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June 14, 2010

The Dot Com explosion’s ripples continue

Current CIO focus on cost cutting will lead not to stagnation in the ICT market but "the next wave of innovation," claims the European leader of storage player Hitachi Data Systems (HDS).

By Cbr Rolling Blog

"Managers can’t evade the fact that they have on the one hand increasing demands from the business to lose more and more cost – but also, by the nature of the way business is evolving, larger and larger volumes of data to manage," Michael Väth, senior VP and European general manager for HDS told CBR last week.

Simple ‘storage economics’ implies, he argues, that CIOs will soon need to plan for ways to balance both needs by decision matrixes that to as high a level of complexity as they manage will need to identify ways to reduce the operating expenses for storage infrastructure, based on factoring in a range of both technical and business drivers, from electricity costs, data centre floor space costs and backup server costs to compliance risk and potential data retention issues.

Väth – who prior to joining HDS in 2005 ran his own management consulting company and was a founding and still board member of BITKOM, the German Association for Information Technology, Telecommunication, and News Media – says there is objective proof of this in IDC recently concluding that the storage market is finally growing again after a drought period, growing 17% in Q1.

Väth also notes that Europe is presenting his company with some real puzzles, based on imbalances between supply in different parts of the region. "We have seen Russia fall off the cliff last year with around a 40% drop in storage business in the market for everyone, which has now switched back to a 20% rebound this year. This is a common pattern at the moment, where some geographies are emerging from recession quite rapidly while places the UK, Germany and France seem to have had a significant drop in ICT spend that is coming back too – but much more slowly than other countries."

Yet continent-wide drives to lose cost in the public and private sectors to deal with debt and position firms for re-growth also mean, he is convinced, "stringent management" approaches to tech investment will soon fade, to be replaced by aggressive drives to greater and greater automation as the only realistic ways to lower overhead.

"Otherwise productivity is going to suffer all round," he thinks. The message for the CIO, then? "Expect increasing challenges to all aspects of your budget but use that to build as sustainable and scalable an infrastructure as you possibly can – as you will soon need it."

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Yes, there is special pleading here – he does sell storage, after all. But there does surely seem to be a grain of truth in these warnings, which really boil down to the fact that we may never see Dot Com Bubble budgets again – while dealing with all the ‘fallout’ in terms of social and business changes that long-ago explosion, Big Bang like, is still causing us in today’s IT universe.

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