Tech Tuesday Presentation

VCU : Tech Tuesday 9.22.2009

DISCUSSION: WHAT DO THE CURRENT ECONOMIC CONDITIONS MEAN TO IT PROFESSIONALS? Rajiv Perera, Arman Latif, Viren Kapadia, Mindy Meredith

LPKGROUP

ECONOMIC STATE Increase in consumer confidence in nearly 2 years.

• Wall Street: Best 6 months since 1933.

• Hopeful, but tentative.

• Month-to-month economic uncertainty.

• Employment continues to lag.

• Concern of backsliding to double-dip recession •

Remain financially cautious over the next 12 months • Continue cost cutting (90%) • Reduction is capital investment (63%) •

McKinsey Quarterly: Economic Conditions Snapshot, August 2009

LPKGROUP

FEEDBACK - INDUSTRY INDUSTRY/MARKET WHICH YOU BELIEVE IS RECESSION-PROOF?

• HealthCare • Federal Governments.

• Government Integrators • Security • Anyone who sells better in down market -- like Wal-Mart, Dollar Store.

INDUSTRY/MARKET YOU BELIEVE WILL MAKE SIGNIFICANT INVESTMENTS IN I.T. IN THE NEAR FUTURE?

• HealthCare / Medical IT, Device / Implant.

• Federal & State Governments.

• Mobile Computing, • Security • Compliance • Insurance • Post-integration opportunities at the big banks (ie. BAC/Merrill, JPMC/Bear, Assured Guaranty, etc.)

LPKGROUP

FEEDBACK - I.T. INVESTMENT IS NEW INVESTMENTS IN I.T. INFRASTRUCTURE OR APPLICATION DEVELOPMENT PROJECTS?

• More cautious with big investments. Must yield significant ROI of IT

Spending.

• Modest to No investments (just run the shop).

• IT decisions are taking longer and projects are being put on hold.

• Continue to extend the life of “Legacy systems”.

• End of life product platforms are making large wholesale product exchanges.

• Deferring routine investments till its inevitable or business critical.

IS NEW INVESTMENTS IN I.T. INFRASTRUCTURE TO LEVERAGE ‘BUYERS MARKET’ AND/OR RETIRE LEGACY EQUIPMENTS?

• Opportunities following mergers / acquisitions.

• Staying away from “bleeding-edge”.

• It’s a buyers market, if they can find the money!

• End of life and non supported infrastructure.

• Mostly to retire legacy equipments.

• Not taking advantage of the buyers market.

LPKGROUP

FEEDBACK - PEOPLE IS THERE AN INCREASE IN I.T. HIRING TO LEVERAGE THE AVAILABLE TALENT POOL AT REASONABLE SALARIES?

• Increase contractor hiring. Very little FTE hiring.

• Salaries will remain static for at least an additional 12 -18 months.

• Yes, contractors who work at onsite, from domestic IT consulting companies and off shoring companies are being converted to full time employees to reduce the cost per IT resource.

• Offshore vendors are used only for offshore resources. Full time employees are expected to manage offshore from onsite (US).

ARE YOU LEVERAGING VENDOR MANAGED SERVICES (AND REDUCING INTERNAL I.T. STAFF)?

• Growing trend vendor management services.

• Reduction in internal IT staff.

• New service offering by vendors (networks, data center, etc.).

• Over staffed?

• Looking long term to maintaining a quality staff and thus are asking the staff to do more.

• Transition costs are major hurdle.

• SMB are starting to use offshore services more, many for the first time.

LPKGROUP

FEEDBACK - CONTRACTS ARE CONTRACTS BEING RENEGOTIATED TO REDUCE SPEND?

• Renegotiated owing to reduction in employees and downturn.

• Not negotiating lower rates, but reducing overall IT spending.

• Asking for credits/reduction in billing, to redeploying the saving back into IT. • Renegotiating with existing providers but are not changing providers.

• Some vendors agree to absorb both the transition cost and provide lower pricing.

ARE SERVICE OFFERINGS TO INTERNAL CUSTOMERS BEING REDUCED?

• Yes but quietly. They are not announcing the impact but it is happening.

• Not necessarily, business critical changes are being serviced, but the number

of resources (employee + contractor) remains unchanged – “getting more from the same spend” • At State and County cross the board reduction in people and services.

LPKGROUP

FEEDBACK - FUTURE WILL THINGS GO BACK TO THE WAY IT WAS (BE THE OPTIMIST)?

• Things will surely get better than today, but may not be the same again • All pendulums swing back so yes. I think though the world is a different place and will take years to readjust.

• The market will return but it will probably be two years before we see the economic opportunities in IT that existed prior to this recession.

• The landscape has changed, I don’t think it is resilient to go back to the way it was.

WHAT HAS CHANGED IN I.T. AND THE WAY YOU DO BUSINESS?

• Expectations have increased, they want more for less money.

• Competition is all time high.

• Personal relationships play a greater role.

• Never be too far from a solution that involves real savings.

• Greater focus on quality • Contracts have more added benefits (free). Margins are extremely small.

Vendors are adopting each other’s strategy (recession) much faster than earlier.

• Negotiating power for clients has increased significantly as differentiation between vendors have narrowed.

LPKGROUP

DISRUPTIVE EVENT •

Leveraging Open Source?

•

Leveraging the cloud?

•

Google Apps - greater adoption?

•

Non-traditional App development?

•

Big investments in ERP?

•

Changing support models for computers/devices?

•

Application services - (like SalesForce)?

LPKGROUP

WHAT DOES THIS MEAN TO US IN I.T?

LPKGROUP

APPENDIX

LPKGROUP

What We Do? We help companies identify and realize cost savings opportunities and effectively manage and measure supplier relationships.

Our Service: We focus on spend analysis, benchmarking, contract management, and negotiations. We work with our clients to minimize costs without reducing services.

Your Benefit: On average a 10% to 20% savings and a better understanding of your spend.

LPKGROUP