Injection of quick ROI will revive tech sector, says Bloor Research

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Bloor Research is predicting that the tech sector will soon emerge from the downturn into a period of growth. It expects this to be driven by vendors with products and services that provide a quick return on investment.

Robin Bloor, CEO of Bloor Research said: "Clearly there have been big reductions in IT spend amongst the dot coms and in the telco sector and this accounts for the current malaise in the tech sector. This is now coinciding with the beginning of the long-term decline in the PC market, which we predicted in 1996. This will have a negative impact on some areas of the tech sector."

However, he says: "So far there is no clear evidence of IT budgets being cut across the board. Indeed our expectation is that IT spend in the UK will increase this year in most areas. We can expect many areas of the tech sector to perform well, especially those that can deliver quick returns on investment. The benefits that technology delivers are still there and so is the Internet, which continues to grow on a daily basis. The tech sector has a history of performing well in downturns and it will do so again."

Introducing a research programme that focuses on Fast ROI, Bloor Research notes that the business environment for the technology vendors has changed. Right now, even companies that are performing well are focusing on practical justifiable IT investment. CIOs and IT directors are looking for propositions that have three characteristics:

• High Profile: That they will make a visible impact on the business either by cutting costs or by increasing revenues;
• Low Risk: That business benefits are virtually assured;
• Fast ROI: That the return on investment will be high and appear quickly;

If you boil this down to its basics, businesses are looking for technology solutions that are ‘out-of-the-box’ and start to pull their weight almost immediately.

Some technology options are tailor-made for fast ROI. These include:
• Storage consolidation
• Server consolidation
• Thin clients and network rationalisation technologies
• ASP-based services
• Open source products

Other fast ROI products/services can boost customer revenues or develop business opportunities. These include:
• Web analytics
• Web interface consolidation products
• Business modelling software
• CRM and sales force automation
• Networked applications of many types

Sarah Tonks, managing director of Bloor Research said: "This research programme is something that our corporate customers are asking us for in increasing numbers. IT spend is now directed more towards cost cutting, quick returns and accelerated business development. Maybe it always should have been. It is time that the tech sector matured and focused on real business benefits rather than trend-chasing, gadgetry and hype. Our fast ROI research and conference programme will help them do just that."

Bloor Research is embarking on a research programme to identify products and services that can deliver Fast ROI and to highlight the contexts in which they are capable of doing this.

Bloor IT Analysis

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