Earth to Forrester, Earth to Forrester. The Economic Slowdown Is Here. Copy.
September 20, 2008
Update September 23, 2008: More on the “mild” downturn in the IT world. When Silicon Valley gets the flu, might it be contagious? More information here and here.
[original post]
I just stepped off a fun filled flight from Amsterdam to New York. I fire up my browser and read this headline: “Mild Tech Slowdown Ahead”. The author is the super-guru, mid range consulting firm edition, George F. Colony. You can read his exegesis here. The headline says it clearly. The balance of 2008 and 2009 is headed for a “mild” economic downturn. Technology will be affected. I–as the official addled goose of information access–can’t dispute the lofty thoughts of Forrester. I can add several observations and perhaps my two or three readers I have can add a few observations. You don’t have to agree with me. You are rejoicing in the “mild” slowdown which has little material impact on your technology centric activities.
Which is it in IT? Happy face or sad face. I vote for sad.
My observations:
- Information technology is in crisis. Major projects are not delivering. Users–up to two thirds of those struggling with search and content processing–are dissatisfied with those systems. The issues are noticeable in the desultory attitudes of trade show attendees (at least the trade shows I attend) and the “we can do anything” pitch of the vendors. There’s a problem, Houston, and “mild” doesn’t capture the situation.
- I took a quick look at an analysis of eDiscovery firms in a late 2006 report. Of the 48 vendors mentions substantive changes in the material circumstances of 26 firms indicate that in this one sector there are too many hungry chiefs and not enough to eat. The same revenue starvation is evident in business intelligence, enterprise search, and even that BurgerKing Whopper of fuzziness–content management. The downturn began in 2007 and is now accelerating. If the trend continues, 2009 will find the chiefs killing and consuming one another. Charles Darwin in action. “Mild” is not the word I choose for the tension building among small and large vendors alike.
- The information technology budgets are in shambles. A Fortune 500 has solved the inflationary systems and software costs in a very simple way–budget caps. No matter what happens, the IT folks have a finite amount of money. The same bean counter approach may be found at US national laboratories, Federal agencies, start ups without significant revenue, and big companies. There’s not enough pay off from many of the zippy new investments to make venture sharks and terrified fund managers to throw money into systems and services that don’t pay off.
Maybe my view of the information technology world is skewed. I get asked to comment on how to fix such excesses as organizations that own multiple search systems that don’t work or play well with one another, by financial outfits trying to figure out how certain companies report record revenues without a concomitant payoff to the bottomline, and innovative companies who can’t figure out how to close a deal and get the client to pay on time because the system doesn’t meet user needs.
When this “mild” downturn is put in the context of the broader economic challenges in the US and now elsewhere, I see some rough seas ahead. Actually that’s not a good metaphor. I see a category 5 hurricane building. It’s heading right at information technology implementations that fail. It’s going to hit the vendors who promise anything and then deliver disappointments. It will strike directly at companies who deploy yesterday’s bread as today’s freshly baked donut.
This is a Siebel smart probe. Do you want to deploy this on your watch or dial in to one of the new cloud based options? I am leaning to the cloud based solutions. On premises’ installations are too tough to manage and keep on a reasonable management track. What’s your experience?
The interest in cloud based applications is growing. One reason is that cost control may be easier. Another is that if a cloud solution works, an organization can trim some fat from its IT budget: people, licenses, consultants, and hardware. Five years ago geospatial meant on premises and expensive solutions; today, think Google. Five years ago CRM meant PeopleSoft and Siebel; today, think Salesforce.com. Other sectors are gaining steam because the old IT model is not right for the challenges that face companies now and tomorrow.
What’s your experience? Vindaloo or no spice in the IT, information access, and content processing world? Help me learn. Share your data, please.
Stephen Arnold, September 20, 2008
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