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Tuesday, September 16, 2008

How organizations will invest in IT in times of economic recession

4:28:00 PM Posted by Oscar Berg , No comments
To be well prepared for the upcoming economic recession, I believe that many organizations will rapidly revise their IT strategies so that they focus on maximizing efficiency while keeping financial cost and risk to a minimum. This will speed up a lot of the current trends we are seeing:
  • There will be an increasing pressure to use online collaboration tools for collaborating across organizational units and locations. The main drivers will be the need for cutting costs related to traveling and the opportunity to reduce "redundant" competencies.
  • SaaS will be rapidly adopted as it enables an organization to share financial costs and risks with other organizations. Development of custom IT solutions will decrease dramatically.
  • There will be no major upgrades of operating systems, enterprise applications or productivity applications such as Microsoft Office unless absolutely necessary.
  • Open source will be considered as an attractive alternative to expensive commercial software for productivity apps (Open Office vs Microsoft Office).
  • All bread-and-butter IT services will be outsourced.
Organizations with strong finances (typically organizations outside of the stock exchange) and in pursuit of long term business objectives will use to similar strategies, but they will do it with much more care and discrimination. They will also invest in initiatives aiming to innovate their core business with IT since this will make them much stronger than their competitors at the next economic upswing.

Considering that marketing investments will probably be aimed at online communication channels rather than offline communication channels due to cost-efficiency reasons, it seems as companies such as Google might actually face more stable future during the coming 2-3 years than companies such as Microsoft or IBM.

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