“We’re going to zig while others zag,” said the boss of one of the largest public relations companies in the UK to me just the other day. He meant that his plan was to acquire rival companies through the plateau/slowdown/downturn/recession, thereby taking advantage of distressed firms, and what market watchers call “negative sentiment” about the economy, in order to grow and use scale as a way to win more accounts.
There again, the old American adage says that when life deals you lemons, you make lemonade. In other words, take advantage of conditions, even if they might appear unpalatable upon first inspection. OK, so it didn’t help them in the great depression (unless you count the composers of Brother Can You Spare A Dime) but the concept is sound nonetheless.
Most firms might talk a good game but they will rein in discretionary spending all the same. Marketing will get hammered early doors, travel will come under microscopic scrutiny, and procurement will be locked down to basics.
And IT? In part, it depends whether you think it’s discretionary or not, but even if you think of it as primarily a tool for cost cutting, then common sense says you reduce spend with utmost care – and maybe you should even think about increasing it.
The fact is that some companies thrive at times when the business world is full of bad news, especially if they offer a low-cost product or a service that might hold up well whatever the economy. Dell enjoyed hyper-growth at the expense of IBM and Compaq in the early 1990s as buyers looked to buy similar PC kit without paying for branding and reseller margins. And Salesforce.com grew in the late 1990s and conued growing because a low capex, service-based spend suited the dark days of the post dotcom boom.
Almost every CIO today is thinking about telepresence. The grown-up version of videoconferencing is not cheap but if you can save lumps from the travel budget then the expense can be easily justified.
Also, if you spend a lot on IT in the next couple of years, you’ll probably be able to cash in on the misery of vendors.
There are a couple of examples of companies seeking to spend now.
Google is apparently to set up a VC fund fund to invest in startups. And why not when its stock belongs on another planet to rivals, and other funds will be looking for safe havens?
Closer to home, the Royal Mail is to spend £1.2bn on IT projects including handheld terminals, sorting equipment and online systems.
Bully for them. It will take a lot of nerve to up investment in IT while others hold fire but the opportunities are there to make lots of lemonade.