Negotiating a path through the recession

Enterprises can make smart investments during the recession

Few companies could say with honesty that the recession has not affected them in some way. Jobs are being cut, contractors delisted, investments postponed and projects shelved, all in the name of saving money - but only in the short term.

Most companies are expecting the situation to improve sometime next year. But the current situation is creating opportunities for enterprises to make smart investments that can help now, and will also put them in a strong position to lead when the recession ends.

The main technology vendors are formulating recovery plans while cutting their budgets and outlooks. Hardly a financial results announcement goes by without mention of a new direction or some streamlining designed to help the business survive the recession.

Some firms have pulled out of entire markets, while others have simply admitted that they do not expect to shift inventory, and have factored this disappointing outlook into potential sales and prospective revenues.

The Economist Intelligence Unit reported in March that over half of all hardware manufacturers had already seen a fall in demand, and expected to see sales fall even lower. The survey found that a fifth of respondents were expecting conditions to improve over the next six months, but almost half expected them to deteriorate further. Importantly for IT managers, these hardware vendors appear to be flexible and very aware of the importance of keeping their existing customers happy and well served.

John Chambers, chairman and chief executive at Cisco, summed up the current approach when announcing his firm's latest financials: "We will use this period of market transition to align and optimise resources, make strategic investments, move into market adjacencies and enhance relationships with our customers," he said.

The general message across the IT industry seems to be: keep the customer happy and your company will continue to do business. But questions remain as to whether enterprises are doing enough to take advantage of any opportunities the recession might offer.

Some technologies, such as videoconferencing, are being pushed by vendors as money saving alternatives, but industry watchers have seen little uptake in anything but traditional tools.

"Many businesses have implemented travel bans to cut back on discretionary expenditure. More often, though, I've seen simple audio conferencing, web conferences, and regular email/instant messaging communication stepping in to fill the gap," said David Mitchell, senior vice president for IT research at analyst firm Ovum.

"Videoconferencing, at the high end, is an expensive but very immersive technology. At the lower end there are still a lot of practical and high-quality products on the market that can prove useful."