Eight Reasons Why Buying IT Now Is NOT Critical

In a recent blog post Eric Pederson outlines “Eight Reasons Buying IT Now Is Critical”. IT is as strategic as ever. Trying to make do can be penny wise but pound foolish.

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- Date: Wednesday, February 04, 2009 Time: 4:57 pm Discussion: View Comments Category: Business and Technology Strategy, Product and Service Innovation Tags: business model, customer service, productivity, virtualization Print this blog post!

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IT is as strategic as ever. Trying to make do can be penny wise but pound foolish. [source]

I could not agree more. However, his presentation then doesn’t go down that road, but is rather very general, as it unfortunately lacks the audio track ;)

His recommendations all make perfect sense buy should not be taken too verbatim without strategic consideration. So here are my (equally generalized) eight reasons why buying IT now is NOT critical:

The competition is hunting your market … and all you think you need is IT, while the real problem is your business model.

Downtime is an additional expense … that hurts but doesn’t kill. The cash you don’t have right now to pay your IT and the personnel for maintenance does kill.

Equipment wears out and will fail … so more IT will wear out more and fail more. is it the right time to buy new IT in its current lifecylce?

Worker Productivity is critical when staff shrinks … and when staff grows, and when it stays the same. It’s critical anyways. And productivity might have nothing to do with IT but with empowerment, trust, responsibilities, process.

Running older systems longer increases cost … NOT – they’re paid for. They only increase “cost” if they’re down, need expensive maintenance, are not “productive”, etc. Old systems that work are GREAT! How do you think telecoms make money on voice calls?

Outside project resources are cheaper … if you need them, if it’s not cash-out-of-the-company, if you can let go the people who are on board for that job, if the job actually gets done more efficiently and effectively, if the stuff you get sold on will not be sold to you because they’re closing the doors and in two weeks tumble weed will blow through their customer service.

Current applications require more computing resources … and you have lots of computational power available as the number of customers basically declined by 30% and systems are spinning free. Plus you have all the computational power from the virtual machines on the machines of employees you had to let go.

New technologies can save money … if they do. (Yeah, that was lame). But do you have the cash for the “new technologies”, what’s the Net Present Value, should you rather spend the bucks you have left in service innovation, should you hire some smart people you can get now for a reasonable price as the economy is down, etc.

As in the slide deck, these are some generalizations, I know. But it shows that during these times – I call them wealth of economic opportunities – it’s easy to grab for stereotypes, one-size-fits-all rules, and the simple message. Some things are inherently complex, whether you like it or not. You can simplify them, but that’s as if you would say “Twitter is nothing more than a database, anyone could build it. Like Yammer.” :) Oh darn, did I say that out loud?

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When Talking About Business Models, Remember That Profits Equal Revenues Minus Costs (avc.com)

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Who’s counting? (economist.com)

One Response

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Daniel W. Rasmus, a Futurist in Washington wrote a great and valued response to my post.

Please go ahead and read his posting, here is my response to him:

Hello Daniel,

I really like and appreciate your comments and fully underwrite them. You do make a couple of assumptions, though, and I would 100% follow you under these assumptions (as I said in my post, I intended to make some bold statements as a counter opinion). I especially like one of the recurring thoughts of- and I paraphrase – “If your business model relies on IT, you better make sure it works – effectively and efficient”.

And sometimes people might not realize how much their business model relies – or could rely – on IT. I recently helped a large wholesale appliance installation company and a one-man-show cabinet-maker to generate and track sales leads through an IT-based system, including social networking advertisment campaigns, dedicated blog sponsorship, and local sponsorship. I guess they never thought that this part of their business model was flawed because they used old computer systems.

I am divided on your point of new talent attraction and “latest cutting edge IT stuff” as a must have – that is certainly true for some sectors (mine definitely!), not so much in other industries. I think this is a case-by-case decision, but you make a valid point here.

In terms of “IT for customer relationship management with customers from Delhi” I certainly agree, a good example. And, as you also point out, just a part of the equation. I quoted some great comments by Seth Godin and Tom Peters in http://www.playoutintelligence.com/2009/01/07/tech-and-customer-service/ from a recent video interview they did with McKinsey, maybe you find that worth watching.

Anyways, I hope you get lots of responses, I myself am interested to see both sides discussed. And of course as an IT innovation geek I’d like to see more geeky stuff around me ;)

1 Thorsten Claus February 11, 2009 5:20 pm

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