There remains a lingering chill from one of the harshest financial downturns in living memory and storm clouds remain on the horizon. With economic uncertainty prevailing, especially in Europe, companies that reduced spending heavily in the depths of recession are unlikely to sanction significant investment while the short to medium term forecast remains dim albeit getting brighter. Business costs have been honed wherever possible and this has taken place in advance of a similar belt-tightening process in the public sector that is yet to fully unwind. The feeling persists that brighter skies will take some time to fully return even if the “sun is now out”.

In times past the technology budget would have been among the first casualties for firms reacting to an economic slowdown. However, the IT community has not suffered this time around in the same way as in previous recessions, when investment was seen as discretionary rather than critical. Major players across industry are still funding large IT programmes both in-house and outsourced. With money still tight though, achieving value through technology should be high on the business agenda again in 2014 and beyond. 

For decades IT has been deployed to automate and improve processes, save costs and enable businesses to offer more to customers and clients than before. It has been a journey of danger and disappointment for some, as expensive systems have failed to deliver. The reports of large scale systems projects going awry are legion in the public sector of old. IT project failures have occurred in the private sector just as often – but were better concealed. Now a different dynamic has turned management pessimism on the value of IT in business to a more optimistic outlook. Perhaps IT practitioners have also got better at delivering value? Any business journal today is laden with big data and analytics; cloud; multichannel; consumerisation of devices, mobile. IT is now very much on the agenda. “Digital” is “in”.

In the Century’s first really serious economic downturn (post dot-com, 9/11 and telecoms bubbles in 2001/2002), the problems that emerged were widescale wealth destruction caused by overambitious investment in technology. Any graduate with a modicum of bottle and a web dream seemed to be able to secure vast quantities of cash to blow on highly experimental new worlds that failed to materialise. Who, for example, could ever forget the spectacular excesses of Boo. com? Value was most definitely not obtained from much of the sectoral spend. From excess emerged maturity of technology and infrastructure and a set of capabilities that ten years or more on are gaining traction. Web 2.0+ is finally bringing home a world of success stories.

Broadband and mobile have also changed the prevailing business world (and indeed citizen world) forever. Broadband, 3G and 4G have enabled internet to become pervasive in many dimensions of our lives and businesses, and has become critical in education and retail, the expansion of citizen access to government and entertainment, including gambling. Commerce is heavily interconnected online. The BBC iPlayer, for example, points the way to a fully “un-wired” society, as does internet TV.

The growth in broadband has dovetailed with a rapid evolution in the technology used to support it. As netbooks, tablets and mobile devices become more commonplace, the “martini effect” is in play as the web becomes available anytime, anyplace, anywhere. Coupled with SAAS it means that “martini” is available to both citizen and to corporate.

We might consider how successful might Boo.com have been in a broadband world? How many other dot.com dreams were dashed by lack of bandwidth or convenient technology? Might first-mover advantage, with insight, have been deadly disadvantage in those cases? Clearly some of the deeply funded of those heady days do thrive today. Amazon and eBay are an obvious pair. However, many others stood back, waited until the environment matured and are now building perfectly workable, efficient business models that can deliver a great service at a lower cost than more traditional models. ASOS and AO are prime examples here. All without the wealth destruction occasioned by moving too fast, too soon.

For those who are just getting into the new channels to market – now is the time to invest. We can clearly see the focus on digital in most roles we recruit today. Resources are plentiful and the technology and supporting infrastructure work, are robust, scalable, and are still deflating in price. Not only that but the fledgling entrepreneur with some cash from a redundancy cheque might well be able to garner a respectable living from a relatively niche idea. Technology paves the way. In fact, the ‘cloud’ will probably have as much impact as the web did, with software as a service changing the entire model of startup capitalisation. Experimentation based on cheap ‘pay as you go’ schemes may prove to be of material economic impact. It will change lives. Faster broadband still will also help relocate tasks from some of the cities to more flexible locations. The speed generally available to a population over broadband can be directly correlated to the rate of entrepreneurial innovation.

Over the last five to eight years in IT a number of seismic shifts support new channels between business and customers, organisations and clients. This is not just about retail and the consumer either – there are thousands of businesses now completely linked to supplier and customer. Social networks have emerged, though attempts to monetise to profitability are still unfolding. They have rolled in droves of young participants in a virtual life. The ability to browse an online store is not the techno-drudge it once was – it is efficient, streamlined and the supporting logistical supply chains work well. Hundreds of thousands of trips to the high street have disappeared into the ether. Not only that but undreamed of social ‘opportunities’ now exist and are evolving.

Gluing all these developments in place in the commercial world has been a steady progress of enterprise-wide tidy-ups. Complete revamps of core systems allow the more innovative wiring to external entities to take place safe in the knowledge that a robust back office can cope with the new demands placed upon it by real-time transactional external connections.

Most businesses in the FTSE now have relatively up to date ERP (Enterprise Resource Planning) systems running the central business functions with new levels of innovation being possible in the surrounding product development, sales and channels to market areas. New technologies are lighter and more agile, being browser based in many instances. Cloud based will be even more agile. This allows speedy implementation, more focused development, and in some cases, maybe even an experimental approach to deploying small but scalable new systems. The IT function tends to be much more closely aligned to its business masters or indeed totally immersed within it. This naturally leads to better communications than before and as a result investments that more closely meet real business needs. Much of these initiatives fall under the generic label of “digital”. Since computing emerged in the 1940s IT has always been digital. So this phrase means, or implies, “facilitated largely by technology”.

The democratisation that the web has delivered has also extended the range of smaller businesses by opening new connections. For larger players this often means swarms of smaller businesses sneaking crumbs off the table, which collectively might add up to a large bite of lunch. Again, selective investments in Technology can be used to head some of these off. IT is making all the market players more competitive as well as opening the market to new entrants.

All in all, slowdown appears to have been the opportunity to catch up by establishing a well functioning ERP with multi-channel connectivity to suppliers and customers. “Supporting the smaller pieces of business that will yield profit but don’t cut back” has been a common theme. Do more with less, but different technologies, moving to leaner solutions, is an eminently sensible evolutionary step. “Go digital” has become a battlecry from the vendor and the buyer sides of the model. In many respects slowdown has helped to accelerate us towards more efficient models, and that can only be to the greater good.

Alan Mumby

Alan Mumby is a Partner and Head of the Global CIO & IT Transformation Group. The Group houses Partners with current and relevant technology expertise from each major continent. Alan's early career...

Caroline Sands

Caroline Sands is a Principal Consultant within the Global CIO & IT Transformation Group. She began her career in executive search in 2000 and has since developed a niche in the appointment of seni...

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