I've been in the working world long enough to know that economic downturns and recessions come and go. When I started out in publishing in the late '70s, interest rates were through the roof, partly in response to high inflation. In the mid-1980s, the stock market crashed, bringing with it the real estate industry.
So this is not the first depressed business environment I've covered; but somehow things seem different this time around. To a great extent that's because high-tech and financial services are directly at the center of this downturnnot causes of it, exactly, but certainly feeling the impact. To a non-economist, it almost seems illogical. After all, businesses (of all kinds) are not going to stop buying and using technology. What gives?
Well, that's why we talk about business cycles. The high-tech slump is due in large part to unjustified optimism (or arrogance), excessive spending and overcapacity. Similarly, insurers and other financial institutions are still feeling the pain from misguided e-commerce ventures, not to mention large-scale "projects from hell" that were never completed, much less achieved their original goals. But lessons will be learned, organizations will be revamped, excess capacity will be absorbed, and the economy will revive. (Until the next time...)
I think the fact that this slump has truly hit homeit is directly affecting our industry (although insurers are faring somewhat better than banks and securities firms)is why everyone has really gotten the ROI religion. As the coverage in this issue's special report on achieving ROI illustrates, demonstrating and getting payback on tech investments is no longer just rhetoric. Not only is it expected, it's actually doable. The challenge will be to make sure the new disciplines are standard operating procedure, not just another phase.
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio