October 12th, 2008
Response to financial crisis may mean more IT work ahead
Governments all across the world are responding to the current financial crisis with a range of nationalization initiatives, and increased support of various parts of the financial services industry through guarantees and pumping in increased liquidity.
You know what it means when there’s more government involvement with enterprises. Lots of regulations. Lots and lots of regulations. New channels of accountability. In addition, you can almost see the handwriting on the wall, especially here in the US, the epicenter of the crisis: there will be some kind of new legislation, a la Sarbanes Oxley, requiring greater transparency and regulation of mortgage markets and associated financial instruments. “Never again will we allow ourselves to get into this mess” will be the urgent rallying cry coming from all sectors.
A couple of weeks back, ZDNet colleague Jason Perlow discussed the impending IT shift that may accelerate as a result of the current crisis. I agree with Jason that we’ll see a lot more infrastructure consolidation, with SOA, virtualization, and cloud computing leading the way.
Ron Tolido, CTO for CapGemini in the Netherlands region, recently raised some interesting points about degree of this impact, agreeing that the fallout from all the financial turmoil raging around us will include the need for more and better information technology.
As he put it (also quoting some points raised in this blogsite about companies requiring more enterprise architecture skills to help streamline and consolidate):
“It sounds utterly cynical, but we should not be surprised if the current misery leads to a pile of new IT work. The government is clearly back at the wheel in many places and the public opinion just won’t tolerate even the slightest suggestion of misconduct in business. Rules and regulation will be tighter than ever. It means more risk management, more reporting and in general a call for total transparency. All of these areas obviously depend on enabling information systems.”
Rough waters will also result in more mergers, acquisitions, and spin-offs in the months and years ahead. Just this weekend, there’s been talk of merger talks between General Motors and Chrysler. In other words, a lot of integration work between massive IT infrastructures. As Tolido put it, “this will require extensive support through enterprise architecture, standardization and carefully crafted integration solutions.”
When the IT industry was hit hard in 2001 with the post dot-bomb crash, one of the drivers that helped bring the industry back was a slew of new regulations and mandates, such as SarbOx. Companies suddenly had a desperate need for data management tools and platforms that helped them comply.
From a private sector perspective, enterprises across all sectors are going to want to be even better able to analyze and predict changes and shifts in their markets. Could more effective information technology have softened the blow to financial services companies from the subprime mortgage debacle? Perhaps, in combination with sound business sense. Competing on analytics is taking on an even greater urgency than before; the ability to connect, leverage, and interact with networks of customer and partners will separate the losers from the winners.
Busy times may lie ahead for the IT industry, if the industry steps up with solutions directed at increasing the transparency and agility of the enterprise.
Joe McKendrick is an author and consultant with deep knowledge and insights regarding trends and developments in the technology industry. See his full profile and disclosure of his industry affiliations.
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