Dotcom jitters could help IT departments

The roller-coaster ride of high-technology share prices is exposing the weaknesses of many New Economy IT suppliers, and could put IT managers back in charge of supervising their companies' ebusiness efforts.

The fear of being left behind on ecommerce has led many companies to abandon normal technology purchasing cycles, pushing business managers into making purchasing decisions without consulting IT departments, says Will Cappelli, research leader at Giga Information Group.

Recent stock market jitters may spook those business managers, however. On Monday £57bn was wiped off share values in opening trading in London, following sell-offs in New York the previous Friday. Many dotcoms bore the brunt as the Nasdaq fell 25 per cent last week.

This climate of uncertainty could propel IT departments back into controlling the buying cycle. "We are already seeing IT departments being asked to resume their traditional due diligence role, which is a good thing," says Cappelli.

"IT departments will play a larger role, and they will favour companies they have worked with over companies that could take advantage of the naivety of the business managers," he added.

"The IT managers will still have to make risky decisions about technology companies, but they won't be in a position where they are having an infrastructure forced on them."

While established IT suppliers are unlikely to suffer long-term effects from the recent stock market turbulence, concerns are growing that smaller suppliers, pushing more leading edge technology, may not survive the shake-out."People are making rash decisions at the moment, and they are feeling the pain," warned Anthony Miller of analyst Richard Holway.

"But the company won't thank you for jumping into a technology if you haven't done your homework. You have to look at the dependence of your business on these products, and measure the risk accordingly," he said.

"Going back to traditional methods is fine as long as it doesn't delay timescales," said Pete Marsden, chief technology officer at Egg. "You do need to look at the quality of the software you're buying; you also need to make sure the organisation you're buying from has a good pedigree, and is financially viable. But IT can't hold back an organisation's ambitions."

Geoff Petherwick, chief executive of user group UKCMG, said the dotcom backlash could result in another benefit for IT departments: staff retention.

"IT staff won't be so keen to jump ship and go off to a dotcom if they know it may not last," he said.

This story has been republished from the 20 April issue of Computing UK

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UK shapes up for ebusiness

Consolidation among software and IT services companies is the key trend emerging from The Holway Report - Richard Holway's influential analysis of the UK software market.  01 Jun 2000

UK plc drags its e-heels over trading

British business leaders are failing to keep up with customer expectations.  01 Jun 2000

Brothers net $40m for just three years work

Two brothers still in their twenties are the latest to hit the dotcom jackpot, collecting £20m each after selling the internet company they founded just three years ago.  25 Apr 2000

Dotcoms called to order by regulators

Identifying and preventing anti-competitive behaviour by dotcom companies is vital to the development of ecommerce in the UK, according to government regulators.  18 Apr 2000

UK debates dotcom tax

The UK has taken a lead in the debate over how ecommerce businesses should be taxed, saying overseas companies that merely locate their servers in the country should be exempt.  14 Apr 2000

Dotcoms no threat say big businesses

Large European companies are blind to the competitive threat presented by dotcoms, according to a new survey from PricewaterhouseCoopers.  13 Apr 2000

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