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Sysix CEO & Client Modine Manufacturing Featured in Milwaukee Journal
But tech's recovery is tempered by customers' wary attitudes, measured spending
By Jason Gertzen, Last Updated: Jan. 4, 2003
The boom probably won't be back in 2003, but Troy Thomas and others in the information technology industry are ready to say goodbye to the bust.
"It was bunker mentality and survival," said Thomas, who guides companies through technology projects as a consultant with Milwaukee's Millennium Partners.
Area consulting companies such as Millennium, the Revere Group and SilverTrain Inc. are recruiting staff as they prepare for a modest, or possibly better, uptick in business.
"We are focused on how to grow again," Thomas said.
Signs for optimism are emerging, but those in the battered technology industry are not getting too carried away. After all, these are not the heady days of the high-tech frenzy that faded about three years ago.
Budgets will be higher
Spending on computers, software and other information technology projects is expected to climb at least a bit this year, according to analysts who track the industry. How much isn't clear, as some forecasts call for a slight improvement and others say to look for a jump of as much as 8%.
After two years of spending declines, almost any growth would be welcomed.
Unsure whether the emerging economic recovery truly will take hold, many businesses continue to be cautious with spending.
"No question that managing more with less is the biggest issue facing IT managers, with nearly 50 percent of those surveyed pointing to budget as the biggest IT pain point," Dan J. Renouard, an analyst with Robert W. Baird & Co., wrote in a recent report.
This marks such a dramatic shift from the late 1990s, said Mike DeWitt, a vice president with the Revere Group.
"Y2K was coming up and looming as a potential trillion-dollar disaster," DeWitt said. "It was a matter of survival. Time was more important than money."
Businesses also were quick to open their checkbooks for the latest technology offering as they feared being overtaken by dot-com upstarts.
Many projects were necessary, bringing either a more stable computer system or a boost in worker productivity. Some were of dubious value.
Basking in easy pickings
Either way, technology consultants basked in a time of easy pickings. "An orgy of investment" is how the period was described by McKinsey & Co., a New York consulting firm.
"They threw money at it," DeWitt said. "Now it is the morning after, and they have sobered up."
Purported technology gurus no longer enjoy so much benefit of the doubt.
Some executives feel burned by past projects that did not work as promised or cost too much.
This is not to say every company is turning away completely from new technology investments. Before projects get the go-ahead, however, companies are aggressively analyzing potential return.
"Now executives are saying, 'We did that, but we didn't see what we got out of it. Next time we have to make sure of the benefit,' " DeWitt said.
This widespread mind-set among potential clients is affecting the way some consultants approach technology projects.
"We are doing very digestible-size projects for companies," said Bob Carlson, president and chief executive officer of Milwaukee's SilverTrain, an information technology firm. "They have a very discrete start and end to them. We make sure we give them a great value."
Another factor improving the technology spending prospects for the coming year is that many projects were deferred in recent years, creating somewhat of a pent-up demand.
"People recognize the value of technology," Carlson said. "They just can't ignore the gains in productivity it represents."
SilverTrain has carved a prosperous niche even in the overall down market, Carlson said. The company, which started about a year ago, already has opened a second office in Chicago and plans to open another one soon in Minneapolis.
The tone of recent conversations with potential clients fuels Carlson's optimism that the company will continue expanding. Many companies are scheduling, or at least talking about, projects in 2003.
"It's entirely different than a year ago when nothing was being planned for the coming year," Carlson said.
Plans aren't as glitzy
The typical projects today are not as glitzy as creating online storefronts for electronic-commerce initiatives. Some companies are boosting computer storage capabilities. Others are asking consultants to tweak existing software systems so they deliver more of the benefits initially promised when they were purchased a few years ago.
Modine Manufacturing Co., for example, worked with Sysix Technologies on a storage area network project.
The Racine manufacturer's computer system was so crammed with data that engineers sometimes waited as long as 20 minutes to load or save a digital drawing. Although Modine has been buffeted by the turbulent economy, the company decided the project required immediate attention.
"We had to fix it sometime," said Butch Harper, Modine's chief information officer.
The company didn't just address the problematic symptoms. Instead, it installed a system that provides greater storage, more nimble operation and vast potential for future expansion.
The investment was significant, but it was seen as the cost of competing. "It's a six-digit number," Harper said. "It ain't a cheap date."
The future for Sysix is strong because the company is positioned to help companies such as Modine with computer storage projects and other critical behind-the-scenes infrastructure, said John Sheaffer, chief executive officer.
"Companies are still spending, but they are not buying luxury solutions," Sheaffer said.
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