Downturn yields bottom-line benefits

Continued economic uncertainty is bringing IT managers some welcome benefits, including lower prices from technology vendors and more success in filling critical positions on their staffs.

And many top corporate executives “do not believe that we are anywhere close to being in a recovery,” despite efforts by sales-hungry vendors to convince them that an economic rebound is under way, according to Michael Fleisher, chairman and CEO of Gartner Inc. in Stamford, Conn.

“I think it’s a mistake to try to cheerlead our way to a recovery, which is exactly what people in the tech industry have been doing for the last several months,” said Fleisher, speaking last week at Gartner’s Symposium/ITxpo 2002 conference here. He added that this year will remain “a tough environment” for companies.

That may be bad news for corporate bottom lines. But some IT managers interviewed at the conference said that the downturn has helped them in important ways.

“Vendors have been extremely negotiable in price” this year compared with what they were trying to charge a year ago, said Lisa Skinner, assistant vice president for emerging technologies at Pacific Life Insurance Co. in Newport Beach, Calif. Skinner said she has seen dramatic decreases in the prices vendors are offering on both software and hardware.

But there have been problems, too, she said, noting that some of the vendor start-ups that Pacific Life took a risk on have failed. But fortunately, Skinner said, those companies were acquired by other vendors, and the insurer has continued to receive technical support services.

The experience underscored the need “to have a fallback strategy if you need to move from one technology to another,” Skinner cautioned. It’s also critical to keep an eye on the health of vendors, she said.

Alan Werckle, IT professional resources director at Compassion International, a nonprofit child assistance organization in Colorado Springs that receives about US$130 million annually in donations, said the downturn has also prompted consultants to drop their fees.

Compassion International recently hired a Web developer on a contract basis for $50 per hour. Last year, the going rate for the same position was $90 per hour, Werckle said. Three weeks after bringing the developer on board, officials at the nonprofit decided he was worth holding on to and raised his hourly fee to $75. “It’s been great for us,” Werckle said.

Dennis Walsh, who manages the distributed systems group at Washington Mutual Inc., a Seattle-based bank, agreed that it’s easier to get better deals now. “But I’m not sure how much the economy has to do with it, and how much it has to do [with the fact] that we’ve just been more focused on doing that,” he said.