This past February, IDC noted that worldwide IT spending is expected to slow down for the first time in half a decade. In fact, the market is poised to grow by just 2 percent this year.
It’s not a huge surprise. China has been a growing source of revenue for the technology sector in recent years. Just last year, the market there grew by 11 percent. But the economic uncertainty in China has had a cascading effect globally.
Cost-cutting just got brutal
I’m already seeing the domino effect of China’s economic volatility seriously affecting companies in our backyard here in Asia.
A client of ours, which is a billion-dollar global enterprise headquartered in the region, has seen its revenues and share price plummet.
This means their purse strings just got that much tighter, but the business has to keep going. But it also means turning off some of the “niceties,” like artificial intelligence, automated machines, and even the maintenance of their network.
As you know, the network is the backbone in any modern business. Not having any maintenance on your network will definitely compromise your business continuity. Yet, that’s the situation my client faced–an end-of-life scenario to a large portion of their network infrastructure.
That’s because when they went to their IT vendor for a cost-cutting solution, they were essentially told: “We can help you save the money, but we’ll have to cut support for a large percentage of your network.”
And by the way, “end-of-life” here doesn’t mean end of “useful life.” It just means that their IT vendor’s program to maintain their network infrastructure has come to an end.
We’re talking about massive risk exposure here.
Instead of focusing on innovative solutions that might propel the company out of the doldrums, our client was shoe-horned further into a business cul-de-sac.
Not having a large portion of your network infrastructure maintained is not a solution. And it’s definitely not client-centric. And businesses today should not tolerate that type of consultation.
How that cost containment strategy you had yesterday is helping you today
Gartner preaches “Bimodal IT” quite a bit. What that means is that ideally, you protect or grow the 30 percent of your budget that is targeted at innovations that drive the business forward. To achieve this, businesses need to be hyper-focused on cost containment in the stability portion (70%~) of the budget while “keeping the lights on”. Business basics, like email servers, data center stability, and the like.
The good news is that over the last few years, CIOs have evolved from laptop procurement and IT support to being important business leaders in your organization.
Organizations with such business-led CIOs tend to be more progressive, where IT spending is more business requirement driven, rather than IT vendor-driven.
These are the businesses that are applying new strategies to relieve the pressure on stability budgets, so that they can funnel cash to invest in key innovation projects to become more competitive.
And if you’re one of these companies, then you’re already prepared (or ready for) what IDC’s talking about now.
I think if anything, this slowdown is a good time to sit up, and think differently about how you procure, maintain and refresh your enterprise IT assets if you haven’t already done so.
That means your traditional IT vendors can’t earmark your annual IT budget and tell you to spend X amount of dollars to keep yourselves up and running, because frankly, it’s just not good for business.
Look around. There’re some disruptive techniques out there for you to explore.
Because know this: If you aren’t being fiscally responsible with how you manage to keep the lights on, it’ll be lights out for you.
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