When times are good, companies are willing to make the upgrades and investments that allow them to become more efficient and effective. When things are bad, they often hold off on making any big purchases or upgrades in fear of the unknown. We are certainly no longer in a horrible situation in the US, but there is still a great deal of uncertainty facing corporations, especially when it comes to the slow recovery from the recession.
For tech companies that specialize in enterprise software and other IT services, business has dropped off. These programs are oftentimes rather expensive due to the amount of customization and work that is put into creating them.
EMC Corp. and F5 Adjust Numbers Downward
According to Drew FitzGerald at MarketWatch, “enterprise spending on technology is hitting a rut, especially for big-ticket items.” Despite the fact that a lot of the IT software can make employees’ work easier and more effective, if corporations cannot find a direct correlation to boosting productivity or sales, they will often hold off on purchase of new IT products.
One of the main reasons behind companies holding back on spending is confidence. FitzGerald writes again, “Confidence in governments around the world to make productive and timely decisions…is at a low point.” We’ve all seen the financial problems Europe – especially Greece and Spain – are having due to failures in leadership and policy. In the US it’s not quite as bad as Europe, but there is the potential for serious gridlock and other fiscal problems to occur.
For large IT companies like F5 networks, their orders have dropped significantly. Instead of getting orders in the millions of dollars, the company is now expecting around half of the normal amount requested. F5’s CEO John McAdam was quoted, speaking on the closing rates, “It’s amazing how they’re mapped to economic conditions.”
Not All Tech Spending is Down
The larger ticket upgrades and software packs are slowing, but not all IT products are being met with reluctant customers. Companies are buying plenty of mobile devices. In addition to that, demand is still very high for “software that slashes companies’ operating costs or guards against new security threats.” These are vital to securing a company’s data and also making them as efficient as possible. Even in a downturn a product that can do that is an easy sell to any high level management.
There are a lot of IT products out there that companies can choose from: enterprise packages designed to improve efficiency, security software to keep data safe, and personal software for employees to improve their efficiency. Despite the many corporations sitting on lots of cash, they aren’t making big ticket deals. Maybe after the election we’ll see more purchases.
Do you think companies should be spending their money and upgrading their capabilities – or should they continue to wait?