Is the recession driving innovation?

Necessity, the cliché tells us, is the mother of invention. And today, unlike the relatively comfortable preceding decade, there is an abundance of necessity: the necessity for IT departments to perform technological miracles with evaporating budgets, for example, or the necessity for IT vendors to persuade customers to continue spending money.

 Is the recession driving innovation?

Necessity, the cliché tells us, is the mother of invention. And today, unlike the relatively comfortable preceding decade, there is an abundance of necessity: the necessity for IT departments to perform technological miracles with evaporating budgets, for example, or the necessity for IT vendors to persuade customers to continue spending money.

Could this explain what is arguably a renaissance in technical innovation in the IT sector? A case in point: in July 2009, search engine giant Google made the most highly anticipated announcement in the IT sector in some years: that it is developing an operating system.

Clearly, the fact that Google is in a position to even consider such a project is testament to its runaway success – and innovation – in the past ten years. But its timing is interesting: why launch a major new line in the middle of a downturn, unless that downturn is stimulating demand?

Elsewhere, as explored in this month’s ‘Database Wars Revisited’ feature, open source software is gaining traction within the enterprise, thanks largely to the renewed drive to cut IT cost. And as BT’s Jeremy Ruston explains in this month’s Profile, the advent of open source within business should – in theory at least – bring about a more innovative model of software development.

Similarly, the cost-cutting imperative is driving more organisations to exploit cloud computing, as can be seen in the rise in popularity of Amazon Web Services.

The utility model of computing has long been mooted, but it arguably took something out of the ordinary to force businesses to take a leap of faith.

It would be an exaggeration to describe the recession as a good thing for the IT sector: one need only look at this month’s Financial Report to see the folly of that suggestion. But the silver lining might be that adverse conditions are forcing the IT sector to do what it does best, but has not done so much of in the recent past: drive technological innovation.

Christopher Andrews, senior analyst at Forrester Research, says that while the recession forces the pursuit of new ideas, it also limits resources for innovative start-ups

The recession does create a new sense of urgency in the industry, and that can indeed drive new innovations.

Our recent survey of technology strategy and marketing professionals found that more than 84% of respondents said that “providing more innovative products and services” is a primary goal for their organisations in reaction to the current economic conditions.

The primary limiting factor in these efforts is access to capital. Many innovative start-ups are having real difficulties getting funding during these times, which will force some interesting start-ups to shut their doors and reduce the amount of innovation we see in coming years.

Jon Collins of analyst company Freeform Dynamics argues that the downturn has affected what kind of innovation is receiving support, both by vendors and user organisations

On the customer side, we are seeing innovation where it is necessary. If a company has an inefficient sales
process, for example, but that wasn’t a problem when it was making enough money, this is where innovation will now be happening.

At the same time, when a company is on the back foot, the first things to go are the ‘nice-to-have’ innovations. On the supplier side, virtualisation is a good example of a technology that is sufficiently compelling for an eco-system to build around it, and there is a lot of innovation around virtualisation at the moment. Where there is a pull there is certainly a lot of push.

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