systematicHR

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Recession Technology

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With the U.S. and probably global economy slowing down, we’d all expect technology spending to slow down with it.  After all, in 2001 when the “bubble burst,” it took a few years (I’d guess 2004) for the IT money to really come back.  Smart companies will continue to  invest in infrastructure.  As Andrew McAfee writes in his blog:

It seems pretty clear that the US economy is in the middle of a slowdown. Its depth, reach, and length are not yet obvious, and some folk still resist using ‘the R word,’ but leaner times are here, and might last a while.

During such times companies often throttle back their IT investments and hold off on big technology products. Some business leaders think this is the wrong thing to do— during the last recession, in 2001, Jack Welch said that “this is the moment to widen the gap” between GE and its competitors. “We are driving the hell out of IT spending… It’s the lifeblood of the company.” But the fact remains that technology budgets typically get pared when times get tight.

Which make Enterprise 2.0 technologies and deployments all the more attractive…  ((McAfee, Andrew, April 8, 2008.  “Recession Tech”  Retrieved from http://blog.hbs.edu/faculty/amcafee/ on May 5, 2008.))

Read Prof. McFee’s post on your own, but I love his third reason for companies to invest in Web 2.0 software.  “as business slows down workers often have more slack in their weeks. When this is the case it’s easier for them to find time and energy to participate in Enterprise 2.0.”  ((Ibid))

If there are two thoughts in McFee’s post that I cling to, it’s these:

  1. This is the moment to widen the gap.  Some companies won’t continue to invest fearing a larger impact on quarterly results.  Saving cash for the short term will certainly be at the expense of the long them.
  2. If you do have to invest in something, McFee has a decent point.  If employees are doing less work, make sure their down time is not on Facebook or Myspace.  (or God forbid, eHarmony.com!!)  Give them an outlet to make those internal connections, find internal innovation associates, and dig for knowledge.  Give them an outlet to blog and create knowledge.  In the meantime, you’re also creating knowledge management, and setting yourself up for new innovations for when the economy does improve, which it surely will.

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5 responses to “Recession Technology”

  1. Blogs Alert for: US Economy SlowdownRecession TechnologyBy systematicHR It seems pretty clear that the US economy is in the middle of a slowdown. Its depth, reach, and length are not yet obvious, and some folk still resist using ?the R word,? but leaner times are here, and might last a while.

  2. Totally Consumed Avatar

    Guffaw! I choked on my breakfast when I read the quote, “as business slows down workers often have more slack in their weeks”.

    When business slows down, financial stress requires companies to layoff and run lean! Which means MORE work and less time to “surf”.

    While true that, “smart companies will continue to invest in infrastructure”, the reality is that companies will have to be more creative about how they find the resources to accomplish this worthy goal, because it becomes harder, not easier, to do during an economic slowdown.

  3. Michael Specht Avatar

    Hmmm, I understand his third point but not sure that it will be the best selling point for Enterprise 2.0 implementations, maybe the wording needs to be revised a bit.

  4. Colin Kingsbury Avatar

    Granted my experience is limited, but during the last recession everybody in my company was busy as heck because the staff had been cut by a third.

  5. Gopi Padakandla Avatar

    Interestingly, Gartner and other analyst surveys show potential increase in IT budgets this year and forward. Business leaders enamored of technology value might be the reason for this estimated increase in IT spend. Similar discusion “Recession Proof Enterprise 2.0 ” (May 21) at http://www.enterprise20link.com/

    Regards,
    Gopi Padakandla