Impact of Economic Downturn on Technology Initiatives July 23, 2001 Dr. Rati Ram, Distinguished Professor of Economics, Illinois State University Vivek R. Gupta, Senior Consultant, System Services Corporation
	Download this report as a Microsoft Word document
	We thank everyone for participating in the inaugural Tech Pulse Chicago survey.  The participation in this survey far exceeded our expectations.  This survey, gauging the impact of the economic downturn on technology initiatives, was conducted from July 9 through July 22, 2001.  We observed participants from leading corporations such as Motorola, Ameritech, and Bank One, leading educational institutions such as University of Chicago, Northwestern, and DePaul, government, medical institutions, and startup companies.  One remarkable aspect was a similar response pattern across early and late participants.  Also, nearly 20% of the participants were anonymous.  We made a concerted effort to remove duplicate data.
	The impact of economic downturn on technology initiatives is overwhelmingly perceived as negative, with over 95% rating the impact as severely or modestly negative.  One participant commented, “It appears that the downturn is more of a delay in the execution of strategic initiatives and the cancellation of superfluous activities not core to the running of business.”  A large number of participants related the downturn to the unusual activity led by the dot com frenzy.
	The responses to the question on encouraged initiatives are not heavily focused on any item.  The three initiatives that are perceived as encouraged include, CRM applications (37%), intranet systems (32%), and infrastructure upgrades (31%).  However, e-commerce (28%) and data warehousing (26%) are not far behind.   Security was frequently mentioned as another encouraged initiative.  (As you would note, due to the items not being mutually exclusive, the percentages do not add up to 100.)
	Although the question on discouraged initiatives was designed to be independent of that on encouraged initiatives, the two questions combined clearly bring out desktop upgrades (47%) and back office upgrades (31%) as discouraged initiatives.  Significantly, e-commerce systems and infrastructure upgrades are fairly widely perceived as both encouraged and discouraged initiatives.
	The question on demands on technology professionals brought out interesting responses driven by interpretation and the nature of participant’s focus.  The predominant response is that the downturn increases demands and pressures on technology professionals (58%).  Participants consistently remarked on tasks needing to be completed by fewer individuals.  One lighthearted participant noted, no longer "I am going to wear sandals and bring my dog to the office."  However, a substantial proportion (31%) perceives the demands and pressures decreasing.  Upon further review of the actual responses in this category we found two factors at work.  First, a significant number of participants in this group misinterpreted the question as asking about demands for technology professionals rather than demands on technology professionals.  We also found a large number of participants from struggling dot com companies indicating decreasing demands and pressures.
	While we optimistically thought the downturn is already or near its end, it is instructive to find that, contrary to our own expectations and predictions of some experts, nearly 60% of the participants anticipate the downturn to continue until 2002.
	An overwhelming number of participants selected greater ROI (71%) and increased productivity (58%) as the significant objective and expectation of technology initiatives.  However, the overlapping considerations of success probability (40%), competitive edge (35%), and technological edge (28%) are also seen to be important.  Remarks consistently brought out the need for immediate payoffs from technology initiatives.
	Our invitation to suggest other issues for Tech Pulse Chicago overwhelmingly and quite passionately brought out the need for a survey addressing the issues of employment of technology professionals.  Suggestions ranged from the next steps for dot comers to entry-level positions, from compensation issues to employment security.  In response to this feedback, we decided to postpone the Infrastructure survey and make employment issues for technology professionals as our next topic.