Spend, spend, spend - but integrate, integrate, integrate (page 1 of 2)

While the world economy has not technically fallen into a recession, it has hovered on the brink for so long that it certainly feels like one.

The current 'downturn in economic activity' has had a particularly devastating effect on the telecommunications and computer industries with massive job cuts, plummeting share prices and thin, if any, profits. As businesses grow more cautious in uncertain times and face tightening budgets, expenditure on technology renewal is an obvious candidate for review.

According to the US Commerce Department, technology spending in the US corporate sector had fallen by 17 per cent by mid 2002 from its high spot at the end of 2000. The rest of the world has, inevitably, followed the US trend.

The general economic downturn also coincided with the end of a cycle of frenetic innovation and technological advance through the 1990s. Following the rapid spread of PC's, networks, the World-Wide Web and mobile telecommunications, terminating with the Herculanean effort to re-engineer the world's IT system for the Year 2000, the last decade of the 20th century was truly momentous.

No wonder businesses are still taking it all in and remain reluctant to take on another wave of technological advance without, at least, a pause for breath.

Unfortunately the modern business environment does not allow pauses for breath. Despite continued uncertainty, there is evidence that the effects of the downturn on IT spending could end soon. While Instat/MDR is gloomy about 2002, it expects a combination of new products and pent up demand to push PC market growth back up again in 2003: "PC market growth will rebound to 13% in 2003."

There are other forces driving a renewal of expenditure on information technology. The continued need to improve efficiency and productivity, to cut costs and maintain competitiveness all make it hard to take that much-needed breather.

As if this were not enough, many sectors of industry face increased regulation which has significant implications for IT systems. The financial services industry, for example, must meet new regulations on risk management which will require substantial change to business processes and existing IT systems.

In addition many financial organisations must upgrade their systems to speed up processing for financial market transactions. And the obligation to archive the rapidly-growing volume of email affects an even wider group.

Taken together, the forces driving technology renewal are irresistible. The form this takes in the more constrained modern business environment is clearly different to that which prevailed in the 1990s. During times of strong growth, companies can afford to invest in new technology and potential new markets. When times get hard and funding scarce, it is more of a challenge.

But even in tough times organisations of every size must plan for a return to more stable economic growth and take a long-term view alongside the need for short-term expediency. Caution and prudence are still essential and spending plans must, of course, be tied closely to genuine business benefits and a rapid return on investment.

History shows, however, that businesses that stand still during a downturn are ill-equipped to take advantage of a switch in market fortunes.

The priority for many organisations is to rationalise their IT infrastructure. The change wrought by advancing technology over the last decade has led to a proliferation of different platforms and incompatible application systems which must be brought together for many reasons.

Integrated business processes and IT infrastructure can cut costs, improve efficiency, enable regulatory compliance and provide a foundation for future development.

Business process rationalisation and integration cuts administration costs and improves efficiency.