What does the recession mean for business spending? Well, there’s the sunny view of things, that businesses will be forced to invest in areas that make them more efficient, like IT. And then there’s what we might call (to steal a phrase from international relations theory) the realist point of view. A recession is a recession.
Here’s a test though, what are big IT vendors dong with their own IT spending?
Yesterday, Cisco CEO John Chambers acknowledged that some companies see IT as “an expense to be cut”, but that successful companies should be more like Cisco, which isn’t cutting it back on IT. In 2008, it spend 10% more on IT than it did the year before, and it doesn’t sound as though it will slow down.
Then there’s SAP, which last week warned of a sudden dropoff in sales at the end of the quarter. Guess what: They’re doing the opposite of Cisco. In an email obtained by WSJ’s Biz Tech blog co-CEOs Henning Kagermann and Leo Apotheker warned staff to halt new spending
We will review all planned investments in IT equipment, hardware, software, facilities, and company cars, as well as internal IT projects,” the co-CEOs wrote in the email. “Do not order any new equipment at this time.”
The email captures the uncertainty at SAP – uncertainty that is no doubt shared by other companies in the industry. “No one at this point can say how markets and customers will react in the coming months,” the email says. “In this turbulent economic environment, we will be giving added attention to sustaining our margin and earnings health.”
No doubt the SAP sales force will try to their best to convince customers on the need to keep up spending, even in the face of the downturn. But will they be able to keep a straight face?