If We're Entering a Recession, Preparedness is Key

If We're Entering a Recession, Preparedness is Key

Preparing for a fight

8. Keep staff motivated "You don't want to end up with a team that is totally pissed off," warns Richard Sykes bluntly.

Sykes believes that, back in the mid-1990s, he only kept his staff motivated to seek and destroy redundant software by pressing ahead with "a limited number of new projects that were essential for the long-term good of the business".

Most likely, you and your company have already laid plans for a downturn. For the large minority of UK companies that run their financial year from April, the prospect of a downturn has already been factored into official budgets.

During research for this article, I happened to meet the business development executive of a large London advertising agency. "There's a huge amount of new business around at the moment," he said. A few minutes later, the executive mentioned that his company had just finalised its budgets for the financial year starting in April. "We're locking everything down," he said. "We're spending no money next year."

Why do that, I asked, when his agency was on the receiving end of so many new business opportunities? He shrugged. "There are just too many warning signs out there," he said. "Too many negative signals."

There may indeed be many warning signals but, to put it politely, forecasts of IT spending growth are variable. Some researchers rely on surveys; others on multi-part calculations. A few of the latter are relatively sophisticated. Others remind us to be grateful that Heath Robinson didn't study economics.

Researchers can't even agree on a valuation for the industry, much less a forecast for its growth. IDC claims that annual global sales of business IT are worth $1.4 trillion. Forrester says $1.7 trillion. You need growth data for a specific country outside the US? Good luck. By the time a 1,000-strong global sample of "decision-makers" is divvied up across multiple "territories" worldwide, any view of local conditions will be based upon the opinions of perhaps several dozen individuals.

It's hard to avoid the thought that they'd better be the right ones. But after all of those caveats, what do the numbers tell us?

Gartner expects worldwide IT spend to grow by between 2.5 per cent and 3.3 per cent during 2008. Something odd appears to be happening in Europe, however.

In the UK, Gartner was forecasting 3.2 per cent annualised budget growth late last year. In February, that increased to 3.9 per cent. It seems likely that the latter rise is due to the dollar's increasing weakness against the euro. But Gartner isn't saying so publicly.

So when will the Phoney War end? When will the negative signals become negative realities? The classic - if extremely loose - definition of recession involves two successive quarters of negative GDP growth.

But rising unemployment is much closer to being a real-time indicator. In the US, unemployment has been rising since January. In the UK, statisticians who specialise in examining output of the Office for National Statistics noted tentative signs of an increase in UK unemployment in mid-April.

For most of us, that's as close to a starting gun as we're going to get. Fasten your seatbelt: we're in for a very bumpy ride.

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