Making Money on Technology in a Recession

Everywhere you turn these days, some research organization or another is cutting its spending forecast for 2009.

The latest case in point is IDC, which is cutting its forecast for IT spending growth in 2009 from 5.9 percent growth to 2.6 percent growth. Similarly, the folks at Computer Economics, a research company based in Irvine, Calif., recently released the details of a study of 159 North American IT organizations that found that while aggressive cost-cutting measures are already under way, overall spending will be flat as some organizations look to reduce spending by as much as 3 percent while others still anticipate a 5 percent increase.

More optimistically, CompTIA recently released a study of 772 small to medium -size businesses that found that 51 percent said they expect to increase IT spending while 49 percent said they plan to decrease IT spending.

The long and the short of this is that nobody knows for sure what exactly is going on with IT budgets in 2009, other than some companies are trying to cut back some spending across the board, while others are trying to cut back IT spending in some areas so they can spend more money in other areas.

Unfortunately, that kind of keen understanding of the market makes it a little difficult for solution providers and their customers to plan for the coming year. So maybe what we should do is take a step back and look at what technologies are strategic in 2009 and which types of technologies tend to gain momentum in a recessionary climate.

With that goal in mind, we offer the following technologies for your recessionary consideration:

• Open-Source Software – It’s true that over a three- to five-year return on investment window, proprietary software can be viewed as being less expensive, but with a price of acquisition near zero, open source is hard to ignore.
• Virtualization Software – The basic concept of virtualization is to increase the utilization rate of existing hardware assets. That’s music to the ears of customers under extreme budget pressure.
• Managed Services – Labor is still the biggest expense when it comes to IT. Reducing the cost of labor around IT is at the top of the CFO’s agenda.
• Cloud Computing – Perhaps this is little more than hosted services by another name. But when everybody is using the same set of buzzwords, it’s best to pay close attention.
• Software as a Service – Whether it’s delivered by a major vendor or a local solution provider, SAAS is a solution to be considered for customers short on capital expense budgets required to build on-premises applications.
• Security – How security is achieved may be going through a major transformation, but the need for it has never been more acute.
• Governance – Along with risk management and compliance, the whole downturn in the economy has empowered government officials to introduce even more regulations.
• Business Intelligence – The downturn in the economy has people all over the business community looking for more insight.
• Systems Management – Reducing the number of people required to manage IT systems is going to resonate with customers as they struggle through the downturn.
• Storage Management – Regardless of the state of the economy, the amount of data that needs to be managed continues to grow exponentially.
• Video Conferencing – All the talk is about unified communications, but when you get right down to it, customers are trying to reduce travel costs.
• Green IT – This is going to be a whole lot less about saving carbons and a whole lot more on reducing energy costs.

All in all, there are at least 12 recession-resistant technology categories that solution providers can make a lot of money on during a downturn. The key issue is whether solution providers have there practices aligned to take advantage of some of the inherent opportunities in an economic recession. No doubt, times are tough, but that doesn’t mean they have to be tough all over.