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Symposium Keynote Speech by Gartner
Chairman and CEO Michael Fleisher
Gartner Symposium/ITxpo, 8 October 2001, Orlando, Florida It's my pleasure to welcome you all to Gartner Symposium/ITxpo 2001. I want to thank you all for coming - for your steadfastness in these troubled times. |
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For many of us, our National Anthem has special meaning, and in light of the tragic events of September 11, it has taken on new meaning. For those of us who grew up going to football and baseball games, it is almost impossible to hear our National Anthem without hearing the words, "play ball." What we want to do this week is to help all of you continue to "play ball" - to get you 100 percent back in the game.
We win and the terrorists lose by our continuing to "play ball," and by our continuing to do the important work that keeps our institutions strong - the institutions that support ourselves, our family, our friends, our co-workers and all Americans. I know that it is awkward and difficult to discuss the business ramifications of these tragic events, but this is what we must do over the next five days. I live in New York City, six blocks from what used to be the World Trade Center, in part of the secure zone around the site. I never imagined that living in downtown New York City, I would be subject to a series of checkpoints to get home to see my wife and kids. My neighborhood is thick with rescue and relief workers whose days are filled with terrible and difficult work. The lives of tens of thousands, perhaps hundreds of thousands, of American have been horribly disrupted and, in some cases, torn apart. We have all been touched by this terrible tragedy. Our sympathy goes out to everyone - here and around the country - who has been directly impacted. But it is time to play ball again, to get the game going full speed. All of us have an important role to play in that effort. It is our hope that, during the next five days, we can play at least some small part in getting you and your company fully back in the game, and that you will leave Orlando with a newfound sense of resolve, purpose and determination. To get us started this morning, we are honored to be joined by Florida Governor Jeb Bush. Governor Bush moved to Florida from Texas in 1980. He first distinguished himself in Florida in the private sector as the founder and president of a successful real estate development company. He then moved into a number of critical roles in the public sector, including serving as Florida's secretary of commerce, before being elected governor in 1998. Governor Bush is well-known for his keen interest in technology, and has been a major proponent of using technology to increase the efficiency, and to reduce the cost, of Florida's government. And this is one public official who does not just talk the talk about technology. He has been using email since the early nineties. And he continues to be a prolific email user as Governor, using it to stay in touch with family members, friends and constituents. I've been told that the Governor delights in sharing his email address with audiences such as this and welcomes hearing what is on people's minds. I'm sure that you've got a lot of great ideas you'd like to share with him, so we'll see if that is true. Please join me in welcoming Governor Jeb Bush. [Governor Bush Welcome] Thank you, Governor Bush, for your kind words of welcome. I want to talk to you this morning about the incredible changes we have all seen in the business environment in the past 12 months - from the best economy of the past 50 years to quite possibly the worst. And now, the added jolt of figuring out how best to respond to the tragic events of September 11. We are all being tested on two levels: We are being tested on our ability to succeed in a tough economy and on our ability to react prudently but forcefully to the attacks on New York, Pennsylvania and Washington. Obviously, there are many issues of immediate concern to you, such as disaster recovery and security. As most of you know, these are areas that Gartner has historically covered in great depth. Nevertheless, we have added some additional resources at this year's Symposium to help you cope with the current crisis starting with this morning's keynote, which will feature less about long-term thinking and planning and more on action items you can use in the immediate crisis. So here is this morning's schedule: I'll talk for the next few minutes about the high-level forces at work shaping our current business environment and how you can respond strategically to these new challenges. Then, we'll bring out a panel of four Gartner experts on security and disaster recovery to explore how best to protect the technology assets of our companies and our country. Finally, we will convene our Panel on Emerging Technologies - an opportunity to take a short break from the immediate pressures and look at some amazing technologies with the potential to transform how we do business in the future. Much has changed in the past twelve months. We all know this from what we read in the headlines, from what we hear from the people who run our companies, from what we feel in our gut, and from the way our personal