Frameworks
Shelter in a Storm
Leaner times are ahead for development shops. Microsoft developers may be in a more sheltered position.
The financial storm that began with the collapse of the sub-prime real estate market and swallowed institutions like Bear Sterns and Lehman Brothers has since grown to imperil the entire U.S. financial system. As I write this, a fierce debate rages over an emergency $700 billion bailout designed to prevent a catastrophic credit freeze.
We have been witness, says former Federal Reserve Chairman Alan Greenspan, to a "once in a century" crisis.
Tom Berquist, executive vice president and chief financial officer of database vendor Ingres, knows a thing or two about crises. As a former equity analyst at Citigroup and a managing director at Goldman Sachs, Berquist for a decade kept close tabs on the software industry from his Wall Street offices. He says development managers should be prepared for leaner times as a result of the current financial turmoil.
"I lived through this as an analyst in the last meltdown," says Berquist, recalling the dot-com downturn that started in 2000 and accelerated with the Sept. 11 terrorist attacks. "The willingness to go to longer payback projects, where software development is typically focused, tends to get pushed to the short term."
Berquist warns that as spending grinds down the focus will pull in to projects that offer 60- to 90-day return on investment. He also thinks small, fast-growing firms may find themselves thirsting for cash, as venture capital firms pull back from capital-hungry start-ups.
"You need to significantly curtail your growth plans," Berquist adds, "or you might get into a cash crunch if you're not careful."
The good news, says Berquist, is that Microsoft developers are in a reasonably sheltered position-provided they aren't working directly in the hard-hit financial sector. He believes the relatively low cost of Microsoft- and Linux-based development compared to Unix and other platforms could drive activity despite the downturn. He points to the big gains Red Hat made in the enterprise between 2001 and 2004-much of it at the expense of premium player Sun.
So what should managers do?
"I think this is a great time to get caught up on the backlog," he says.
Big-ticket projects may fall off the table, but Berquist urges managers to get after long put-off updates and to refine existing software. Blended applications based on C# and Silverlight can provide value for Web-facing systems without huge outlays, while projects like improved analytics and dashboarding for transaction systems can play right into short-term priorities.
"People might want to make decisions much faster in a bad environment than in a really good environment," he says.
Ultimately, a sharp downturn in activity may be a perfect time for a little self-improvement.
"There will be people stuck in place over the next few months while things get sorted out," Berquist notes. "This is actually a good opportunity for developers to sharpen their skills."
What are you doing to prepare for the ongoing storm? E-mail me at
mdesmond@reddevnews.com
and let me know!
About the Author
Michael Desmond is an editor and writer for 1105 Media's Enterprise Computing Group.