vnunet.com comment: Clive Longbottom's predictions for 2008

Clive Longbottom, service director at Quocirca

The indications are that 2008 is going to be a tough year for many on the financial front.

A mix of geopolitical issues (continuing tensions in the Middle East, increasing unrest in Africa, a move back towards Cold War politics in Russia) and chaos in the financial markets driven by self-inflicted sub-prime debt wounds, has tipped an unstable global economy towards what is looking more like a precipitous decline.

How deep a recession we face will depend on how politicians, central banks and the financial sector respond.

It could (and should) be fairly simple. The price of oil is abnormally high. Yes, the uncertain political agenda has to have some impact, but there is no shortage of oil at the moment, and Opec has stated that it could pump more oil into the markets if required.

The price is driven by the speculators and is far more about playing financial games than anything to do with supply and demand.

The sub-prime problem should be faced down as a learning exercise by the banks; swallow hard, figure out that lending money to people who can't afford to repay is not good practice, and move on.

But it seems far more likely that myopia and the inability to see beyond Wall Street's 12-week event horizon will drive knee-jerk reactions that will result in the very recession that so frightens the politicians and the financial wizards.

With the banks tightening lending to consumers and businesses alike the spiral of a downturn in revenues, and a lack of capacity to gain access to lines of credit and other financing, will mean that all members of the supplier-customer value chain suffer.

This will place stresses on organisations to impose stricter controls on their own expenditure. For many one of the prime targets for cutbacks will be, as always, IT.

The projects that are likely to be hit hard are large, infrastructure refresh initiatives, such as upgrading to Microsoft Vista.

With little in the way of a solid value proposition to make organisations feel that Vista is a necessary investment (after all, XP works well enough, thank you very much), this delay will be a simple decision to make for many.

But it could have a knock-on effect to Office 2007 implementations, where many organisations had been banking on a single desktop refresh to the Microsoft stack, and may baulk at the perceived lack of benefit/cost of implementing just Office 2007 on existing XP platforms.

Other projects seen to be nice-to-haves rather than imperatives may well be canned, and the large application companies such as Oracle and SAP may well see upgrades being delayed as a means of saving money.

This extension to application version cycles could then have further impacts on the vendors.

Not only will they have to deal with supporting an increasingly old code base, but they will struggle in moving the user base to more modern and flexible architectures, such as SOA, so building up further issues for the future.