IT managers must be prepared to see half of all the well-known IT vendors doing business today disappear in the next three years, either through mergers or bankruptcy, according to Gartner Inc.’s chairman and CEO Michael Fleisher. He made the warning during the the opening keynote speech of the company’s recent Symposium/ITxpo 2001 in Orlando.
“You’ll need to anticipate incredible consolidation, both in your own industry as well as in your suppliers. Your most trusted partner may suddenly be subsumed by another company that you chose not to do business with,” he said.
He called the proposed merger between Hewlett Packard Co. and Compaq Computer Corp. “the beginning of this new wave of consolidation.”
“We believe that 50 per cent of current IT companies that have a household brand name won’t exist in their current form in three years,” Fleisher said.
Leaders of IT vendors are to blame for the radical consolidation to come. Over the past year, they failed to adapt to the demand slowdown and didn’t promote the creation of innovative products users need. These business decisions, which Fleisher termed “adolescent,” have gotten many IT vendors into deep trouble.
“Most tech executives managed their companies as if demand would never slow,” he said. “At the same time, they failed to direct their companies to develop products that customers found innovative and compelling.”
The lack of IT innovation, the troubled economic times and the threat of terrorist attacks and war pose significant challenges for IT professionals, who will be asked to do more with less and deliver profits from IT investments.
“As we come into increasingly difficult times, understanding how your company generates and leverages cash earnings will be critical,” he said.
Ultimately, IT staffers must act with creativity and optimism to help their companies achieve profits.
“How we fare in the next 12 to 24 months will be the real test of whether we know what the hell we’re doing,” he said.