TechWeb

Editor's Note: Be Ready When Recovery Comes

Sep 29, 2002 (08:09 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=6503193


A reader recently told me that he doesn't take seriously stories about an economic turnaround or investor confidence. I'm not sure how that translates into action (or inaction) at his company, but I felt the need to explain that our goal is to present and interpret economic data and investigate how companies are dealing with tough times. If there's one message I heard at last week's InformationWeek Fall Conference, it's that technology innovation must continue if you want to come out of this without too many bruises. Call that an abundance of confidence if you want, but I call it smart thinking.

First, let's look at a few economic indicators released last week. A lower-than-expected drop in durable-goods orders and a decline in jobless claims boosted investors' spirits, at least for a few days. On the other hand, let me give you a few facts from our most recent Priorities survey: Only about half of the companies we surveyed expect to finish the year with higher sales than they had in 2001, and 25% think revenue will fall. That's the worst outlook of any of our surveys this year.

So how do you strategize? It's all about optimizing business processes, agility, and flexibility, says Ameet Patel, chief technology officer at LabMorgan, part of J.P. Morgan Chase. Sure there's some dieting going on, but it's about getting fit, not just skinny, he says. "So when the market picks up, we aren't gasping." It's about thinking creatively and restoring confidence, other executives say.

Another thing to consider: Lakshman Achuthan, managing director at the Economic Cycle Research Institute, told conference attendees that IT cycles are becoming predictable and can help you plan. He also notes that the indicators point to no renewed recession. So here's an important message: A couple of years ago, some companies didn't believe a recession was coming and didn't prepare. Those who don't believe a recovery is coming may fall into the same trap.

Stephanie Stahl
Editor
sstahl@cmp.com