and professional concerns and agendas have radically shifted. "Being strategic" is at its core a simple idea. It is about understanding the fundamental forces that are at work shaping your environment, and then understanding what you need to do to be successful in that environment. Let's set the clock back just one year and take a look at the forces that were shaping your world and, consequently, your company's agenda and your own personal agenda. We were still in the afterglow of an incredible five-year global boom, perhaps the greatest flurry of economic activity and tech innovation ever. This boom came about through the alignment of a number of powerful forces. We found ourselves, in 1995, enjoying a generally strong economy. The tech industry began to deliver a long string of significant tech innovations, many of which were perceived to have significant business value. Businesses spent aggressively on these technologies in an effort to benefit from that perceived value, further stimulating the already strong economy. Companies were also spending aggressively on Y2K remediation work. And, on the massive hype about the transforming effects of the Internet on business created an insane capital markets environment where suddenly profits did not matter to investors. Companies who appeared to be making good on the promise of the Internet were suddenly the darlings of Wall Street. This triggered yet another round of aggressive spending as companies fell over each other in an effort to impress investors. Sometimes it seemed as though all it took was the ability to lose more money faster than the next guy. CEOs were given a free hand to spend wildly to create market share and brand awareness, adding yet further stimulus to an overheated economy. The result of all of this was a great global boom fueled in large part by unprecedented spending on technology. Obviously, no two companies reacted exactly the same to finding themselves in this environment. But as these forces flowed through companies and eventually arrived at your desks, you faced a common challenge: First, you needed to do all of the stuff that you knew was important, but that suddenly no one else seemed to care about. At the same time, you needed to get your company on the Internet bandwagon, and make sure that your company did not get left behind in the great Internet gold rush. At a minimum, this meant quickly creating a Web presence for your company, and doing so largely without regard to the best practices of your profession - like security, interoperability and scalability. "Just get it up and running," or the job would go to someone else. And many times, the job did go to someone else. Sure, a lot of this was crazy. There were oodles of misguided ideas and false expectations, but it was also a time of remarkable innovation, activity and economic growth, and it left an incredibly important legacy. It was the confirming vote for business executives around the world, that technology is fundamental to business. No CEO could have come out of the last five years without understanding the power of technology as a strategic weapon. Today, we live and work in a world that is being shaped by entirely different forces than the world I just described. Let's take a look at these new forces and what it means for you to be strategic in this new world to understand how these forces will flow through your company to you and understand how you will need to react. Obviously, the mid-Nineties boom is ancient history. It is not really a surprise that the good times are over. Most everyone understood in their gut that these trends were unsustainable despite all of the hyped-up commentary about the new economy. The real surprise has been the sudden and dramatic rate of the slowdown. As with the boom, a variety of forces became aligned very quickly and in a dramatic fashion. Beginning more than a year ago, the great tech innovation engine began to sputter. We are in a period right now where innovation is often described as the next generation of an existing technology. That's not the kind of pure innovation that can fuel this economy. We only need so many versions of what we already have. Most companies, and most of you, are thoroughly challenged to make the stuff you already have work. So all this week we are going to ask our keynote speakers one simple question: Can you point to one truly innovative technology that you have in your labs that has the potential to significantly transform the way business is transacted? We think these breakthroughs are few and far between at this point. No one should be surprised that real innovation has slowed. For the past five years, capital markets have not rewarded companies for conducting prudent research and development that would lead to long-term success. They rewarded companies that rushed to market with half-baked ideas. Our most innovative people spent the last few years of their lives trying to create an immediate and fleeting notion of market value instead of true innovation. And, today, we see the results in a lack of the sort of innovation that has historically fueled the growth of the tech industry. At the same time this innovation trough was giving businesses less and less incentive to spend, most tech suppliers were ramping for ever-expanding