Tech Cutbacks Could Stifle Firms' Futures

from the careful-what-you-cut dept

A few months back, we posted a story about the technology gap, suggesting that the "gap" between the technology the best companies of today were using compared to the worst firms, suggested a reason to be optimistic. The worst firms would need to upgrade their technology in order to compete. However, combine that with the incredibly short-sighted way that management always seems to look at only one side of the cost-benefit equation and you have a problem. During the boom years, I used to complain that everyone only looked at the benefit side of the equation, and missed out on the fact that in order to bring in that extra $1 of revenue, it actually cost $5. Now, however, during the downturn, people can only look at the cost side of the equation, and will cust that $1 in costs, even if it will bring in an additional $5 in revenue. The fact is, at all times, a business should be looking at both sides of the equation and making decisions that bring in more revenue than they cost. However, all Wall Street wants to hear these days is about "cost cutting", so many companies are ditching technology projects that could harm their long term potential to compete. The projects may cut costs in the short term, but they make it more difficult to compete in the long term. In fact, many of these projects, if implemented properly, could actually cut costs in the long term as well.

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