IT leaders must rise in face of tougher times

Rising energy costs, higher prices for raw materials and a slowdown in home building characterise the current state of the US economy. The corporate landscape is dotted with weekly layoffs numbering in the thousands.

Rising energy costs, higher prices for raw materials and a slowdown in home building characterise the current state of the economy. The corporate landscape is dotted with weekly layoffs numbering in the thousands. The stock markets have been tumbling.

The view from Silicon Valley isn’t pretty either.

Funding for new technology companies has dried up. Some blame the end-of-year doldrums, while others speculate it’s because there are no longer viable exit strategies for these new firms.

Here in the Valley, hiring is frozen, people looking for “business development” work draw smirks and working full time at half pay is the new incentive programme, with stock options being the not-so-funny punch line of the great joke about working for internet firms.

Recently, I talked with a stock trader who specialises in technology shares. “I call this ‘death by 1000 paper cuts,’” he says, describing last year’s fall of the Nasdaq. Each day, he tells me, sounding slightly shell-shocked, it gets more and more difficult to sell shares. There’s no liquidity.

So what does this have to do with IT?

From the 22nd-floor headquarters of the IT department at Thomas Weisel Partners, a San Francisco investment bank that specialises in emerging growth companies, you can see the prison walls on Alcatraz Island. The view and the technology aren’t cheap. Atop this aerie at the Pacific Telesis Center sits some of the most powerful technology around. A 50-foot-wide bank of large-scale flat-panel screens surrounds a new trading floor with 124 workstations, each with three flat-panel displays. Each trader will be using technology maintained by a team of 76 IT professionals. And the traders will be looking to trade stocks so that the company can pay the IT bill.

While the IT department’s responsibilities also include telecommunications, enterprise engineering and business systems, all must demonstrate strategic competitive advantage.

For 350 users, technology at Weisel Partners conjoins operations in San Francisco, New York, Boston and London. It’s an information-intensive business that depends on an IT infrastructure par excellence.

This is the future we envision when we think about the possibilities for IT.

But how can companies afford it? Where does the money come from for the blond wood and Ellsworth Kelly painting just outside the server room? How do you pay for the rooms full of Cisco equipment when whole divisions are being downsized? Is the IT department next?

The tide has gone out of technology investing. Corporate job cuts will ripple through IT departments as projects are put on hold or cancelled.

IT managers who demonstrate real effectiveness in helping divisions generate profits are the ones who will survive. The silver lining of this tech disaster may be that a slowdown in the economy lets you show how vital IT is to a profitable business.

Fox is Computerworld US’ West Coast bureau chief. Sent email to Pimm Fox.

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