Looking back a decade ago, Dot-com bubbles in 1995-2001 especially its climax in 2000 was hardly forgotten. The decline of IT, specifically Dot-come business defeated the confidence of IT investors and employees. The IT industry did not fall over, innovation of hardware and software, Web 2.0, google and new age of Internet started fighting back to the business. Investors and marketing also doted Web business, such as success of SNS. More money came into IT industry. Enterprises invested more in IT in order to develop their business and bring innovation to help business going forward. Probably no one did imagine around 2000 that IT giant would be able to come back so attractively and vivid.
Financial crisis and Economics recession
Finance institutions are always the core of world economic system. Investment banks, funds have innovated a big amount of products and tools to make profit aggressively. IT played a crucial role of building information system to transfer information, calculate risks efficiently and guarantee the continuity of business. Financial system hugely depends on IT system. When the financial crisis spreaded all over the world in 2008, the Wall street experienced a scary nightmare in a coupe of months, Lehman Brother, Merrill lynch and Bear Stearns fell down over night. There were huge impact on other business too rather than financial business itself because lack of liquidity and loss of confidence of investment. Business started cut off cost and save enough liquidity to prepare for even worse economics situation. No one can ignore the fact that world economics recession. The UK chancellor reported that GDP decreased 0.5% in the 3rd quarter which means the economics of the UK, one of the world top 5 economies is recessing. The US is also experiencing a huge pain and injected more than 700 billion dollars into their financial system. Car manufactures, toy makers, and other manufacturing had to shut down their business.
Challenge of IT industry
IT industry can not escape from the economics recession. Unfortunately, the IT investment was hugely cut off. IT industry laid off employees. In people’s mind, IT cost money. I recently attended a economics discussion panel which was held by China Economics Research Center. I clearly remembered that one of the key note speaker said “IT had never produced productivity. 20 years ago, stock market can use telegram to transfer message and make the transaction without IT.” I personally very much disagree with his opinion, although it was not totally ridiculous. So what does IT do to help business? Generally, IT improves the efficiency and reduces the likelihood of making mistakes of business. It looks like that IT does not add value to business directly, however without IT, business can not grow so fast and so efficiently and there would not be such good service without the support of Information system and IT infrastructure. The financial crisis impact real economy directly and slow down the investment on IT indirectly. Now IT is facing a very critical time. Where is the way out? How much should IT industry worry?
Opportunities of financial industry
One of the way outs is to help the business better, faster and more customer focusing. Jamie Dimon
CEO of JP Morgan Chase recently was interviewed by CCTV and through the whole conversation, he emphasized several times that the success of JP Morgan Chase was more customer focusing, better product and server, faster responded to the market. From what he believes, how can IT help financial industry more customer focusing, provide better service, product and faster respond to the marketing is one way out. Some real life examples are:
- Short life-cycle of project delivery.
- End-user, customer focusing design and continuous improvement
- Cloud and Grid computing to help transaction faster and efficiently.
- Business Intelligence to help analyzes customer’s preference etc.
There are definitely more that IT can do in order to help business to achieve their goals. One of the reason that the US learnt from the financial crisis is that lack of effective supervision and Inappropriate regulations. In order to build or reform the existing financial system, a set of new rules, regulations, tools and products would come out. A new system which can lower the risks of investment and make the whole process clear and easy to supervised. All these changes need new information system or business re-engineering of existing system. Only IT can help business to make that happen. It is a great opportunity for IT to server government, industry and business to build good basis of the better financial system and go forward.
Real economy need IT innovation
During the economics recession, business is in a awkward situation, on one hand, they want to less spend and on the other hand they have to invest and innovate new ways of doing things in order to grow and increase profitability. Whatever primary, secondary industry, they have no choice to get rid of IT and live by their own. A good information system can bring them into the market faster with better service.
So, even it is still cold, it is close to the end of winter and there are more demand floating up and the spring of IT is coming.
So what shall IT do to be prepared for the coming spring?
As Jamie Dimon mentioned in his interview, looking back into the mistakes that we had made, learn from where we fell down. This is definitely one thing that IT should learn from the financial crisis. Reducing the risks of investment, pay more attention to how to help business to generate more productivity is the second aspect IT should be aware of. Be more customer/marketing focusing, better and faster, align with the growth of business, feel what business feel and be responsible for what business is. More innovated ideas, products and brand new ways of doing things is always a way out. Certainly there are more things that IT can do instead of waiting for the end of the world. I believe that the spring of IT is coming after this short winter. There will be more opportunities than ever.