growth without much thought to when the party might end. And, unlike the airline industry, there will be no federal bailout for the tech industry. Technology is an industry in its adolescence. We are being forced to suffer through some of our most embarrassing moments in a very public way. When adults are in a car and the gas gauge is on E, they go to a gas station. Teenagers figure, "What the hell, we'll just go for it. We can make it without stopping for gas." When you are a teenager, it doesn't matter much if you run out of gas. When you are an adult, it is a mildly embarrassing thing. When you are the CEO of a multi-billion dollar public company, it is more than just embarrassing. Most tech executives managed their companies as if demand would never slow, as if the party would never end, while at the same time, failing to direct their companies to develop products that customers found innovative and compelling. This was a dangerous combination. The danger was compounded three quarters ago when the first signs of the slowdown began to appear. Today's tech spending is largely controlled by you, veterans of the very ugly recession in the early nineties when enormous numbers of IT professionals lost their jobs. At the first sign of the slowdown, this group tried to prepare themselves and their organizations by stopping virtually all discretionary spending immediately, instead of waiting for the other shoe to drop. And of course, the investment climate has completely changed. No one is getting rewarded anymore for spending money frivolously. So we came into the fourth quarter of 2000 with suppliers producing like demand would never slow and buyers who suddenly had a whole bunch of reasons not to spend. A huge discrepancy between IT supply and IT demand suddenly opened up. In the late nineties boom, the splurge in tech spending was the catalyst that turned a good economy into a powerhouse. In the past year, we've seen the other side of that coin - a slowdown that was severely exacerbated by a precipitous decline in tech spending. Make no mistake about it, we were in a recession even before the events of September 11. We all knew it, but we didn't want to say it or believe it. Now we have no choice but to adapt. How we fare in the next 12 to 24 months will be the real test of whether we know what the hell we're doing. At the end of the day, we all work for the shareholders who own our companies. Investors today seek companies that show growth in profit. You can be sure that CEOs will respond to that desire. With revenue growth slowing or declining in many industries, the math is simple. Companies will reduce their costs by either cutting their own expenses or by merging with or acquiring other companies and consolidating operations. Against this darkening background is September 11. We have already seen customer relationships impacted by a significant reduction in business and leisure travel worldwide. Obviously, businesses that rely on air travel to service or sell their customers are in the process of attempting to formulate alternatives that can protect revenue and profit streams. Possible "virtual" substitutes are aggressively being investigated for their viability. I'm sure that many of you are already involved in this process and probably were doing so within days of September 11. This is a striking example of how quickly external forces compel us to react by rearranging our own personal and organizational agendas. This is the model for being strategic, for seeing the larger forces at work, for anticipating how your company will need to react and for taking the necessary actions as quickly as possible. Companies are quickly adapting to another fallout of September 11. For the foreseeable future, major stoppages and disruptions in all modes of physical movement of goods are highly likely. This will compel a fundamental change in supply chain strategy. From wringing out the last ounce of inefficiency in the supply chain to ensuring continued operation in the event of major outages and disruptions. We have already witnessed two Global 10 companies - Toyota and Ford - shutting down plants within days of the September 11 attacks not because of a reduction in demand, but rather because of the reliance on superbly efficient just-in-time processes that simply cease to function when confronted with global transportation stoppages. Companies will be forced to choose between accepting this risk, which is highly unlikely, or choosing alternative strategies that will entail increased costs. So, instead of extending the supply chain out in search of ever more efficiency and low cost, most companies will do exactly the opposite. The result will be fewer but more critical partners and suppliers, with deeper and deeper links and longer-term contracts but, ironically, at a higher cost. You will of course be called on to support these rapidly evolving shifts in business strategy. Today's business environment will reward companies that can show growing profits in a slowing economy. The challenges for IT professionals in this new environment are immense. Cost-cutting, or "spending wisely" will obviously be a top priority. You and Gartner have been doing this together for years. You will need to anticipate incredible consolidation both in your own industry