn] does definitely not [change budget plans]. For small businesses providing products and services to an industry sector thats on the rise—probably [the upturn does change budget plans]."

The watchword may be caution, but that doesnt mean doing nothing. Just as three years ago, you needed to be prepared for budget cuts and should have been keeping a list in your head of things you would cut if you had to, you should think now about projects that would show immediate return on investment if they were to be funded.

What might these look like? The self-service check-in kiosks that many airlines have installed in the midst of the downturn would be one example. These terminals are saving check-in attendant labor and moving travelers along faster than ever before. Another example would be the systems in which a mobile sales executive is able to retrieve key data via his or her cell phone rather than having to cast about for a laptop connection.

Longer-term thinking and top-line planning are beginning to return. But it still makes sense to think in terms of quick wins while you wait to see if the economic projections fulfill their promise.

Editor in Chief Eric Lundquists e-mail address is eric_lundquist@ziffdavis.com.