At the outset, I should stress that I am not a blind defender of IT research companies. I strongly disagree with a lot that transpires in the name of research and I would acknowledge that some of the criticism that is directed towards the profession is justified.
Researchers know that the market depends on them to provide accurate, balanced information, and that their audience rightfully expects that information to be carefully researched and faithfully presented.
The problem with all this is that just about anyone can claim to be an IT researcher without being required to secure a license or certain credentials in order to practice. Anyone with sufficiently deep pockets can start a research consulting company, hire the research staff of their choosing and profess to be in legitimate technology research pursuit.
"For the want of a nail, the kingdom was lost." So goes the prophetic moral from a fairy tale, in which the King had to forsake his kingdom because of a missing nail -- the nail from his messenger's horseshoe. The pointer here is a failure to see some vital details, and this holds true for some research firms.
Data versus information
Synonymous with this are the information technology executives who, when attempting to make it big in the marketplace, are relying on convoluted data extracted from a variety of sources to meet "business plan needs". As history has it, their businesses may not thrive since this information is often choked with inconsistent and unreliable data on which, they are making major decisions.
Too many of these research providers today are "data" rich, but "information" poor. Furthermore their information can also be more "subject-oriented" and can differ enormously in its applicability.
In the aftermath of the IT spending spree of the past 12 months, the rush is currently on in crunching through the Q4 data to determine exactly who spent how much on what. What will all these numbers mean? Not much, unless you know exactly what segments they include and what assumptions went into the calculations and this can all be articulated to the marketplace at large.
Most analysts also try to justify their own methodologies but many will admit that the whole e-commerce research is a messy business, with predictions all over the map. (With only our own forecasts on the bull's eye, naturally).
Mix and match
When new vendors are out there trying to raise money everybody wants a high number -- you just use the money to try and stick to your business plan. When you're actually spending money, building products and deploying additional staff, you need a much better understanding of the numbers you're dealing with.
For many years now IT has been having an increasing impact on the economies of all industrialised countries, just as it has in Australia. It has impacted practically all industries either directly through the production of new IT goods and services, or indirectly through the impact of IT goods and services on their production processes. It has also impacted the working and social life of most Australians.
Given this, it is somewhat surprising that nowhere has any statistical organisation developed a framework for the compilation of IT statistics. Nor has anyone developed any comprehensive statistical indicators about information technology.
This lack of "official" statistical indicators, though, has not prevented journalists, policy makers, researchers and the like talking and writing about the IT industry, the information economy or some other term.
Marketeers, analysts and commentators have also freely swapped from one definition or concept to another to suit their purpose.
Whatever their concept, however, there have been in general no official statistics to help them in their endeavors.
The recent growths in some sectors have been phenomenal. The accompanying statistics were close to unbelievable and if published here, would be out of date by the time you finish reading this article. Suffice it to say, it's bigger than it was yesterday and smaller than it'll be tomorrow. And most importantly no one knows the answers, because we've not been here before.
Growth rates today in many sectors are on the decline and the competition is extremely fierce. The larger vendors are locked in mortal struggles for tiny pieces of the barely growing pie. In the decimated sectors, skeletons of companies are circling and stalking each other as the market slowly shrinks. Newer organisations are hovering on the periphery like jackals. Quicker and more nimble than their older larger foes, they're a threat to dart in and steal a chunk of the market share bounty. Their key advantages of speed, stealth and size have always provided opportunity to increase their intake and to change direction.
But of course this scenario is only half true. Even life on the periphery is not independent of greater environmental forces. The IT industry's health rests not only on entry into new applications but also on the continued growth of traditional markets.
Therein lies the problem: both new and traditional markets appear to be waning or so the analysts tell us. Amid a deepening worldwide recession markets are being increasingly described with words like maturation and consolidation.
Coping with a slowdown
This malaise didn't happen overnight but by and large it is the result of the astronomical expectations generated by the survey results from the many analysts.
Competing exclusively on technology has become impossible. The easy sales have mostly been made in the boom markets that were ready to happen. There are now few killer applications to pull the industry out of this jam and into the high margin easy chair, margins will keep decreasing as competition for the remaining sales heats up.
Times are tough for the IT vendors. A volatile stock market has cast an unflattering light on some rapidly deflating paper fortunes. Law firms are also staffing up to handle bankruptcies and mergers and acquisitions (so nice to know the lawyers won't go hungry).
There's nothing like blood in the water to bring analysts and irate investors swimming in for a good fee. Weekly reports are huffing about the "imminent demise" of this or that market place. Such hyperbole without investigating the underlying causes just alarms people and adds little value. The unfortunate truth is that more than 80 per cent of small businesses fail every five years or so and nobody takes much notice. The same statistic applies to the IT industry, but the process is a lot more painfully public.
Shell-shocked investors can be forgiven for wondering where do we go now? The economy's slowing, the political outlook also appears cloudy and the bull market has gone, gone, gone. Last year's winners the telcos are today's biggest losers.
Despite the gloom, some markets will actually improve in 2001 -- but you have to know where to look for market gains. You could be holding the road map in your hands but you will need research, insight -- and guts. There's no doubt that we're living through a remarkable time in which the old rules are being rewritten and "common sense" might turn out to be anything but that.
Paid to dream
Analysts love major changes in the marketing equation; if things are the same, it gets pretty boring. Thankfully major sea changes are happening to lifetime customer relationships. The tide is moving from finding sales to farming the customer base. Pondering where technology might be headed 5 years down the road is a lot more than a fun exercise for professional dreamers.
It's serious business now, as I was reminded by an "old" research friend of mine -- barely in his 50s, a self confessed "old dog". "Life use to be easy," he reminisced. "I remember when this industry was defined by IBM. Now there is no obvious industry leader, no single company that defines the future. We have to figure it out ourselves".
Then he added rather philosophically: "I'm not sure I would succeed if I were starting out today".
The business battle for the research companies in the future will be over how to help vendors and users turn their research data into dollars.