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Viewpoint: the End of the Long Boom

  1. Introduction
  2. Two Strategies to Weather the Storm
  3. Conclusion
  4. Authors
  5. Footnotes
  6. Tables

The phenomenal growth in the IT sector over the past two decades has slowed down as organizations cut back their spending plans in response to the bursting of the dot-com bubble, and the weak global economy. The long boom may be over, and there are doubts about the nature of the boom itself. The perceived wisdom that it was an IT productivity-led phenomenon has been seriously questioned, as it may all have been due to the combination of the availability of cheap oil and low interest rates.

Post 9/11, the Iraqi war, and the continuing weakness in the global economy are making the IT companies’ global marketplace very difficult indeed. To survive means beating the competition, but not on cost alone. Everyone can compete on price, and there is always someone who will undercut you. Such a focus results in a vicious circle that benefits no oneā€”not the client, and certainly not the IT companies, especially when the market improves.

To maintain market share and longterm survival, IT companies must get back to basics by delivering real value. And they must get closer to their clients, understand their agendas, and make the sales and delivery process more successful. There are two opposing views as to the way the IT market may develop.

Doom and gloom. The house of cards on which the economic boom was built is collapsing. A domino effect that started with the bursting of the dot-com bubble is spilling over to the general IT market (especially chip manufactures, and increasingly software providers) and further still, into the general economy. Some believe it is the delayed effects of the discretionary spending associated with Year 2000, when organizations took the opportunity to upgrade hardware and carry out non-Y2K development under the Y2K umbrella. Others believe it is more serious: we are now in the midst of a period of economic contraction. The headline is that the domino effect will lead to global recession and then depression. The current problems may well get a lot worse before they get better.

A return to realistic growth. The double-digit growth over the last couple of decades was ultimately unsustainable as economies reached their natural limits, especially in relation to the availability of skilled resources. A return to more realistic growth would not be a bad thing. Furthermore, we should remember that the majority of organizations are now so IT-dependent that they cannot switch off spending altogether and will, at some point in the future, return to their former IT spending habits. Ultimately, after a period of retraction, the pent up demand for IT and new systems will probably lead to renewed growth. As yet, however, we do not know when this will be.

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Two Strategies to Weather the Storm

Back to basics. One of the immediate strategies that every IT consultancy should follow is to return to basics. Instead of selling the latest technological fad without much regard to the benefits or the genuine business need, IT consultants should seek to improve the value from the existing IT infrastructure and systems that most organizations struggle to control. This means delivering projects more effectively and ensuring that real business value is squeezed out of current systems.

Culture as competitive advantage. The second and possibly more important strategy is one that depends on the IT companies developing a much better understanding of the way their clients work. In competitive times such as these, selling on the basis of product features is simply not enough. A much more effective strategy is to tailor the sales and delivery process to the client’s culture. Equally, when delivering the service, too little attention is paid to how best to work with the client and in preparing the team before they start work.

If IT professionals are to be more successful at selling and delivering their services, they must become more culturally intelligent. What this means in practice is developing a sensitivity for organizational culture. The way we do things around here frames the way we behave as individuals, how we relate to our colleagues, and how work is executed. Those that don’t fit into the culture are rarely around for long. This also rings true for IT professionals. To keep it simple, there are four basic client cultures that the IT companies should become familiar with:1

The networked culture. The networked culture is typically one that exudes friendship and kindness. People genuinely like each other, and display high levels of empathy. There also tends to be a high degree of trust between them. The networked organization typically is conversational, with people covering all topics from work, to what they did over the weekend. People are able to have their say without getting talked down. The office space is often personalized and an open-door policy predominates. Time is taken to socialize both within and outside work.

The mercenary culture. The mercenary culture is restless and ruthless with a powerful drive to get things done. Goals are at the forefront of people’s minds, as they strive to make things happen. Time between coming up with an idea and executing it is short; time is everything, as is action. Winning is very important to the mercenary organization. These organizations achieve their external goals by setting very high internal targets to get there. Communication is swift and to the point.

The fragmented culture. In the fragmented culture people are not particularly friendly toward each other, and they do not support the organization or its goals; they work primarily for themselves in isolation and uninterrupted. As a result, doors tend to be closed, work is often conducted at home or on the road. Being away from the office is usually a sign that they are busy. People associate more with their profession than the organization. Communication is usually work-related, and brief.

The communal culture. The communal culture is one that combines the friendship associated with the networked culture and the drive and ambition of the mercenary culture. Passion for the company and its products goes hand-in-hand with a strong sense of community and shared responsibility. Organizations that fall into the communal culture category tend to have a work-hard, play-hard ethos about them that is highly infectious. Office space tends to be shared, and there are few barriers between functions. Communication is everywhere, with every channel used (meetings, face-to-face, corridors, and so on). People live and breathe the organization and its mission.

But what does this mean in practice for the IT companies? How should they focus their sales presentation and how should they behave during the delivery of the IT project?

The accompanying table identifies the major behaviors required in each culture at the time of the sale and during delivery. If you get it wrong, the results can be disastrous. Acting in a mercenary way within a fragmented culture will win you no friends. Equally, delivering a major project in a networked way within a mercenary culture is destined to fail. Preparing for delivery must involve tailoring the processes and approaches as well as behaviors. Expecting the client to adjust to your way of working could be difficult. Instead, know your trade, know how to deliver, and then work within the grain of your client’s culture to make the project a success.

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Although quite straightforward, delivering real value to the client requires a degree of attention that tends to be lacking within most IT companies. The framework of four cultures offered here provides a practical basis for tailoring the selling and engagement activities. Companies that are prepared to adapt will be more successful than those that don’t and they may well emerge from the downturn in good shape.

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T1 Table 1. Some rules of thumb.

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    1More detail of the four cultures can be found in Rob Goffee and Gareth Jones'The Character of a Corporation, HarperCollins.

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