Tech Not in the Clear Yet

Some economists already refer to the recession in the past tense, and analysts are eagerly shortening their recovery timelines.

This week, for example, Forrester Research said the tech sector will return to double-digit annual growth by 2003.

Call me pessimistic, but that sounds like wishful thinking. Even with an upturn in sight, we should remain on guard for bumps in the road ahead.

Light Ahead

In the second half of 2002, the technology sector will grow 3.9 percent, according to Forrester -- nearly two percentage points higher than the research firm predicted in October 2001.

In 2003, Forrester said, growth will reach 10.4 percent, followed by 12.5 percent growth in 2004.

Those predictions may be accurate. But the trajectory of growth will not be without some dips and valleys.

Ups and Downs

Many economists will tell you that the path of economic recovery often takes the shape of a "W." That is, after a stint of growth, another mini-contraction occurs before giving way to a legitimate recuperation.

I would not be surprised to see this scenario play out in coming months. And I expect the technology sector to track closely along this path.

Since the recession was largely spearheaded by the business-to-business (B2B) arena, rather than by the consumer sector, we may find cautionary clues in corporate technology spending behavior.

On Your Mark

No single company wants to be the first to bid farewell to the economic doldrums and launch aggressive growth plans.

It will take much more than a few encouraging words from analysts or Mr. Greenspan to rekindle corporate IT spending.

So for the next six to nine months, there will be a lot of waiting and posturing among technology companies, which will behave like thoroughbreds before a starting gun.

This will undoubtedly delay, or perhaps even stall, the recovery.

Not So Fast

Once companies begin to loosen their grip on cash, they will invest judiciously, looking for discernable returns that are months, not years, away.

The days of strategic technology investments made for competitive or marketing reasons are over.

Many firms will try to build on existing investments in enterprise resource planning and customer relationship management systems, rather than making new commitments to e-procurement or e-marketplace applications.

Therefore, IT spending as a whole will ramp up sporadically over the next year.

Integration Challenges

The need to integrate efficiently with trading partners will draw companies toward the promise of Web Services, which purportedly will allow data to pass seamlessly from one application to another, reducing costly lags in the supply chain.

Clearly, new opportunities for value creation will emerge, making room for new technologies and vendors.

The problem is that there are still many lessons to be learned and best practices to be developed in Web Services.

As a result, companies undoubtedly will make some investment mistakes and surrender some money on their way up the learning curve -- just as they did in the e-marketplace era.

This represents another bump in the road back from recession -- perhaps the penultimate leg of the "W."

Rite of Passage

As we inch closer to mid-year, pessimists and optimists likely can agree on one fact: The infancy of the Internet and of e-commerce is all but over.

And whether they follow a straight or jagged course, key technologies like e-commerce and e-collaboration are approaching the prosperous years of young adulthood.