Computerworld Top 10 Most Influential - #4 Financial Crisis

Computerworld's Top 10 Most Influential for 2009 continues with 4th place: The Global Financial Crisis

As the year draws to a close, it is time to recognise the people, products, organisations, trends and events that have had the greatest influence on the ICT industry and community. We have therefore launched the inaugural Computerworld Top 10 Most Influential.

Last week Computerworld began counting down to the winner with one article each day from 10th place to number one.

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When we reach #1 on Friday, it will be over to you for the readers' choice award. If you don't agree with the panel of 12 you can still have your say on the most influential person, product, organisation, trend or event for 2009.

We’ll publish the results on the website and in the February/March issue of Computerworld magazine.

#4 The global financial crisis

Was it a financial crisis in Australia? Or was it a crisis of confidence?

Whatever your take on the fortunes of 2009, the influence the economy had on the ICT industry and community was big enough for the Computerworld Top 10 Most Influential 2009 panel to rank it near the top of the list at number four.

While a large portion of the global economic downturn started biting in 2008 Australia continued to be affected, especially in the first quarter of the year.

Across the board IT budgets and projects were frozen, cost cutting – including reducing headcount – rose to the top of the agenda, and getting a better return on investment (ROI) became the theme of the year. In April Gartner reported a quarter of companies surveyed reported that they had cancelled IT projects due to the global financial crisis.

IT spending dropped so much in some sectors it lead analyst firm IDC to describe the Q1 server shipment result as having gone to "hell in a hand basket". In that quarter the overall server market units shipped declined 38.9 per cent, while revenue declined 38.8 per cent year-on-year.

The server market was indicative of many other hardware markets and showed just how bad things had become at the start of the year.

“The significance of this is it actually goes beyond IT in a lot of ways,” IDC enterprise analyst, Matt Oostveen, said at the time. “If you think about the ramifications of a very mature market place like the server business contracting by so much it shows that firstly, business confidence is very low and no one is spending their money.

“It shows that even a mature market place with a large install base, it’s not like it is a new technology, can suffer an extremely large decline and it shows that in an SMB-centric market place like Australia small businesses are very concerned about keeping their own head above water and they want to keep their staff as well. When they are given a choice between keeping staff and keeping themselves buoyant versus splashing out on a new x86 server it is obvious which one is going to win out.”

Add in the global announcements of staff cuts by pretty much every big company in the game and the fact they wouldn't detail the precise impact these cuts were going to have in Australia plus the Gershon Review calls for a 50 per cent cut in the use of contractors and confidence continued to slip.

Several studies – the Clairus Skills Index, the Olivier Job Index, etc – continued to show bad times in the job market. Even the Federal Government predicted in the Budget that the overall unemployment rate would continue to rise to 8.5 per cent.

That was despite the Rudd Government putting out a far-reaching $42 billion stimulus package that included, among other incentives, a 30 per cent tax break for small businesses on items worth more than $1000 purchased before June 30.

And the fall of the Aussie dollar arguably didn't help confidence levels either. Early in the year some vendors raised their prices as the Australian dollar had dropped by 25 per cent to the US greenback and 30 per cent against the Japanese Yen.

In short, with the continued bad news seeping out of Europe, Japan and the US, confidence in Australia seemed to be going south and a recession appeared imminent. At least that is what a lot of the public discourse – especially in the mainstream media – seemed to be indicating.

Yet, we never went into recession. Unlike our counterparts overseas, Australia's economy grew and continues to do so today. Some put it down to the Government's stimulus package, the Budget and other announcements like the plan to spend $43 billion on a National Broadband Network (NBN). Others said it was due to our exports to China, which was able to continue growing at a rapid rate and the strength of our banking system.

Now as the year draws to a close we have seen several of the country's ICT companies post strong gains on the ASX, the job market stabalise, the dollar rebound towards $US0.90, retail remain robust, large projects start to unfreeze with IT spending expected to be in the positive and general confidence in the economy and the ability of ICT to help drive growth start to soar again.

There are always ups and downs in any economy and varying views on the relative effects of different events on our fortunes, but the overarching influence of the global financial crisis on ICT spending, confidence, recruitment, planning and discourse this year was undeniably dramatic. It is for this reason the Computerworld Top 10 Most Influential 2009 panel selected it as our number four place getter.

More stories on the global financial crisis Gartner: IT spending will strengthen in 2009

Online job ads slump 50%

IBM opens purse strings with its own stimulus package

IT spending to pick up mid-2010

iSoft in good health recording $20m after tax profit growth

Enterprise software spend to rebound in 2010: Gartner

Australia spends $13.8 billion in 9 months on consumer IT

ACS scolds govt for lax investment

Government stimulus made little impact on IT spending: Gartner

Financial crisis good time for IT leaders: Microsoft

Business confidence sends services companies on hiring blitz

Big IT mum on Aussie price cuts

Full time IT jobs remain strong: 2009 ACS survey

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