As The Economy Improves, High-Tech Will See More Challenges In 2004
You may think I'm crazy for saying this, but productivity gains have been far too large and unexplainable, aside from the fact that people are working longer hours. We've all seen the surveys indicating that the vast majority of American workers are waiting for the chance to jump ship at the first sign of an improving job market.
A recent statistic claimed that even 86 percent of CEOs considered quitting their jobs in the past year.
Certainly, the productivity gains didn't come solely from a longer work week. Pieces of it came as a result of underused technology becoming more ingrained in operations.
But if the surveys are correct and worker job-hopping becomes overheated next year simply because employees believe the grass is greener elsewhere, then productivity will decline.
This could be particularly pronounced in high-tech, where stock options have been a long-term driver for many workers accepting crazy schedules in the hope of a big payday in the future. Tech stocks just are not going to grow as fast in the future as they have in the past.
There are far too many companies that have downsized and do not have a deep-enough bench to easily plug in internal replacements for those employees who leave. The result is loss of revenue and productivity as new hires are brought on and trained.
Turmoil will come in other fashions as well in 2004.
The number of mergers and acquisitions is going to increase dramatically for several reasons. First and foremost, acquisitions are always easier to make in an improving economy than in a declining one. In a declining market, buyers are always concerned that they are paying too much. In an improving market, it's easier to convince yourself that there are more sales to be gained, and the price will seem cheap at some point.
Acquisitions will rise for other reasons as well. High-tech firms that have strong balance sheets that were built during the boom days of the mid-1990s but have questionable business models are looking for exit plans, and being acquired is the mother of all plans.
And despite the improving market, there are still too many companies chasing too little business, and that is always a driver of consolidation.
The big challenge for solution providers in 2004 is going to be having the skill set to capture business in the hot areas.
You've heard me say it before, but being positioned in the voice-over-IP space can't hurt you next year. It's a no-brainer for many smaller businesses that have significant phone bills each month. The ability to sell a customer a technology that has a rapid payback is always a good thing.
Solution providers will see no decline in hardware margin pressure next year, requiring a continued effort to push services first and drag products in behind the solution sell.
To that point, it will be more critical than ever to constantly evaluate your supplier partners and sell products from those vendors that are easiest to work with, are the most profitable and handle channel conflict best. That holds true even when you fill the role of influencer on products and don't take title.
No question, we are heading into a better economy, but there is no doubt that it will bring its own set of challenges.
Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].