Wednesday, January 21, 2009

A new golden age for the IT industry is coming up

There is much doom and gloom about the economy just about everywhere you turn today. I am sure it will continue for a couple of years and that we will see new waves in the financial crisis that will seriously disturb and hurt the world economy. 

But as always, there will be - and already is possible to see some - light at the end of the tunnel. We know that every downturn will be followed by an upturn, that there is an end of every tunnel. The question is just how long the tunnel is and whichindustries and companies will be able to see the light, and which won't.

The IT industry will for sure see the light. The IT industry will even see it before most other industries are still in the dark, trying to get out of the tunnel. Why is that so? 

I am not just saying that because I am an IT professional myself. 

One quite obvious reason is that IT is business critical in a way it was not even just ten years ago, and that IT is a key means to cut costs and improve sales. A lot of the IT investments that have already been planned will need to be carried out. Still, some IT investments will be put on hold or dropped completely. Some companies will have to cut back on a lot of IT investments because they otherwise would bleed to death (companies that will probably die anyway).

However, I believe that the IT industry will not just come out of this recession less damaged than other industries - I believe it will enter a golden age in the near future. The main reason is that the root causes behind the financial crisis will need to be fixed. As soon as the root causes have been identified and analyzed, new rules and regulations that state how business need to operate and manage their business will need to designed. Then these will need to be implemented - worldwide. All businesses operating in the global market will be forced to comply with these rules and regulations.

This means that there will be A LOT of change in IT systems - especially regarding how transactions are initiated, carried out and followed up upon. Companies and other organizations cannot choose whether or not they should change their policies, processes and IT systems - they will be forced to do so by the lawmakers (our governments). If they do not comply, they will be put out of business or face serious fees. The area of compliance might even give raise to an industry of its own. 

Today we do not know what to comply to, and how the operations and management of a company will need to be changed. We just know that change will come. Inevitably. What companies can and should do is to prepare themselves for change. One part in this is increasing the agility of their organization, processes and IT systems. Another part is to prepare people for change. And those who can afford should do their best to keep, develop and recruit people skilled in management and IT for the times ahead when they will need them dearly.

At the same time, an even tougher competition about markets will force companies to invest serious amounts in order to increase customer satisfaction and loyalty, penetrate new markets, and invent new products and services at an increasingly rapid speed and quality. The companies that are best at this and are well prepared for change will be first to see the light in the end of the tunnel.


  1. Being an IT professional, even I wish that there should be enough light for all of us after this recession. I agree with your perspective that it’s not that near. I am seeing that most of the large and mid level enterprises are restricting themselves from any kind of investments in software products. Also, for cutting costs most of the organizations are now tending towards developing software in house (compromising quality), as compared to buying from external vendor with hefty price tags. Service Vendors as opposed to Product Vendors still have projects in hand or in pipeline to survive for another 1-2 years. Whatever we think, but small or big investments are very much required and will play a big role in getting out of this recession.

    Many Thanks,

  2. I agree with you. For those organizations that have the money to invest and the determination to make something out of their money, there are always opportunities in a recession. Actually, the opportunities to gain competitive advantage and increase market shares are better in a downturn than in an upturn.

    One such opportunity is that they can invest in improvements and stimulate innovation when their competitors don't. Another opportunity is hire the most skilled IT pros instead of pushing down prices or developing in house.

    Still, most organizations act like people in general tend to do act (because organizations are run by people) - they look around to see what other organizations are doing and then decide to do the same thing as everybody else. Humans are herd animals (and also risk averters). So if other organizations signal to the world that they are cutting back on IT investments, they decide to cut back too. If other organizations are trying to push down prices, they do so to. They fail to see the opportunity and use IT to gain competitive advantage.

    If more organizations would actually dare to see and make use of these opportunities, then they would come out of the recession stronger than their competitors.

    Unfortunately, most think the wisest thing to do is to cut back on all kinds of investments. Even those who have not yet suffered from this recession. They choose to cut back anyway, just as a security precaution, prepare themselves for bad times. Bad for them.