8 things to watch for in the coming recession

8 things to watch for in the coming recession

Like many of you, I am right now trying to figure out the impact of the mess of the past month on my budget plans for AIIM for next year. 

I’ve spoken to a number of executives in the industry and we’ve also done a quick survey of some end users and suppliers, and I thought I would share my observations from these.

Alert readers should be cautioned that I am known among our friends as one of the worst stock market prognosticators ever.  I very seldom change my 401-k allocations, but on the rare opportunities that I do, I have been encouraged by friends to send out an alert so that they may immediately do exactly the opposite.
So here are my 8 things to watch for in the coming recession relative to our industry. 

What are you seeing?  Why not post a comment?  Data below refers to a "spot" survey I did last week of ECM users and vendors.  To get a copy, email me.

#1 – Process automation (especially designed to replace lost workers) sells well during a recession.  Our industry has the tools to help end users do more with less.  Even with this, 25% of end users (N=108) see their spending on document, content, records, and business process technologies decreasing next year.  New initiatives are particularly at risk.  Suppliers still seem optimistic, with 65% (N=60) still forecasting increased revenues for 2009.  Gartner has cut back forecast for 2009 IT spending growth from 5.8% to 2.3%.

#2 – Quick and hard-edged ROI is king.  For 42% of end users, hard dollar savings are “more important” or “much more important” than 12 months ago. In this environment, massive implementations won’t get done.  Nimbleness and quick implementations will be the order of the day.

#3 – Customer loyalty trumps customer satisfaction. Most everyone measures some form of customer satisfaction.  In the coming environment, that won’t be enough to get projects through.  The suppliers that will come through these challenging times intact will be those whose customers are zealots for them.

#4 – Industries are not homogenous.  Even within an industry as troubled as banking and financial services, there will be a lot of variation when it comes to IT spending.  Consider a credit union that may have come through the past month relatively intact.  Their approach to new IT spending in 2009 is likely to be very different from a “government-owned” bank that has acquired a variety on unstable properties with disparate IT systems that must now be rationalized.

#5 – Good news/bad news for the channel.  First the good news.  In the environment described in #2, applications and vertical domain expertise are also king.  Read this as good news for system integrators and VARs who have their act together and have used the last few years of good time to finely hone their focus.  There is also potential good news for service bureaus and outsourcers in the coming tight times.  Tight times mean staff is scarce which spells outsourcing opportunities.

#6 – Good news/bad news for the channel.  Now the bad news. Go to almost any partner conference in our industry and you will hear that 20% of their channel delivers 80% of their sales for just about any supplier.  Recessions are when marginal resellers and integrators are squeezed, and this one will be no exception.  What will be different this time is that marginal companies will not only be squeezed on the top line – revenues – they will also be squeezed by their creditors.  All that fine print in loan and contractual terms will become bold print and actionable.

#7 – High ticket items likely to be postponed.  Among end users with 100 or more employees, there does seem to be a tightening in anticipated spending for high ticket items relative to last year.  While the samples are not exactly the same (the sample for my “spot” 2009 vs. 2008 survey was drawn from those who responded to the previous 2008 vs. 2007 survey), the demographics are very similar.

#8 – Marketing funds will tighten.  This always happens in recessions.  It doesn’t seem to make sense – why cut marketing funds when business is slow? – but it happens anyway.  There is already a long-term movement underway to focus more resource on a company’s OWN activities (if you haven’t gotten a copy of our 2008 marketing benchmark survey, email me HERE), and this will accelerate.  Among those spending money on a particular marketing activity, here are the percentages of suppliers who say they will DECREASE their spending in 2009 in response to conditions this year:

• Yellow page advertising = 35% will decrease spending
• Large horizontal trade shows (other than AIIM On Demand) = 32%
• Print advertising = 30%
• Local IT events = 28%
• Vertical events = 28%
• AIIM On Demand Show = 20%
• Market research = 16%
• Blogs = 12%
• Staff training = 12%
• Industry web sites = 10%
• Podcasts = 9%

The winners in this mix?  Blogs (39% will INCREASE spending), Staff training (35%), industry web sites (31%) and vertical events (30%).

Comments

[Ioanis]

Your email address link is not working any email sent is simply bouncing back.

Do you have an alternative email address?

Thank you!