The real threat

Dot-coms aren't a serious threat to big companies. The real threat is what it has always been: your direct competitors.

On the first business day of 2001, venture capitalist Robertson Stephens downgraded the stocks of a handful of IT-related companies.

Within hours, the Nasdaq tumbled. Hey, that’ll grab everyone’s attention. Also grabbing attention were the oft-quoted comments of Robertson Stephens analyst Dane Lewis: "Recent industry checks indicate IT purchases will fall off sharply in Q1 ’01 . . . Reasons cited include macroeconomic issues and reduced threat from failing dot-coms that will slow aggressive IT initiatives at Old Economy companies."

Remember those words. You may be fighting them for months.

Look, never mind that corporate IT budgets are actually up about 8% this year. Budgets may well be cut, especially if the economy screeches to a halt. Slowdowns mean budget cuts — we all know that. If the money isn’t there, we don’t spend it.

But what’s insidious is the idea that the dot-com die-off means a "reduced threat" for corporate IT.

You’ll likely hear that from your CEO when the budget-cutting starts. You’ll hear it from other departments when they’re competing with you for budget dollars. You’ll hear it repeated by other analysts and pundits.

Get ready to fight it. Because it’s wrong — dangerously wrong.

Dot-coms aren’t a serious threat to big companies. Maybe someday they will be, but that’s a long way off. This year, the real threat is what it has always been: your direct competitors.

Wal-Mart Stores looks over its shoulder at Target and Kmart, not Home Depot worries about Lowe’s, not Montgomery Ward went toes-up after being hammered by Sears Roebuck and specialty superstores, not

Even those few dot-coms that have made a real impact have been heavier on hype than bottom-line threat. makes Barnes & Noble sit up and take notice, sure. But B&N sold just under $US3.5 billion in books last year. Amazon sold $US800 million in books. Borders Group sold $US3 billion. Which one is really breathing down B&N’s neck?

Dot-coms are sexy. They get the headlines. But you know the real reason those "aggressive IT initiatives" are crucial.

It’s because if the guys across the street can use IT to sell more effectively, or close deals faster, or reduce inventory or paperwork or time to market — if they can do that, it comes out of your company’s hide.

Unlike dot-com upstarts, your direct competitors won’t live fast and die young. They’re not burning venture capital — they’re making profits, just like you. And if they can use technology to steal a march on you, you could be in deep trouble.

That’s the real threat. Not the way-New Economy — but the old-fashioned competition.

So what’s there to do? Drill that message home — to your CEO, your IT shop and everyone in your organisation. IT matters wherever it can make a competitive difference — for your web store, your outside salespeople, your warehouses and back office and supply chains and credit operations.

When IT’s budget is cut, make sure it’s on a sound basis — not because some phantasmal dot-com threat is gone, but because truly noncritical projects can go on hold and really unnecessary projects can be spiked.

And if you’ve been using dot-coms as a bogeyman to get more dollars for your internet projects, now’s the time to repent. Admit it to the boss, your staff and everyone else: You were wrong.

It’s not the dot-coms. It never was. The real threat is — still — the competition.

Hayes, Computerworld US’ senior news columnist, has covered IT for more than 20 years. Send email to Frank Hayes.

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