Greenspan's green light

DURING THE LATE 1990s, technology people were the superstars of business. The Internet was going to redefine the way everything was done and the tech folks were leading the way. Businesses bid for CTOs and other tech staff as if they were major league baseball players. Salaries rose steadily and promotions were frequent -- all was well.

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Then the economy tanked, and the recession in the rest of the economy arguably became a full-blown depression in the tech sector, both emotionally and economically. Suddenly, conventional wisdom in some parts of the business community was that all the tech spending had been wasteful and the only payback businesses got were depleted cash reserves, a surplus of unneeded infrastructure, and failed ERP implementations. In January, Gartner released a report entitled "IT Popularity Declining: CIOs and Vendors Beware." In the report, Gartner noted that Financial Times printed a story in October 2001 with the subheadline "A study has found that only 8 percent of total IT spending actually delivers value." In a mid-2001 survey of 180 directors at U.K. manufacturers, two-thirds said they thought IT "overpromised and underdelivered." Ouch! In many businesses, IT is fighting for budget scraps from skeptical CEOs and their boards.

Fortunately, people who matter are realizing that technology is playing a key role in making this recession less severe. On Feb. 27, Alan Greenspan delivered the Federal Reserve's outlook on the economy to the House Committee on Financial Services, and suggested that there are clear signals that an economic recovery is on the way. There was the usual and expected talk about unemployment, interest rates, and consumer spending, but one excerpt from Greenspan's remarks really made this CTO's ears perk up.

"Doubtless," Greenspan said, "the substantial improvement in the access of business-decision makers to real-time information has played a key role. Today, businesses have large quantities of data available virtually in real time. As a consequence, they address and resolve economic imbalances far more rapidly than in the past."

CTOs, spread the word far and wide: Technology as an absolutely fundamental business tool is indisputable. If leveraging technology to deliver real-time information to decision makers has had enough economic impact to be explicitly noted by the chairman of the Federal Reserve, continued technology investment to enhance these capabilities within your organization seems not only prudent, but business-savvy. Of course, Greenspan's remarks do not suggest that spending dollars on technology is the single panacea for the economy, but it's difficult to read his comments and not think that focused technology investment is back as a real key to any sustained economic growth.

Greenspan's comments are instructive to CTOs who continue to demonstrate the fundamental value of technology to business, and his remarks are a useful tool as we all look toward a recovery. Begin planning for the recovery now, when demand for technology services in your organization will certainly increase. A recent Gartner report warned, "Unless business and IT executives strike a balance between growth-targeted IT investment requirements and constrained IT budgets, many IT-powered business initiatives will falter or fail when the economy turns positive." Hopefully the IT spending in your organization has been healthy enough to maintain key systems and base infrastructure in preparation for the good times. If not, it's time to pay a visit to the CEO's office for a quick budget review.

You can say that Alan Greenspan sent you.