Warren Buffett once famously remarked: A group of lemmings looks like a pack of individualists compared with Wall Street when it gets a concept in its teeth. He was referring to investment bankers, but could just have easily been talking about company executives when it comes to IT.
It’s easy to argue that IT spending in the corporate sector is driven as much by fear and greed as the stock market. Senior executives go hot on IT, then cold again, then hot again. Their decisions make Woody Allen look like a stable personality.
At the present moment, executives all over the world are about as cold on IT as they’ve ever been. Most of them view IT spending as a waste of money, at best. The technology cost centre is to be attacked and, if not killed, at least severely wounded. Yet, as with most decisions based on fear or greed, their current thinking is wrong.
We live in an increasingly competitive business environment. The opportunities for businesses to get ahead of their competition are limited. Senior executives must be constantly looking for ways to decrease costs and increase sales in order to get ahead. Getting one up on your competitors requires guts, imagination and determination, yet the rewards for success can be enormous.
Clever implementation of IT offers one of the easiest and most effective routes for businesses to gain a competitive advantage. Examine a business closely, and it usually doesn’t take much imagination to figure out a way to increase its efficiency or find new sales through the use of technology. Look at how companies like Dell, eBay, Walmart and GE have used technology to beat their competitors. Often, the ideas implemented have been quite simple. All it took was the bravery and imagination to seize the opportunity presented.
Businesses have been burnt recently by their spending on technology. It has led many of them to discount the claims made about the benefits it can offer them. Certainly, some of the claims made during the dot com boom were exaggerated. There weren’t many that didn’t have some grain of truth in them, though. The internet still changes everything. Its use is growing and increasing numbers of businesses are finding clever ways to reduce costs or increase sales through it.
During the boom, businesses found themselves getting bad value for their investments in technology. They paid too much for assets that offered too little in return. Compare this to previous booms in equities and property and you will soon find that the technology boom shared many characteristics with other speculative bubbles. You wouldn’t forsake houses altogether and sleep under the stars after being burnt by a property boom. Why treat IT the same way?
Like all speculative bubbles, the IT boom offered little benefit to those who bought in at the peak. White hot competition meant that it was difficult to make money from investments. Resources of dubious quality (including many human resources) sold at exaggerated prices. Wild promises were made that were never fulfilled.
Boom has turned to bust and executives find themselves with an incredible opportunity on their hands. The question is, will they have the foresight to recognise it?
High quality technology resources, from hardware, to software, to talent, lie unutilised. Prices have plummeted and strategies can now be implemented at a fraction of the price of a few years ago. Vendors and staff are more experienced than they were during the boom, and more willing to help you out. In short, it’s a buyers’ market.
Perhaps the greatest opportunity facing an executive willing to look at IT again is that nobody else is doing it. Let me put that another way: your competitors are ignoring an area where it is easy for you to gain advantage over them. Spend an hour brainstorming with your staff about how you can use IT to improve your competitive advantage, and I bet you’ll come out with a number of good ideas. This is an incredible opening for executives to gain market and profit share right now.
Many executives will counter that in the present business environment, they simple haven’t got the funds to spend on technology. Like most business people, executives are looking at what their competitors are doing, and exactly following them. The current depressed business environment offers much better opportunities to gain one up on your competitors than the next boom will. Prepare now, and when the global economy picks up again, you will be ahead before your competitors know what’s hit them. If you think the global economy isn’t going to pick up again, then why bother staying in business?
Take a small spending risk now, and your competitors will be running to catch up with you when it matters. And they’ll be paying more. The me-to’s always pay more than the leaders. As the old business maxim goes; the seeds of boom are laid in the depths of bust.
All it takes for executives to take advantage of this once in a lifetime opening is to have the guts to swim against the crowd. Warren Buffett has another saying to describe why most will choose not to: As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.
Paul Knapp runs the Australian IT professional’s website
Why the current consensus on IT is wrong
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