Thomas Nolle at ComputerWorld (via NetworkWorld) suggests that not only will the economic downturn affect IT budgeting, but that networking, in particular, will take a harder hit than the rest of IT.
The logic goes something like this: when the first tech bubble burst in the early 2000s, IT spending shifted from networking to computer systems and software. To quote Nolle:
The fact that the point where the shift occurs corresponds with the previous major economic downturn raises some legitimate questions about whether networking might not take a further hit in the current slump, as well as questions of what might be done to prevent that.
That is one theory.
But I think it’s simply more likely that there were other factors that precipitated 2000s IT spend shifting to computer and software expenditures.
For example, 1999 and 2000 were the years of the Y2K scare. (I still believe that Y2K will, of course, eventually kill us all. It just didn’t happen on New Year’s Eve, 1999, because everyone knows that Y2K will strike when you least expect it…)
To prepare for Y2K, companies spent millions on upgrading their entire IT departments to newer equipment that was “Y2K compliant.” It makes a bit of sense that more was spent on the desktop than in the network – there’s only a handful of data centers but tons of workstations.
Additionally, Windows 2000 came out in February of 2000, with Windows XP soon after in October 2001. Both OSes provided a more stable, and thus, more business-friendly computer working environment – so companies might have a compelling reason to upgrade.
Or, consider that prices for desktop computer hardware, already on a deep decline, started hitting very low prices, comparatively, around the same time – computers were becoming so cheap that there were companies that would give you a computer with 2 years subscription to an Internet service. At those prices, computers could be given to every employee instead of only the most savvy. Also, 2000 was when early graduates of universities in the Internet era were out looking for jobs – and these graduates knew how to use PCs, which justified the cost.
So I think that perhaps Nolle might be confusing correlation and causation. Then again, Nolle may be right and I might be confusing correlation and causation. Then again, correlation and causation might be causing confusion. (Then again…)
Additionally, the networking environment of 2000 is very different from 2009. How many applications did your company have on the network in 1999/2000? How many does it have today? Can you even count that high? 2000 was before the advent of Salesforce.com and other SAAS products that depend on network connectivity – back then, you were just as likely to e-mail a file as you were to copy it to a floppy disc.
And let’s not forget the point about the number of people working remotely, which will actually be more important as companies shrink campuses.
However, that doesn’t mean he’s necessarily wrong about some of the points later on in the article. For example:
The question we might ask is why networking couldn’t capitalize on the attention it received. The answer, I think, lies in the stuff that binds networks to applications. The pivotal point in that critical issue came in the early 1990s, when IBM’s Systems Network Architecture was supplanted by TCP/IP. SNA network equipment was just too expensive, and enterprises went to the lower cost of TCP/IP instead. The critical thing was that SNA was an application architecture as well as a network architecture, and TCP/IP vendors didn’t present application tools… Networking won hearts and minds in the ’90s, then lost them again because it didn’t offer the whole solution. The application connection to the network was never made by the network vendors, and so IBM and other system and software players continued to control that critical linkage — and still do today.
We often say, (mostly because we agreed with it when Jim Metzler said it,) that in IT, you either develop applications or you deliver applications. It’s all about the applications – because ultimately, layers 1-6 have no purpose unless they’re supporting layer 7.
If you’re going to have problems with IT budgets during the economic downturn, the best way to weather the storm is to make it clear how the network enables the applications that run on it, and how the applications add to the business’s bottom line.
If anything would precipitate a slowdown, it would probably be that for years, during the good times, CIOs have been future-proofing their networks in order to meet increased demand during a time when they couldn’t just throw more resources at the problem – that day seems to have arrived, so now they may be looking to finally use the capabilities that they paid for when times were tougher.
Thanks to Chandra Hosek and Steve Harriman for their help in writing this article.
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