Is The Turnaround On Its Way?

John Brandon

9/9/2009

Clouds have darkened over the U.S. economy of late, and they are not the clouds we normally discuss (those related to cloud computing). Instead, employment rates continue to drop, the housing market is troubled in many areas, and companies are struggling to find new ways to increase revenues. And yet, not every economic indicator predicts doom and gloom. Since late June, the Dow Jones has actually made a rebound, and tech companies such as Google are doing just fine.

In fact, in a recent CDW IT Monitor poll (www.cdwitmonitor.com), the indicators are looking up. Eighty-three percent of midsized enterprises surveyed expect that they’ll buy new software within the next six months (up 5% since April), 28% of large businesses plan to hire staff members in the same time period (up 5% since April), and 52% of federal IT decision makers expect to see budget increases in the next six months (up 17% since April).

For data center managers, now might be the time to plan for a rebound, even if it is still important to keep a tight rein on spending and focus on critical business operations.

“Expecting a turnaround is likely to result in increased IT budgets, so IT can expand their wish lists beyond preserving the status quo,” says Charles King, an analyst with PUND-IT. “With Windows 7 coming down the pike, it might be a good time to investigate the condition of PCs and notebooks and strategic services like online client backup. Downturn or not, companies just keep creating/storing more and more data every year, so updating or expanding storage environments is a sensible investment. Though many seem to think the economy has touched bottom, it’s still a buyer’s market for IT, so there are some terrific bargains available for companies willing to take the plunge.”

Planning For An Upturn

Planning for a turnaround is a difficult proposition, especially with such a tight focus across all of IT on operations spending and mission-critical tasks. Joe Skorupa, research vice president of enterprise network services and infrastructure at Gartner, says he has seen a tighter scrutiny of spending, especially in networking, and a close examination of pricing that has led to cost reductions. He says, even with the possibility of a turnaround in sight, one of the grievous errors in IT is to buy what sales vendors say is the right thing to buy and letting vendors drive business decisions.

Instead, Skorupa says IT should “stay closely aligned to the needs of the business and understand what business initiatives are critical to driving the company forward and be prepared to support those.” That way, when the turnaround occurs, IT will be prepared to keep matching business needs with new technologies and expanded services that are required to meet new business needs.

Skorupa also advises, as a company prepares for and expects a turnaround, to refocus on process improvement, team training, and the core factors inside a data center, such as buying back-panels for cabinets, moving to hot-aisle and cold-aisle configurations, and other energy efficiencies that can reduce costs. Even low-tech functions—which don’t cost any capital outlay—such as cleaning out under the floors and improving airflows are good tasks for IT to perform in preparation for a turnaround. That way, when a boon in the economy does hit, those areas will be taken care of.

James Paddon, consulting services director at JGI (www.jginfo.com), a management consulting company, says that one factor to consider in preparing for an economic rebound is that many projects have been backlogged and will likely move to the forefront, so it is important to prepare IT services as these projects begin to ramp up. Paddon says he has seen clients already starting to prepare for a turnaround and that there is a distinct advantage in preparing for an economic resurgence.

“Also, as long as the recovery is in its very early stages, there are still significant opportunities to get excellent pricing and discounts from suppliers, and IT managers should remember that these are unlikely to continue once the recovery is fully underway,” says Paddon.

What If A Turnaround Does Not Occur?�

Rob Enderle, an analyst with Enderle Group, says IT should “set up and ensure contingencies” no matter what happens in the economy. Enderle says this will mean examining the sales cycle in the business and planning to increase IT resources and infrastructure plans to meet demands, instead of being caught off guard, but still running lean as the economy has dictated for the past year or so.

In some ways, the advice for IT spending when a turnaround is not expected is to be even more vigilant about extraneous expenditures and focusing more on operations, because the underlying framework for the business will be even more critical if the economy continues to slide.

“For less optimistic organizations, focusing on strategic solutions with long-term technical and capital expenditure and operational expenditure benefits is critical,” says PUND-IT’s King. "What money they do spend needs to go to products that deliver the biggest business/financial bang for the buck. For example, if they haven't investigated or invested in server virtualization/consolidation, now would be a good time to do it. The main thing is to ensure that lines of communication between management remain open. Even in tough times, technology plays a critical role in the vast majority of business processes so it’s critical for IT to have the support it needs to support the greater organization.”
Article by John Brandon for

CONFERENCE SCHEDULE

National Association Partner

ITEC-TV

Weekly ITEC-TV netcast live or on-demand!

Featuring ITEC General Manager Bill Sell and ExtremeLabs analyst Tom Henderson every Wednesday at 4:00 PM Eastern time.

Each week ITEC-TV hosts leading IT experts examining the day's most newsworthy technology issues.

ITEC Conference & Showcase

ITEC Connect

Is The Turnaround On Its Way?

John Brandon

9/9/2009

CONFERENCE SCHEDULE

National Association Partner

ITEC-TV

ITEC Conference & Showcase

ITEC Connect

Is The Turnaround On Its Way?

John Brandon

9/9/2009

Subscribe to ITEC Connect Newsletter

CONFERENCE SCHEDULE

National Association Partner

ITEC-TV