Comment Article
VNUNet – Prioritise to beat the Recession
The indications are that 2008 is going to be a
tough year for many on the financial front.
A mix of geopolitical issues (continuing tensions
in the Middle East, increasing unrest in Africa, a
move back towards Cold War politics in Russia)
and chaos in the financial markets driven by self-
inflicted sub-prime debt wounds, has tipped an
unstable global economy towards what is looking
more like a precipitous decline.
How deep a recession we face will depend on
how politicians, central banks and the financial
sector respond.
It could (and should) be fairly simple. The price
of oil is abnormally high. Yes, the uncertain
political agenda has to have some impact, but
there is no shortage of oil at the moment, and
Opec has stated that it could pump more oil into
the markets if required.
The price is driven by the speculators and is far
more about playing financial games than
anything to do with supply and demand.
The sub-prime problem should be faced down as
a learning exercise by the banks; swallow hard,
figure out that lending money to people who
can't afford to repay is not good practice, and
move on.
But it seems far more likely that myopia and the
inability to see beyond Wall Street's 12-week
event horizon will drive knee-jerk reactions that
will result in the very recession that so frightens
the politicians and the financial wizards.
With the banks tightening lending to consumers
and businesses alike the spiral of a downturn in
revenues, and a lack of capacity to gain access
to lines of credit and other financing, will mean
that all members of the supplier-customer value
chain suffer.
This will place stresses on organisations to
impose stricter controls on their own
expenditure. For many one of the prime targets
for cutbacks will be, as always, IT.
The projects that are likely to be hit hard are
large, infrastructure refresh initiatives, such as
upgrading to Microsoft Vista.
© 2008 Quocirca Ltd http://www.quocirca.com
By Clive Longbottom, Service Director, Quocirca Ltd
With little in the way of a solid value proposition
to make organisations feel that Vista is a
necessary investment (after all, XP works well
enough, thank you very much), this delay will be
a simple decision to make for many.
But it could have a knock-on effect to Office
2007 implementations, where many
organisations had been banking on a single
desktop refresh to the Microsoft stack, and may
baulk at the perceived lack of benefit/cost of
implementing just Office 2007 on existing XP
platforms.
Other projects seen to be nice-to-haves rather
than imperatives may well be canned, and the
large application companies such as Oracle and
SAP may well see upgrades being delayed as a
means of saving money.
This extension to application version cycles could
then have further impacts on the vendors.
Not only will they have to deal with supporting
an increasingly old code base, but they will
struggle in moving the user base to more
modern and flexible architectures, such as SOA,
so building up further issues for the future.
Another area that may see a change in priorities
is green IT. The arguments will have to be based
even more strongly on 'green + cost savings',
rather than just green, and many fledgling green
projects may find themselves quietly shelved in
the quest to save money, leaving standard
power and cooling initiatives as the main focus.
Even virtualisation may find itself held back, as
this can require more broadscale changes to the
overall platform.
On the upside, organisations may see software-
as-a-service and other forms of incremental
outsourcing as a more valid way forwards.
This could then run the danger of early
outsourcing failures, where the main drive was
purely around cheaper direct costs.
'Cheap' hosted solutions often prove a false
economy. The impact to an organisation's brand
through systems that are poorly managed, or
provide low levels of flexibility, customer support
or capability to move with the times, may show
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 Comment Article
that such 'solutions' can prove to be an
ineffective means to cut costs, but the best way
to save your way out of business.
The next couple of years will see these cutbacks
and delays force many organisations to fall by
the wayside, due to the mainly US credit crunch
causing a recession which will have a knock-on
effect in many other countries and regions.
This includes Asian countries such as India that
have become more dependent on western
countries for outsourced business.
IT vendors will face their biggest financial
problems since the dotcom bust, and some will
not make it through to 2009.
For the canny organisation wanting not only to
survive the recession but to do well out of it, the
key will be to prioritise investments.
The business comes first, and it is ensuring that
the business can ride out the troubles that
counts.
Identify where the biggest bang per buck is likely
to be, and where investment is required for the
business to survive.
Rather than rushing to cut IT spending, look at
how targeted IT investments can help maintain
the customer base, minimise the cost of sales
and maximise the conversion rate of prospect to
customer.
© 2008 Quocirca Ltd http://www.quocirca.com
Outsourcing low-end processes makes sense,
and can remove the need for IT skills to be used
in keeping systems running for little added
value.
Spot-functionality can be brought in through the
utilisation of software-as-a-service capabilities
from specialised vendors. In-house systems can
be optimised with rapid returns on investments
through the application of virtualisation.
Incremental updates can wait. In the majority of
cases, the added value will be insufficient to
warrant the investment of time, resources and
money.
Be prepared to be fleet of foot, even looking to
use tactical, low-cost solutions to tide you
through to the better times, when more
expensive, strategic expense can be warranted.
2008/9 need not see the return of recessionary
IT, as we saw in the mid to late 1990s. Those
who manage their IT budgets effectively,
choosing where IT investment needs to be made,
should be able to ride out the madness caused
by those who find it difficult to see further out
than Wall Street's myopic 12-week cycle.
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 Comment Article

About Quocirca
Quocirca is a primary research and analysis company specialising in the business impact of information technology
and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the
views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of real-
world practitioners with first hand experience of ITC delivery who continuously research and track the industry
and its real usage in the markets.

Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption – the personal and
political aspects of an organisation’s environment and the pressures of the need for demonstrable business value in
any implementation. This capability to uncover and report back on the end-user perceptions in the market enables
Quocirca to advise on the realities of technology adoption, not the promises.

Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC
has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocirca’s
mission is to help organisations improve their success rate in process enablement through better levels of
understanding and the adoption of the correct technologies at the correct time.

Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC
products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of
long term investment trends, providing invaluable information for the whole of the ITC community.

Quocirca works with global and local providers of ITC products and services to help them deliver on the promise
that ITC holds for business. Quocirca’s clients include Oracle, Microsoft, IBM, Dell, T-Mobile, Vodafone, EMC,
Symantec and Cisco, along with other large and medium sized vendors, service providers and more specialist
firms.

Details of Quocirca’s work and the services it offers can be found at

http://www.quocirca.com

© 2008 Quocirca Ltd http://www.quocirca.com +44 118 948 3360