Gartner chairman and chief executive Michael Fleisher said that the recently announced merger of Hewlett Packard (HP) and Compaq is just the first of many large IT acquisitions that will be seen over the next few years.
"We believe that 50 per cent of all IT companies with a household brand name will cease to exist in their current form in three years, either through mergers or bankruptcy," he said.
Fleisher outlined what he called the harsh reality of the IT industry during his keynote speech at the Gartner Symposium/Itxpo 2001. He called the HP/Compaq merger "the beginning of this new wave of consolidation".
"Chief executives and chief information officers [CIOs] need to anticipate incredible consolidation, both in your own industry as well as in your suppliers," he explained. "Your most trusted partner may suddenly be subsumed by another company that you chose not to do business with."
Fleisher emphasised that business leaders will need to understand how their company not only generates revenue but generates cash flow as well. Over the past year, IT vendors have failed to adapt to the slowdown in demand and did not promote the creation of innovative products that users need.
He termed the business decisions "adolescent", and said they have put many IT vendors into deep trouble, adding that most tech executives managed their companies as if demand would never fall.
"Your focus on changing the nature of your relationship with suppliers and customers is so important because those are the only places where you are going to increase your company's cash flow," Fleisher said.
He added that CIOs must completely delegate non-strategic business processes. "This is the only way CIOs can be sure to use their intellect and horsepower on strategic business issues," he concluded.
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