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Groupware Executive Roundtable: IT and The Recession

Volume 4, 2008

Groupware's top three executives—President and CEO Mike Thompson, VP of Strategy Tony Miley, and VP of Sales Scott Sutter—recently sat down for an open discussion on their perspectives and opinions on IT trends and the current and pending economic situation is impacting  technology spending.

Moderator: Everyday, it seems news about the economy isn't good. From your perspective, will the forces affecting the general economy affect IT?   

Mike: So far, we at Groupware are not seeing it nor are the advisory boards I sit on. In a recession, history has shown that certain industries are affected more than others and today the IT space has been protected because technology continues to drive efficiencies while reducing TCO. Technologies such as Unified Communications and Consolidation through Virtualization continue to thrive. However; we're cautiously optimistic about the current and remaining economic outlook for 2008.  We are prepared for a slowdown in the economy but have not been impacted to date. We just closed a strong first quarter and the pipeline for CY Q2 is strong.

Moderator: Overall, would you say IT spending is increasing or decreasing?

Mike: I'd say overall IT spending has slightly increased over last year on a quarter over quarter basis. That is what we have experienced at Groupware.  Regulations continue to promote and force IT spending.  Environmental initiatives and the Green movement are not only good for the environment but have a positive impact on IT spending.  And specific technologies that create business efficiencies and can demonstrate ROI in a short time, like virtualization, consolidation, business intelligence, and unified communications, which all support Green Initiatives, have and will continue to drive IT spending.

Moderator: So, even if the recession isn't significantly impacting IT budgets, companies are going to have to be smarter with the dollars they have.

Mike: Absolutely and that's going to continue. That ties back to the virtualization play and getting more bang for your buck. Companies are looking for solutions that reduce total cost of ownership and can show ROI in real time.

Moderator: What about the market that connects and surrounds IT, consumer electronics? Have you seen any impact in that sector?

Scott: We have seen some trouble there, but it's really been coming for last three years.

Tony: What I'm reading is that the downturn in the economy has been driven by the housing market and sub-prime loans and foreclosures. What happened was people were taking a second out on their home to fund a lifestyle filled with boats, TV's, entertainment centers, car, cameras, and electronic toys. Purchases that were once driven by home equity are suddenly affected by the tightening economy. People saw a recession coming and immediately stopped spending.

Mike: Discretionary income is being impacted or consumers have changed their spending habits based on the fear of a recession. That will have a trickle down affect and slow IT spending in specific sectors.

Scott: All companies are connected. Which means all companies are going to feel it.

Tony: Right. We're behind a curve driven by consumer goods. It's going to take time to make its way to the enterprise-level technology companies. I think we will get hit but that's possibly why we're not seeing it right now.

Scott: But we will. Twelve months. It's coming.

Moderator: Of the different vertical technology markets you serve, which do you see as being the most immune to a recession?

Scott: Security, life sciences, and software as a service.

Tony: While the financial markets are getting hit because of the sub-prime crisis, on the other side, new laws are requiring data to be held for eight, ten, and fifteen years. And this is in addition to SOX compliance and other regulations. So, as much as business may be falling off on one side, governance issues and politics are driving the other. And that's in all businesses. There are four things we talk about at Groupware that are driving the marketplace: politics, demographics, economics, and technology. For example, sixty to eight million aging baby boomers retiring will have a huge impact on each of those as well as effect issues like immigration. It's all interconnected and it's going to play itself out in a lot of ways over the next twenty years.

Moderator: Research shows that of the areas of IT spending least likely to get cut, the first is Security and the second is virtualization. Is it surprising that virtualization has become so critical?

Mike: No, virtualization creates business efficiencies. It's good for the environment and demonstrates a strong ROI.

Scott: Strong ROI technologies won't get cut. Our storage practice is increasing and what's driving it are business intelligence applications that aggregate information in a single dashboard. Technologies that can pull it all together in one spot so the CIO can make educated decisions based on centralized information will be immune. And we're seeing growth in this area on a global scale.   

Tony: Data mining, especially as it relates to the backend of a business intelligence application, also seems to be growing.

Moderator: So, it sounds like, despite the economic situation, there are still strong areas of growth.

Mike: While no one knows if or when a recession will hit, no one denies that IT, and what it enables, is more critical than ever in every part of society. In any market, to be successful, companies need to be smart, confident, and prepared. That's true no matter what shape the economy's in. 

 

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