Using the Crisis to Restructure Processes

from left to right: Oliver Tuszik, Volker Schmid, Willi Kaczorowski Photo: Bernhard Krebs

Podium discussion participants:

Volker Schmid (HP Germany), Michael Hammerstein (managing director for Germany at EMC), Willi Kaczorowski (director of Public Sector Internet Business Solutions at Cisco Germany), Robert Helgerth (director of Small and Midmarket Solutions and Partner Group at Microsoft Germany), Oliver Tuszik (CEO and chairman of the board at Computacenter), and Christoph Witte, editor of the professional journal Computerwoche, as discussion moderator.

The chairman of the management board of Hewlett-Packard Germany agreed with other top IT managers, who basically all recommended that in times of crisis, you need to restructure your processes and invest in future technology.

What counts for companies now is to handle the present situation by increasing productivity, and by also preparing themselves for what is to come after the downturn.

Although opinions varied slightly at times, the discussion round was largely united in many statements or assumptions:

  • While many other industries expect a deep recession, those in the IT industry currently “only” talk about a decline in growth. However, any prognosis lacks a sufficiently solid basis. “Nobody today can predict what is going to happen by the end of this year,” said Michael Hammerstein. Oliver Tuszik also added: “At the moment, companies are often doing without analysts, as they are expensive and there is little to be gained from using them in the current climate.”
  • In the foreseeable future, IT companies will achieve growth primarily by squeezing out the competition. Schmid believes therefore that currently, for many companies, “pressure is determinant in reaching benchmark level.”.
  • At present, there are different types of users on the market. There are those who
  1. drastically cut or freeze their IT budgets;
  2. maintain their overall investment in IT stable, but redistribute funds internally to projects that will safeguard productivity;
  3. intensify their investment in IT to increase efficiency and reduce costs. These users have realized that a well positioned IT infrastructure enhances value. Robert Helgerth firmly believes that many companies will use the crisis to restructure their own processes and invest in future technology in order to gain a competitive advantage.
  • IT focus in Germany 1: Although the German Federal Government’s second economic stimulus package is generally a welcome initiative, a clear sign is also needed that companies are willing to invest in IT. What is still missing, according to Willi Kaczorowski, is an overall IT concept for a digital Germany that bundles the requirements of the state, the economy and society. This is almost certainly not going to happen, however, before the next legislative period.
  • IT focus in Germany 2: IT still often has an image problem. The memory of the burst dot-com bubble is still fresh in people’s minds, and the discussions about data security and the poorly-scaled, increasingly complex and thus confusing systems provide users with little confidence. Tuszik’s recommendation: “When IT becomes increasingly complex is precisely the time you need to talk to your customers.”
  • Finally: The “hire and fire” mentality, which until recently was considered common practice in the industry, is outdated. It simply does not make sense to let good people go in the recession, only to desperately seek them out again once things recover.

Industry investments in IT

In an analytic tour de force through the industries, the discussion participants surveyed the potential of IT in the coming months:

  • Although the finance industry is suffering, it seems that the IT approach in many cases is to take control of costs and processes.
  • The troubled automotive sector will continue to hold off on investments.
  • Public service still has interesting projects ready as a result of the recovery package. There is a lot of catching up to do particularly in the education sector.
  • Commerce is one industry increasingly investing in IT.

IT topics of the year 2009

Second economic stimulus package:

A German federal government program aimed at easing the 2009 recession triggered by the international financial crisis. The government plans to spend around 10 billion euro in local authority and federal state investments and 4 billion euro in federal investments by the end of 2010.

“The trend is clearly toward standardizing IT landscapes,” commented Schmid. Many entrepreneurs have realized that they can only reduce costs and increase efficiency in the long term if they harmonize and consolidate their IT landscape. IT managers will see themselves more and more as consultants and partners of their customers. “Our aim is to point out to companies the value that IT can create. The companies that get this right will ultimately head the field,” Tuszik assures.

Other topics that will be determined by IT in the coming months include:

  • Virtualization: It helps companies use their available resources more efficiently, as well as save energy and costs.
  • Security: How companies handle their data will play a key role – for vendors and users.
  • Web 2.0 and collaboration: Collaborating with partners all over the world from any location saves time and money.
  • Management services: “From unified communications to telepresence; the potential is far from exhausted,” said Helgerth.
  • Reform the offer structures: Suitably priced, efficient and flexibly tailored to customer needs. Witte believes: “What will encourage users to spend money on IT in 2009? First and foremost, really great products.”

The challenges for 2009 are clear. It’s now about jointly meeting them. The plenum agreed that the industry has learned that, in the spirit of coopetition (duality of competition and cooperation in markets), you cooperate where you can – and compete where you have to.

Why? Because this is what the customer situation often dictates.