Top execs seek bright spots in the downturn

The one sure thing about economic downturns, "survival of the fittest" rules the day.
[link|http://iwsun4.infoworld.com/articles/hn/xml/01/08/08/010808hnaccenture.xml|
Top execs seek bright spots in the downturn]

By Heather Harreld
August 8, 2001 11:52 am PT

MORE THAN HALF of the top executives at Fortune 1000 companies believe that eliminating poor business models is the "silver lining of the economic slowdown," according to a study released Wednesday by technology consultant Accenture.
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The study surveyed 150 C-level executives in June to gauge their outlook on the economic slowdown and their level of satisfaction with recent technology investments. More than half reported that eliminating poor business models is the bright spot of the current bleak economic climate. Thirty-nine percent of the executives believe the inability to get new capital is the most negative impact of the slowdown.
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"The byproduct will be more highly educated C-level [executives] ... regarding new technologies, particularly the Internet," Rich said. "They will focus on using the Internet to eliminate inefficiencies. When they talk about poor business models, they mean moving toward a virtual enterprise."
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Executives believe the "next big wave or killer application for the business world" will be CRM technologies, mobile and wireless applications, and SCM technologies.

Does anyone disagree? I expect that as the economy heats up (which it started doing about 3 weeks ago and is getting hotter each passing day lately) we will see increased productivity again.
[link|http://www.businessweek.com/technology/content/aug2001/tc2001089_466.htm|
Why Productivity Gains May Have Legs]
Despite the downturn, chances are good that U.S. companies still have a ways to go in employing new, output-enhancing technology

[By Margaret Popper]

One of the biggest fears about the current economic downturn is that it'll kill all those wonderful productivity gains corporations have enjoyed since 1995. After all, rising productivity helped boost corporate profits year after year -- and that kept inflation from gathering steam during a time of red-hot GDP growth, despite the tightest labor market in decades.
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The hard thing for economists is to separate such cyclical movements from the underlying productivity trend -- efficiencies that stay in the system for a decade or longer. Despite the dot-com bust, many economists think the U.S. economy is currently only partly into that decade. "The encouraging thing is that we saw productivity pick up when we were well into an expansion," says the Dallas Fed's Koenig. "It's unusual to have productivity suddenly pick up when you are five years into an expansion."

Indeed, about half of the productivity increases that showed up during the latter half of the 1990s were of this more permanent kind, according to the economic studies of Northwestern University's productivity guru, Robert Gordon. It's true that a big part of those gains reflected the extent to which the tech sector employed its own technology to operate more efficiently -- and that tech is currently being hit hardest by the slowdown. Once technology demand picks up, however, those productivity gains should reappear.

And then the entire economy should benefit. It's reasonably clear that information technology has been the key to the economy's heightened productivity in recent years. "Between 1995 and 1999, IT producers and users showed the largest gains in average annual productivity growth," says Christophe Bianchet, a vice-president and U.S. economist at Credit Suisse Asset Management. Technology producers saw 3.7% average annual gains in their productivity during this period, compared with 2% gains for information technology-intensive industries and 0.43% for industries that don't use much IT.

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