Cheer up, Lou – $2.1 Trillion should ease your pain
2000-06-14
Lou Gerstner is a worried man. According to a leaked internal memo posted on The Register, he is fretting about many companies’ apparent seduction “by the lure of the magic market-cap wand.” He is worried that organisations are seeing the Web as key to the electronic city, as a license to print money. His fear is that organisations are not looking beyond eBusiness to other, equally fundamental changes in the global market economy. Oh dear, oh dear. Well, he may choose to seek some solace in a report just published by WITSA (That’s the World Information Technology and Services Alliance), an international consortium of 40 IT trade organisations. Among the findings of the report was the fact that global IT spending topped $2.1 trillion in 1999. Now that should give even the dour Mr Gerstner something to grin about.
It may be that Lou has a point. There is plenty of evidence that companies are e-Nabling e-Verything with the hope of huge returns, or at least the fear of losing their existing places in the market. Organisations like our own are quick to point out that businesses without an eBusiness strategy might as well pack up and go home. Are we wrong to suggest that the Web is changing business? No, not according to Gerstner. “Don’t get me wrong,” says Lou. “I’m convinced that eBusiness really is changing the entire basis of the global economy.” In other words, don’t ignore the threat and the promise of eBusiness. But don’t let it cloud the other, ongoing changes in stock markets around the world. And (perhaps most importantly) don’t think that any old eBusiness strategy will yield huge returns. Call us old fashioned, but we’re hoping that the Boo.com debacle burst that particular bubble.
The New Economy might be dangerous ground for businesses in general, but according to WITSA it is being very kind indeed to the technology sector who, let’s face it, stand to gain whether the businesses they supply succeed or fail. In the nicest possible way, it’s a bit like arms dealers who sell to both sides and clear off quick before the bombs drop. This is certainly the picture painted by the WITSA report, a summary of which is available \link{http://www.witsa.org,here}. Furthermore, the report paints a “bullish” picture of the future, with a prediction of $3 Trillion annual IT spend by 2004. The drivers it indicates are:
- continued expansion of the Internet, fuelled by wireless, broadband and the device explosion
- privatisation of government-owned businesses
- adoption of eBusiness facilities such as vertical electronic marketplaces
- harmonisation of international law concerning the electronic economy
- emerging markets, such as China, India and Brazil.
All in all, technology companies have a great deal to smile about, particularly companies such as IBM which are ideally placed to take a slice of the pie just by continuing on their present course. We are sure your feelings were heartfelt, Lou, but we don’t imagine you will be losing sleep for too long.
(First published 14 June 2000)