While the previous recession and stock market correction is now almost a distant memory, technology and the internet were the story as "irrational exuberance" drove stocks through the roof. What followed was a massive sell off of internet, telecom and technology stocks while other sectors of the market performed much better on a relative basis. 2001 and 2002 were tough, but the manufacturing, consumer and service industries pulled us out of the mud.
Today, the recession is global and cuts across all sectors with no one left untouched. Unlike the previous downturn, this recession is not isolated to a few industries and the stock market has sold off across the board. But what may be lost in all of the gloom and doom is the story of productivity gains and how far we still have to go. Just ask the executives at HP, IBM, Oracle, SAP, Cisco and EMC and you'll hear about the story that is very much in process. During the past few years, companies have invested heavily in ERP solutions as CIOs, systems integrators, and offshore developers have been working flat out. While virtualization and on-demand solutions improve the CIO's ROI, lasting productivity gains stem from the business integration and change that ERP enables.
This is the good news as CIOs were in the middle of large scale IT transformations driven by CEO expectations of improved productivity. Today, these productivity gains are showing up in the results of companies across many industries, but the spending on IT and team building was shut down due to the severity of the recession. Just as the CEOs of technology companies selling to CIOs suggest little visibility into when CIOs will start buying again, CIOs tell us they don't know when their CEOs and CFOs will release the purse strings. But importantly, both tell us that when it comes back it will likely come back with a vengence.
As executive recruiters and advisers with deep expertise in technology, we see it. The supply of business-oriented IT leaders hasn't magically increased in spite of the impression that we are in a buyers market for talent. The translators who are the key to engaging with business leaders and driving the adoption of new technology enabled processes are in short supply. Nearly every CIO in the country doesn't have the expertise they need in this area, and when CEOs and CFOs feel comfortable spending again they'll aim their investments where they can improve productivity. As a result, technology will lead us out of this recession and companies well positioned for the spend will benefit first.
What is your view on how technology drives productivity? Do you see technology spending returning in 2009 or 2010?