as well as in your suppliers. Your most trusted partner may suddenly be subsumed by another company that you chose not to do business with. In fact, we believe that 50 percent of current IT companies with household brand names won't exist in their current form in three years. Let me repeat that: Fifty percent of current IT companies with household brand names will not exist in their current form in three years. HP/Compaq is the beginning of this new wave of consolidation. As we come into increasingly difficult times, understanding how your company generates and leverages cash earnings will be critical. If you are a CIO, 100 percent of your strategic focus needs to be on using IT to change the nature of the relationships with your suppliers and customers because those are the only two places where you can impact your company's cash earnings. I know that some of you were at our Spring Symposium this year in Denver where UPS CEO Jim Kelly told us an amazing story about changes in competitive dynamics. UPS does a huge amount of work with Ford and has for many years. And we all know what UPS does: They ship packages, usually not particularly high value items, in those brown trucks - sometimes to our homes, sometimes from business-to-business. And they do that unbelievably well - 30 billion dollars a year well. Ford came to them and said, "Jim, you guys do such a good job allowing us to track two-dollar parts from point A to point B, that we have something else we would like you to move. We'd like you to move $75,000 dollar Jaguars because we lost them between point A and point B." That created an entirely new business for UPS. They are now effectively moving those cars using their tech prowess in logistics and knowledge management. The only way you can recognize and support opportunities like this is to completely delegate, or better yet, outsource to a third party, the pieces of your business that are not strategically relevant to your supply chain and to your customers. Trust me as CEO when I tell you that the only time I will trust that a CIO has crossed the line to being a business leader is when he has 100 percent delegated these non-strategic tasks to others so his intellect and horsepower can be used on strategic business issues. One of Gartner's best and most trusted senior executives is Leon Shapiro. Leon runs a large part of our business and is actually the Gartner executive responsible for this event. Leon is an absolute genius at arranging air travel. For years, he used this skill to personally arrange air travel for our senior executives. For his first few years in the company, Leon was the "travel guy," and he had trouble getting beyond that perception. I think the same may be true for many of you. The thing that you think gives you visibility (perhaps your expertise with problem solving of one kind or another) actually obscures many of your real and larger capabilities. Leon figured out that he needed to stop helping our executives with travel so that people could see his broader skills and capabilities. The challenge for many of you is the same. You must delegate some of those cherished roles that are giving you high visibility - but, high visibility for the wrong things. I spoke at the outset about how we were all being tested on two levels: the tough economy as well as the recent geo-political uncertainty. We are all being tested on a third level as well. We are being tested on our ability to continue to cultivate the restless, creative energy and the persistent optimism that has made the United States an unparalleled source of hope and opportunity for 225 years. Improbable as it feels today, our current difficulties and troubles will pass, and when we emerge, a few select people and companies will come roaring out of the pack to lead us. These companies will of course have met the challenges of today, but they will also have done one more thing: They will have helped to create the future by investing in a highly disciplined but ultimately illogical way by devoting a small but significant portion of their thinking and their resources to pursuing ideas that are today but wild-eyed dreams. Will this be "good business" for most of you? No. Could these expenditures survive any sort of rigorous ROI analysis? Absolutely not. But some of you will make that bet. Frankly, we all need to make that bet. It is the same illogical, hopeless, yet sure bet that Americans have made time and time again. And, time and time again, it pays off for all of us - not always for us as individuals, but always for us as a nation. We are a nation under attack, but the great error the terrorists make is that they see our freedom as a weakness they can exploit. As they will soon discover - as our foes over the centuries have discovered - exactly the opposite is true. Our freedom, our creativity, and our sometimes naive hope and optimism is ultimately our greatest asset. When you return to your offices next week and begin once again to face the tough choices these times demand, do not forget to make that small, crazy, but sure bet on something utterly improbable. It will be your best bet on the future - on our future. And it will be your definitive statement that our best days lie ahead. Thank you. |
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