Study Reveals Strong Link Between IT, Strategy to Combat Recession

November 20, 2009 at 11:51 pm Leave a comment

In a new study conducted by RONIN, a global market research and marketing consulting firm with offices in Princeton, NJ, and London, has found that companies across the globe are planning opposing strategies as their companies emerge from the recession. In the US, 58% are employing tactical, short-term initiatives that stress cost-cutting and deferred investments and longer-term planning. The other 42% are taking a more strategic view by re-engineering their business models, making acquisitions and forging new relationships.

            In past recessions a similar pattern has emerged, and McKinsey and Co. has studied this, concluding that the “strategic” companies emerge stronger while the “short term” companies emerge with weaker competitive positions.

            The current study from RONIN links the behaviors of these two types of companies with the role of Information Technology and clearly shows that the “strategic” companies are investing more in IT, have more advanced technology in place and regard IT as more strategically important than their “short term” counterparts.

            Outside the US, the percentage of “strategic” companies is higher, except in Japan, and the emerging markets covered in the study – China, Brazil and Mexico – show an even higher percentage of “strategic” companies.

            During 2009, overall spending on IT will fall by 5.1% from 2008 levels as the decreased level of spending in “short term” companies outstrips the gains in the “strategic” companies. This is, however, an improvement over three months ago, when the previous wave of the research was completed, when a decrease of 8.1% was expected for 2009.

            The recession has caused a change in what IT buyers look for from vendors. While there was a significant emphasis on “low cost” in the early days of the recession, the emphasis has now shifted to a desire to work with vendors that have a long-term strategic vision, best-in-class and innovative solutions and are easy to do business with. Lowest cost is well down the list of priorities.

            When this is coupled with the admission by most that their technology implementation is mainstream or behind mainstream, 2010 could shape up as a bumper year for vendors, particularly if they are targeting the “strategic” companies.

            RONIN conducted this third phase of the ongoing program studying the impact that the current worldwide recession had on companies’ IT initiatives in early October 2009. Over 4,900 surveys were completed over the three waves by IT decision-makers both in IT departments and in the lines of business (e.g. finance, marketing) across 12 countries: US, Canada, Mexico, Brazil, Germany, UK, France, Italy, Spain, China, Japan and Australia. Respondents were members of the RONIN global IT Decision-Maker Panel.


Entry filed under: IT Infrastructure & Data Center Management, Oil & Gas IT Management. Tags: , , , .

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