SAN MATEO (05/01/2000) - Unless you've been living under a rock the last few weeks, it's been hard to miss the bouncing stock market and all the analysis that's gone along with it. The ups, and mostly downs, of the Nasdaq and Dow Jones have struck fear in the hearts of investors, pension plan managers, and company executives.
Sure, we all knew that an economic correction was imminent, but when the correction actually came to fruition, well, reality is much more painful than theory.
All the economic analysts are offering advice that primarily revolves around the "keep calm" mode of thinking.
As a CTO, the "keep calm" advice is pretty hard to follow when you've bet your business's infrastructure on a company's technology whose stock price is now dirt cheap and not looking like its going to gain much value anytime soon.
Now I'm not an economist, but you don't have to be one to see the potential for disaster. The problem here is that if these companies' stocks and valuations don't improve, that means they may not have the money to properly continue funding the company.
And guess what? That means that research and development efforts could be slowed, and their ability to deliver to customers would be compromised. That customer would be you, the CTO, and your company.
One CTO told me that his CEO was standing in his office two weeks ago having a fit because they had bet their infrastructure on a company whose stock price had dropped through the floor in the last three days. The CEO wanted to know if their technology providers were going to be in business in six months.
Although the CTO made assurances that indeed their technology providers would be in business, secretly he was not so sure.
I wasn't surprised by this story, or that the CTO is now questioning his technology decisions.
I don't think any CTO can be blamed for being lulled into a sense of security by the burgeoning stock market of the last year and the soaring valuations of dot-coms.
It looks like the market may have stabilized somewhat in the last week or so, but it's critical not to be lulled into thinking that the worst is over.
Analysts say the outcome of this economic correction will likely be that the weaker, less stable dot-com companies will go under eventually. It's the "survival of the fittest" theory, and it's right.
There is a lesson to be learned here: The criteria for choosing your technology partners and providers needs to change.
There are really two criteria for choosing technology providers in the New Economy, and while these two rules may not work all the time, they form a good framework for choosing your technology provider.
The best dot-com companies, and the ones most likely to stay in business, are the ones that have formed technology and business partnerships with companies such as Microsoft Corp., Oracle Corp., IBM Corp., and Computer Associates Inc..
These more established companies have already done the evaluation for you. If they have blessed the provider, that should carry a lot of weight in your thinking.
It also gives you credibility, when your CEO is standing in your office questioning you about a falling stock market, to say that your technology provider has partnered with stable companies.
The second criterion is talking with other CTOs. By networking with CTOs who you can call and commiserate with, you may get loads of information about the inner workings and stability of your technology provider -- and others in the marketplace.
InfoWorld's CTO Forum, being held May 15-17 in San Francisco, will give you the perfect opportunity to establish that network.
Although nothing is for sure in this New Economy, reshifting your thinking is a requirement. As a CTO in the hot seat, it's a necessity.
What have been your experiences in the rock and roll of the new stock market environment? Write to me at email@example.com.
Katherine Bull is InfoWorld's executive producer/new media. Editor in chief Michael Vizard will return to this space next week.
Surviving the ups and downs of the New EconomyAs the stock market soars one day and drops the next, take another look at your partners.
* Re-evaluate who you are doing business with. Have a companywide agreement on the criteria for choosing a technology provider.
* Get involved in a professional network of CTOs that you can talk to on a regular basis about technology providers' performance.
* Bet your infrastructure on a combination of established and newer companies.