The Global Recession and its Lasting Effects on IT
30 October 2009
As world stock markets recover and leading economists and government officials proclaim that the global recession is (at least technically) over, it’s a good time to take stock of how the sudden and steep business downturn of the last 12 months has affected the information technology industry.
Of course, we can’t relax yet, as there is the real risk of a second, ‘double-dip’ recession. Unemployment in many nations is still rising, and in the US, for example, wages are falling and mortgage foreclosures and consumer debt remain at frightening levels. But if it is true that the worst of the downturn is now (or soon will be) behind us, we think that the four observations below will set the tone for business/IT strategies over the next 24 months:
1. We have only just begun to get to grips with the recognition that information technologies substantially enabled and accelerated the global financial industry meltdown. This is leading to a major re-thinking of the whole idea of Enterprise Risk Management (ERM) systems.
2. In contrast to previous recessions, during this downturn the political position of Enterprise IT has strengthened in most large organisations, helping many companies push through important business/IT change initiatives.
3. The recession has given cloud computing a major boost, as firms have been forced to become more open to lower cost alternatives. Real-world use of ‘The Cloud’ appears to have been accelerated by as much as two years.
4. The relative priority of various ‘Green IT’ initiatives has fallen sharply, as companies focus on much more immediate concerns. Only a sustained recovery seems capable of restoring this issue to its 2007 level of urgency.
When the full force of this recession became clear in late 2008, we, like most of our clients, reshaped our agenda to focus on the new challenges at hand. In this memo, we will draw on our resulting Leading Edge Forum research to explore the four observations above and provide a high-level perspective on how the global downturn has affected our clients and our industry, and what this means for the journey ahead.
