Thursday, February 19, 2009

Economy and IT

All the bad news about economic downturn got me thinking that there are a few parallels to be drawn between the cause and effect of current economic situation and IT. Just like American consumer, we have to start thinking about making some adjustments that will be required in future. Lets look at some of the parallels first:

Exotic instruments – One of the reasons financial system came crashing down was the invention of exotic financial instruments such as Collateralized Debt Obligation (CDO), Credit Default Swap (CDS) etc. These instruments were not well understood by majority of people that were peddling it or those that bought into it. We in IT world have been living in alphabet soup of our own – EAI, AI, SOA, BPM, CEP etc. While some of these acronyms have legitimate meaning, most are there to sell products or consulting services. In financial world these instruments have led to illusion of profit thus fat bonuses for undeserving people. In IT world this has also led to fat profits or career advancement for undeserving people

Sub-Prime Mortgages – IT equivalent of sub prime mortgages is the foolish investments we have made over time in technologies that have failed to pay back (they are the financial world's equivalent of "Upside Down" mortgages). Now, any new technology investment is risky and we should not be totally risk averse otherwise we will miss the opportunity to take advantage of transformative technologies such as the Internet, but at the same time we in IT tend to over hype any thing new. "If only I go ahead and buy a new CRM package, I will have better customer relationship." I am sure every organization has a number of expensive software products that have either been abandoned or are under utilized.

Next time I will talk about the adjustments. Anyone here with me for a “BAILOUT”?

Ashok Kumar
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