Opinion: Why tech businesses will lead the charge out of recession next year

If, as expected, the economy improves next year, tech companies will be better placed than others to take advantage. Why? Because metrics and data are at the heart of tech businesses, says Nancy Cruickshank, executive director for digital development at Telegraph Media Group and Revolution columnist.

It's a huge asset to have access to detailed information about customers and their behaviour, as it gives an understanding of revenues and other KPIs and how they relate to individual products and consumers. Getting a handle on ROI is vital in the downturn, but it will also be a distinct competitive advantage in better times when investment in products and marketing increases.

All companies know the value of being customer-centric. While Tesco is the oft-cited master of this art, tech companies such as Cisco, Google and Apple have an even greater competitive advantage in terms of predicting customer needs as they change in response to evolving technology. Creative engineers are almost magical in this respect. Think Skype - we always wanted free telephony (and, increasingly, free video conferencing), but we simply never thought to ask for it. Predicting the seemingly impossible and servicing that demand is becoming commonplace within great tech companies.

Customers' expectations of value and what technology can give them has changed for good. It's inherently risky to expect 'old' revenue to return to pre-recessionary times when customer behaviour has changed so radically and permanently.

Thankfully, the decadent excesses of dotcom start-ups are a thing of the past. The fierce economic environment has forced companies to launch, operate and innovate in a more agile manner, focusing on revenue and profit growth. Not every idea gets funded today; the good ones thrive and the poor ones don't. It's simply a better basis on which to build good companies.

Innovation sits at the heart of great tech companies. Whether the economy is in boom or bust, the likes of Adobe and Facebook can't help but innovate. This, combined with the ability to quickly pursue great ideas (and suppress the others), is a major asset in a market showing early signs of recovery.

With unlimited broadband capacity just around the corner, it's an opportunistic moment for tech companies large and small to think about how they can thrive as we climb tentatively out of recession.

Nancy Cruickshank, executive director, digital development, Telegraph Media Group, nancy.cruickshank@haymarket.com.

QUICK TAKE - ECONOMIC RECOVERY

  • Some economists believe the recession is over, citing rising interest in the property market and an increase in the number of jobs being advertised.
  • The Bank of England believes recovery will be 'slow and protracted', holding the base rate at an all-time low of 0.5 per cent for the sixth consecutive month in August.
  • On a brighter note, the FTSE 100 rose above 5,000 points for the first time in almost a year in September.
  • In advertising, Sir Martin Sorrell forecasts an 'italicised L-shaped' recession and 'a flatish recovery with some upside'.
  • Sorrell's predictions have been rebutted by Tim Weller, chief executive of Incisive Media. "Anyone who thinks 2010 is going to be better than 2009 is kidding themselves," he said.
  • Despite tough times, the European online ad market grew 20 per cent during 2008 to EUR12.9 billion (£11.3bn), according to the IAB and PricewaterhouseCoopers.
  • Search accounted for 43 per cent of online ad spend in 2008 as companies sought greater ROI.

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