Recession impact on ICT: get the brooms out!

Being around for some time, I watched various recessions, dips and de-hypes impacting the ICT industry. Looking through the press headlines and suggestive comments, ignoring panic reactions of those who were not able to create success in the best of times, cleansing is again the universal action taken by most managers. It seems to me that the actions taken are mostly ritual though and not looking at structural improvements. Let us take a look at some very different recent published cases and try to find the silver lining behind the recession clouds.

An alibi: Reorganization at EMC will result in loss of 2,400 jobs

Despite good Q4 results the reorganization is announced; no details what and where; VMware not touched. Savings planned in 2009 $350mio, 2010 $500mio.

This sounds massive but:

• This is “only” 6,5% of the total number of people that work at EMC (38.000).
• And the savings are around 2,5-3% of the annual revenue.

I would advocate that these are the normal numbers and bandwidths one should contemplate about in every business planning cycle. Although I don´t have access to all detailed information, it seems that EMC´s management found out that the revenue per employee is decreasing and now are using the moment to correct is without anybody that can blame them.

A leap forward: Cisco sees a tidal wave of acquisitions in 2009

The CEO of Cisco, John Chambers, wants to grow big time in the area of video, extending its traditional footprint of data and voice to also become a consumer market leader (again).

Timing seems perfect:

• Cisco has $27bio cash to work with.
• Many of the interesting technologies in the video area are owned by small (start up) companies who suffer from the recessions problems to get at investment money.

The only question I have is if Cisco, which in the depth of its genes is a B2B company with the accompanying cost and pricing structures, is agile enough to transform into a low price end selling mass customer organization. Maybe Cisco should not only buy technology but also invest in organization that know these markets.

Rethinking margins: Fujitsu Services looks for 200 new employees

The Dutch Services branch of Fujitsu Siemens announced that it is looking for 200 ICT professionals to strengthen and grow the current team of 650.

Counter cyclic? Partially I think:

• With the recession going on, one sees a traditional flow back of independent consultants into permanent jobs.
• Fujitsu Services traditionally has hired a lot of temporary technical staff, impacting the bottom line margin (or having no margin at all on these resources).

With a decent filled order book, getting the freelancers on board in permanent jobs can give a boost in margin, stability and customer service. I just hope they select the right people who will not leave the moment the contractor market pulls again. The ones that go early and come back early are not always the best.

Do you believe in seizing the opportunities the recessions opens up? Let me know.

hans.van.nes@results2match.com