Loads of good data

Its interesting to see the IT industry’s reaction to the financial mess because technology expenditures are really sensitive to macroeconomic conditions ((This is one of those facts that I just know… I’m having a terrible time tracking down data to support this contention, though. The best I can do is to point at technology stocks’ high betas.)). This is a presentation a large venture capital firm gave its portfolio companies yesterday; lots of interesting data:

(h/t VentureBeat)

6 thoughts on “Loads of good data”

  1. How does IT compare to other fields whose primary business is in selling and maintaining capital used by other businesses?

  2. I’m not sure. I think IT capital would be more sensitive because much of it is “new” capital vs. replacement capital. If a machine breaks down, you almost have to replace it, but you might wait to replace old production processes with new fangled high-tech ones.

  3. I disagree; most IT expenditures are in software, and most failures are in software. Hardware failures are rare in comparison. If a server crashes, you send a tech in to reboot it. If it won’t come back up, you have the tech reinstall from backups. Some upgrades are trivial; it’s pretty easy to strap in some expanded storage or memory. Some upgrades are difficult and controversial within companies; watch what happens when you try to upgrade the ten-year-old CRM app that your sales team relies on.

    Individually, the servers that form the core infrastructure of a company seem like commodity parts when you only look at their shipping invoices. Once they are integrated into that infrastructure, they act more like an organic entity. IT’s job starts to look more like surgery than plumbing.

    I think I answered my own first question. I’d expect IT to grow and shrink with their host companies. A company weathering the current conditions is probably going to tamp down their IT growth, maintaining their existing infrastructure while putting off upgrades for better years.

    Maybe it would make more sense to split your definition of “IT.” There’s a pretty substantial difference between in-house maintenance service and companies that sell pieces of IT infrastructure like EMC, Dell, or Cisco.

  4. I think you’re right IT should be divided into replacement and upgrades. I interpretted your earlier question to be contrasting IT and other capital firms like road builders or whatever. High tech has more of the “jee wiz isn’t this a great new toy” factor than other industries, I think.

    If you’re worried about in-house IT employment prospects, it would seem firms would need to keep the geeks around to keep the shop running. That said, for some reason bosses tend to think IT folks are expendable. I learned this is absolutely 100% not true by first hand experience.

    During the last recession my company had layoffs and I had the privilege of helping to draw up the lists. Anyway, the IT guy was on the list. He was the chatty sort, always BS-ing somebody and so we figured there wasn’t much for him to do. Boy, we were wrong. That guy kept our internal systems running and our data center. Luckily, he was so good he documented everything and his replacement could quickly get up to speed.

    Yes, I appreciate the irony.

  5. My father is the field right now and has had the same experience.

    Not much irony to it. That very scenario is posed to /. about once a year. The consensus view is that refusing to document makes you both layoff-resistant and promotion-resistant. If you can’t be replaced, you can’t delegate.

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