net.work

The Way Business Is Moving

net.work published by
Issue Date: January 2009

Ed's column

1 January 2009

Welcome to this, the December/January issue of net.work.
The big question on everyone’s lips, as 2008 comes to a close, is what does 2009 hold in store for us all?
In the context of unprecedented economic turmoil, rather than trying to ‘preach the gospel’ according to Darren, I thought I would highlight the words of Pick 'n Pay founder and chair Raymond Ackerman, who has urged South Africans to 'stop the cynicism' ... during a recent speech at the Cape Times/Safmarine Business Breakfast. It is a speech which resonates with me, and I would urge you to read it - Full summary: http://www.sagoodnews.co.za/your_good_news/raymond_ackermans_speech.html
Ackerman is an optimistic man, and a jaded view of his words might describe them as ‘Pollyannaism’ ...
But Ackerman is nothing if not a realist. He concludes his speech by saying:
“Despite all I have said, none of us can deny that business is experiencing a period of severe stress. Beset by high interest rates and elevated inflation, and buffeted by a formidable financial crisis which has seen the virtual collapse of banking systems and currencies, we are navigating perilous waters. 
As a player on this turbulent world stage and as minister Manuel has cautioned us, South Africa cannot hope to be immune to these difficulties. However, I am reminded of the ancient Chinese curse that dooms us to live in interesting times. But my experience over a long lifetime has also persuaded me that such times are also periods of stimulating challenge, of opportunity for the brave, and of optimism for those with the courage to hope, work hard and think strategically.
As danger and possibility jostle for the upper hand, I therefore have no hesitation in asserting that we are well equipped to weather the storm. Every period of storm is followed by an era of revitalisation and re-invigorated energy in which our ability to rise to the challenges and remake the world is tested. Our country has time and again demonstrated its capacity to respond with innovation and initiative to changing economic, political and social circumstances - and I have no doubt we shall continue to do so.
And always I return to the reassuring equilibrium of perspective - a perspective that tells me that we must maintain that sense of confidence and promise that is altogether different to the restricted, inward-looking siege sentiment of only two decades ago. Our economy has never been better managed. What we often forget in the angst of our growing pains is that we have created a climate in which a whole new generation of upwardly-mobile, ambitious and entrepreneurial South Africans for the first time enjoy access to and participation in the formal economy.
It was the Austrian Holocaust survivor and psychotherapist Viktor Frankl who taught us that one of the principal avenues by which an individual can find meaning is by doing something meaningful or creating something meaningful. In seeking to live out that maxim, I have lived all my life as an optimist and have never yielded before the force of those who argued that the best was impossible. It was for that reason that I never lost my faith that one day South Africa would emerge from the long night of apartheid and regain its status as an envied land of promise. I have no intention of abandoning my confidence now.”
Let us not abandon our confidence now. Have the courage to hope, work hard and think strategically … and this period of stimulating challenge, might just become one of opportunity.
More to the point I guess, is asking ourselves the question, can CIOs benefit from the economic crisis?
According to Gartner, instead of waiting for signs of a return to growth, it is better to begin planning for further business growth. Senior vice president and global head of research for Gartner, Peter Sondergaard, said an economic downturn can be a perfect time to undertake projects that warrant priority, because of their impact on future growth. In the preliminary results of its annual Gartner Executive Programs (EXP) CIO survey, Gartner said IT leaders are wary of making dramatic budget cuts because they know it will be difficult to ‘ramp up’ their IT capabilities when opportunities for business growth return.
Of the 444 CIOs surveyed around the world thus far, 48% are projecting an IT budget increase in 2009. However, 52% of CIOs are reporting flat or IT budget decreases in 2009. On a weighted basis and considering all 444 IT organisations, 2009 IT budgets are set to increase 3.36%.
“While these are preliminary results, they support what we have observed during 2008 - that enterprises see IT as a way to drive cost out of the business in the face of an increasingly challenging economic climate,” said Sondergaard. “Unlike the post-dot.com era where IT was perceived as wasteful, organisations now view IT as a way to transform their businesses and adopt leaner operating models. While it is prudent to plan for a short-term economic slowdown, IT leaders that are called on to reduce 2009 IT spending should do so in a way that will not impede the organisation in the future.”
As business growth is not declining at the same rate across geographies, Gartner said that CIOs can exploit asymmetries between regions and industries to find new opportunities.
Sondergaard predicts robust growth rates for some regions and countries. Asymmetry of markets and regions is a continuing feature of the global economy and IT leaders must be aware that more than one style of response may be needed if the enterprise is active in regions or sectors with different conditions.
Gartner said economic uncertainty dictates that prudent IT organisations prepare three alternative budgets: best-case, worst-case and most-likely scenarios. To that end, Gartner presents three global 2009 IT budget scenarios, spread across all industries, and based on the fallout from the ensuing economic uncertainty:
* Best-case scenario: global IT budget growth is between flat (0,0%) and 3,3%.
* Worst-case scenario: global IT budgets are between flat (0,0%) and a decline of 2,5%.
* Most-likely scenario: global IT budgets are between flat (0,0%) and an increase of 3,0%.
This overall decline in IT budgets is primarily due to the financial services sector, as a huge spender on IT, dragging down the average substantially. Public sector budget cuts are also occurring across many economies, and there is weakness in other vulnerable sectors such as retail and automotive, said Sondergaard.
He also highlighted some key areas that IT executives should focus on right now to help their organisations weather economic turmoil:
* Cost optimisation.

* Virtualisation.

* IT modernisation.

* Low-carbon IT.

* Workforce management.

* Business intelligence.

* Service-oriented architecture (SOA) and business process management (BPM).

* Multisourcing.
Full results of the Gartner EXP CIO survey will beavailable in the first quarter of 2009.
Enjoy this month’s read - net.work - the way business is moving.
Wishing you all the best for the festive season,and the year ahead.
Sincerely,
Darren Smith
Managing editor
PS: All feedback, brickbats and praise, would be welcomed. Contact me directly on darren@technews.co.za.


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