Staff column: Turn that downturn upside down

My new year's resolution is to actively avoiding talking up a downturn.

You could perhaps say I'm a bit in denial, but I'm also a firm believer that focusing on companies' negative actions or promoting the macroeconomic drivers behind them benefits no-one, least of all the industry in which we operate.

The other problem in talking up a downturn, in my opinion, is that it cuts into time that could be better spent discussing all the great stuff that continues to happen in the Australian ICT sector.

Frankly, watching 39 entrepreneurs come up with six working software start-ups within 48 hours at Startup Camp excites me far more than news of another tech company taking the razor to R&D and middle management.

Besides, there will always be people that innovate and make money no matter the prevailing economic conditions.

Getting the inside word on these closely-guarded money spinning secrets is something I'll undoubtedly be focusing much of my time on this year.

More broadly, however, crisis often seems to bring out the best in people in terms of creating innovative product and services offerings.

At worst, we learn something from crisis, the market corrects itself, new opportunities are formed and business goes on. Consider these worst-case scenarios as examples.

Nortel Networks recently filed for chapter 11 creditor protections in the United States and similar measures were taken in Canada and EMEA.

Where, you may ask, is the good news in that?Well, the fact that the Australian and Asian region markets haven't filed similar proceedings is good news for local customers and artners.

Assurances by Nortel of product supply and 'business-as-usual' operations in all markets also won't go astray.

All going well, Nortel should ultimately benefit from this restructure.

The other 'good news', at least according to Ovum analysts Dana Cooperson and Matt Walker, is that Nortel's actions may also bring about more 'balance' to the telecommunications equipment industry as a whole.

"Debt restructuring can give struggling companies breathing room to radically change and return in a different form or make their businesses more attractive for acquisition," the analysts said of Nortel."

'The new Nortel' may be unrecognisable as a result of business and product line shutdowns and asset sales, leaving opportunities for other vendors.

"Just one of those opportunities is for tier-2 networking players to take a divested slice of Nortel's business and integrate it with their own kit in an effort to compete better with the likes of Cisco, according to Ovum.

"For a company targeting Cisco, bits and pieces of Nortel's Enterprise and Metro Ethernet Networks (MEN) units are clearly attractive," said the analysts.

"Juniper, Tellabs, and Ciena would benefit from looking carefully at Nortel. More importantly, Nortel has channel depth outside of North America, which is of high value to these companies.

"A new and nimble Nortel, together with new channel opportunities to compete in larger networking equipment deals - there is potential 'good' in both outcomes.

Time will tell the success of Nortel's latest restructuring effort of course, but it does show there's upside to an act of the downturn.

Let's now take a second example - Satyam.

Last month, the Indian outsourcer revealed a US$1 billion fraud by its chairman, B. Ramalingu Raju. Again, you may ask, 'where's the good news?'

According to Jens Butler, a principal analyst at Ovum, the good news is that "corporate governance is probably now a taboo theme for marketing to play with.

"From where I sit, this can only be a good thing for both IT managers and the channel. It means that we should hopefully see less products and product marketing materials that use fluffy corporate governance motherhood statements as differentiators between that vendor and their competitors.

It reminds me of an announcement made last year by a mid-sized local data centre operator that it was allowing its co-location customers to go 'green' - simply by buying green power.

It was marketed as a major differentiator between them and their competitors that customers could host equipment in their centres that drew so-called green power - not to mention that the operator itself would switch to a greener supply as well.

Of course, there's a big problem with all this - the issue of 'greening' a data centre is much more complex than simply buying 'green' power.

After all, you can pump as much 'green' power into a centre as you like, but if you haven't optimised the floor layout, under-floor and in-room airflows, and plant, and you aren't measuring equipment draw at the node - or at very worst the power distribution unit - then you can still waste just as much energy.

The only difference is that you're paying more for the privilege.

I don't know how you feel about it, but cutbacks to this kind of feel-good marketing can't come fast enough.

As Butler said, "Environmental credentials, the broader corporate social responsibility contribution and excellence in corporate governance were all candidates that marketing departments would have used to squeeze out the maximum possible amount of differentiation."

The upshot of Raju's confession is that the ability to play the corporate governance card is much reduced for all players.

"More seriously though, outsourcing customers will also benefit from the Satyam situation as governments and other providers revamp their supervisory and governance frameworks to ensure a scandal of this scale doesn't befall them, too.

Hopefully I've managed to prove that some good can come from the downturn. Now, together let us agree to never speak of it again.