Tech Investment Advice for Tough Times - InformationWeek
IoT
IoT
Software // Information Management
Commentary
10/15/2008
09:46 AM
Tony Byrne
Tony Byrne
Commentary
Connect Directly
Twitter
RSS
E-Mail
50%
50%

Tech Investment Advice for Tough Times

As bailouts become a global phenomenon, it's time to review what this all means for you, the technology buyer. There are two main issues: 1. The immediate liquidity crisis and any lingering effects that may lead to longer-term financial sclerosis, and 2. An enduring recession - which previously left much of the enterprise software space unscathed - getting deepened and extended.

As bailouts become a global phenomenon, it's time to review what this all means for you, the technology buyer.

I think there are two main issues here:

1. The immediate liquidity crisis and any lingering effects that may lead to longer-term financial sclerosis 2. An enduring recession - which previously left much of the enterprise and web software space unscathed - getting deepened and extendedSome commentators have opined that more customers will turn to SaaS-based solutions inasmuch as the cash crunch will hit buyers' capital ("CapEx") budgets first. If that's the case with you, you'll want to weigh reduced initial cash outlays against potentially higher operating costs on a long-term basis under a SaaS model. Depending on the type of service provider, you're shifting at least part of the capital burden to your SaaS vendor, so you'll want to weigh their liquidity very carefully.

More generally, it's prudent to examine the financial health of all your major technology suppliers, current and prospective. We've always counseled looking more closely at balance sheets rather than profit-and-loss statements. Many vendors still remain cash-rich, even as they become customer-poor. I'm no financial expert, but I'd value short-term assets over things like "goodwill."

And what about the longer-term effect of a likely global recession? Alan Pelz-Sharpe issued the definitive statement: continue important projects, but take your time to do them right. (This is great advice even in go-go days!)

I'm seeing more evidence of technology customers doing this. Reviewing the software procurement schedule laid out by a CMS Watch client yesterday, I marveled at its realism. For the first time in ages we didn't have to push back to try extend the schedule for proper vendor vetting and solution-testing under realistic scenarios.

A judicious schedule offers no guarantee of this enterprise getting the right vendor fit in the end, but it seriously reduces their likelihood of ending up with a bad fit.

Best of luck to everyone.As bailouts become a global phenomenon, it's time to review what this all means for you, the technology buyer. There are two main issues: 1. The immediate liquidity crisis and any lingering effects that may lead to longer-term financial sclerosis, and 2. An enduring recession - which previously left much of the enterprise software space unscathed - getting deepened and extended.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
Digital Transformation Myths & Truths
Transformation is on every IT organization's to-do list, but effectively transforming IT means a major shift in technology as well as business models and culture. In this IT Trend Report, we examine some of the misconceptions of digital transformation and look at steps you can take to succeed technically and culturally.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll