Pondering an Information-Age Depression

I have been busy lately. That’s good, because when I have had lulls in the action recently, I’ve been assailed by dark visions of a dystopian economy. These gloomy presentiments have been sufficiently jarring to induce hyperventilation and panic attacks.

Then again, I’m probably neurotic . . . and I use the word “probably” as a weak qualifier.

Still, the economic outlook is tenebrous. The difference between best- and worst-case scenarios isn’t pronounced, with the best-case scenario an extended period of stagnant or low growth. The worst-case scenario? If one gives credence to the ruminations of Gluskin Sheff economist David Rosenberg, we’re looking at an information-age, 1930s-style Depression (Big D).

Prone to Optimism

As Rosenberg notes, human beings are prone to economic optimism. We’re hardwired to perceive every evanescent blip as a sign of recovery. That keeps our hopes up, but it doesn’t change the fundamental economic reality, which reasserts itself like a marauding interloper at a dinner party.

So, I got to thinking — as I am inclined to do — about what this means for the technology industry, particularly for enterprise and data-center spending. If we’re about to scuffle along the floor of the Valley of Despond for a lengthy period, what is it likely to mean for IT budgets?

Obviously, they will be severely constrained, under the unrelenting jackboot of austerity. Nonetheless, a plausible case can be made that enterprises will be looking at technology investments as vehicles that can help them ride out the storm. The focus, in IT as in much else, will be on mechanisms and tools that help reduce, or at least contain, capital and operating expenditures.

Mumbo-Jumbo Won’t Work

Virtualization, in its many guises, can help with the former, but it will need to be assisted by improved data-center automation and centralized management if it is to have anything meaningful to contribute to the latter. As for cloud computing, it should gain favor gradually, but it will meet strong resistance from enterprises concerned about security and privacy issues. As for the private cloud, it’s like a twisted Rorschach test: each vendor sees it differently and tries to persuade their customers to see it the same way. Customers, as always, need to focus on business benefits and not get distracted by the marketing mumbo-jumbo.

That sort of thing, by the way, is less likely to work than it has in the past. Somewhere along the enterprise chain of command, somebody holding the purse strings will be asking tough questions about value, investment protection, and ROI. Vendors that hide behind buzzwords, and can’t provide specific answers to direct questions, won’t get their share of what business there is to be had.

I’m spending some time really thinking about how a prolonged period of economic turbulence and uncertainty will affect the industry. If vendors haven’t made the adjustment already, they’ll have to adapt to a new normal that doesn’t feel like anything we’ve experienced before.


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