High Tech Is Alive And Healthy

September 27, 2002
| By Katy Rent |
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GRAND RAPIDS — In a day when excessive spending and unbridled enthusiasm give way to moderation and prudence, and where high prices are out and product and service discounts are in, one thing is for sure: The IT world is changing, and that seems to be a good thing.

To better gauge what the market has been through and where the industry is going, the Business Journal talked with four local technology experts: Valerie Kozikowski, regional business line leader for BDO Seidman and head of the BDO Seidman Alliance of Technology; Jerry Engle, founder of Computer Products and Resources Inc. (CPR); Keith Brophy, president and CEO of SageStone Inc.; and Jeff VanderWal, president and COO of hi-tech inc.

“One thing is for sure,” said Engle, “the last two years have been challenging and interesting. Technology can be a wonderful thing, but in a world of false economies and over-spending, we saw the walls around the tech world start to crumble.”

In fact, the past two years have been so tough for the technology industry that Brophy said that of 15 of SageStone’s local competitors, 11 went out of business within the last two years.

However, it appears to have been the forge-ahead attitudes of the surviving companies that allowed each to survive.

“We doubled our sales force when everyone else was scaling back,” Brophy said. “And we made a big investment in our sales team, our technology team, and we re-focused to adjust to the new customer buying attitude.”

The survivors have seen a shift to where the size and scope of IT projects are more manageable and the returns are more carefully managed.

And Engle was careful to point out that technology spending has not gone away, just changed tracks.

“You have to be nimble and be able to move on a dime,” he said.

“People are not spending like they did in the past but they are spending — just in the areas that will make the most impact on their businesses.”

Kozikowski noted that she sees more strategic spending related specifically to business initiatives that drive revenue as opposed to a traditional return on investment.

“What they used to do in IT was a quick ROI that was focused on ‘I think I can save this amount of money.’ But now if it doesn’t support a key strategic initiative to drive revenue and profit more on the sell side than on the cost savings side, then regardless of size, companies are not spending the money,” said Kozikowski. “And I think that is going to hold for awhile.”

This is an assessment with which Brophy agrees.

He said SageStone also saw a shift in customer buying, moving from cool tech, to no tech, to strong ROI-based investment.

He explained that two years back many people felt that if your neighbor had it, you had to have it, too.

Now, he said, businesses are jumping off the trend bandwagon and moving into service-oriented needs.

Brophy, Kozikowski, VanderWal and Engle all noted a shift in consumer buying from product-based purchases to service-oriented necessities.

“We started to do some strategic planning on where we are and who we want to be, and we began to transform,” said Engle.

“We made the big investments, but we were cautious and we were prudent — and I think the only place to go from here is up.”

He added that while his and other local tech companies are on the rise, so are the businesses they depend on.

“I think the (economic) situation has bottomed out,” he said.

“Now we are seeing cautious excitement. People are starting to get excited about the investments they have seen working for their companies, and I do think it will pick up in time, but not to a place where we saw it in the past.”

VanderWal agreed and said while the revenue didn’t stop, it did come in through different means.

“There were some sectors of the market that didn’t need to cut back on technology spending, and then there were others like manufacturing that really had to step back and take a look at things,” he said.

“And luckily, in tough times we were able to diversify and generate revenue in different ways, and in the end I think it will all begin to trickle down.”

Foresight is now the key phrase in all four technology professionals’ vocabularies and each sees a high level of consumer confidence ahead.

Each also thinks it still is going to take work to get there.

“We are going to have to penetrate other markets and expand with complimentary services,” said Brophy.

“You have to play to where the market takes your customers, and I think that is what the surviving companies are aiming to do.”

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