Economic news, for the most part, has been dismal in 2001. The stock market, especially in the information technology (IT) sector, has remained down. Investors are wary. Technology companies continue to miss earnings forecasts as overcapacity creates continued downward pricing pressure, and new sales are hard to come by. Business spending has decreased and, in some sectors, dropped off dramatically. In July 2001, Gartner reported a steady growth in IT spending, despite news to the contrary in equity analyst reports and daily newspapers everywhere. One could argue that people answered the Gartner survey based on IT budgets that were "set" last year, rather than on the realities of paying the company's bills each month. Nonetheless, questions are bandied about in the press as to whether the U.S. economy has "bottomed out," whether we're in a position for recession or rebound, and whether IT spending will increase or decrease. I'm not an economist, so you won't find me predicting a turnaround! However, many others will cover the subject. Time will tell.
Anecdotal evidence would suggest that most companies are feeling a lot of pain. Company cutbacks continue in the quest to reduce expenses. Cutbacks take the form of layoffs as well as reductions in spending for equipment and software. Companies are concerned with cost savings; in fact, they are almost obsessed with obtaining near-term bottom-line benefits through cost cutting. Projects that don't directly impact near-term profits are being stopped or put on the back burner. There is little or no available money for strategic projects or those with a longer-term payback. It's, "Pay me now I'll worry later about those projects where the benefits fall into the 'soft' category." The fear is that stockholder value will suffer if expenses are even marginally above what it takes to maintain the status quo. Maybe next year we can attempt some of those projects.
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