Survey: Tech execs retrenching

In a new study, CEOs and senior managers from Cisco, Oracle, SAP, Virgin Mobile and other companies say they're not holding their breath for a tech recovery.

Alorie Gilbert Staff Writer, CNET News.com
Alorie Gilbert
writes about software, spy chips and the high-tech workplace.
Alorie Gilbert
2 min read
Information technology, telecommunications and media companies are bracing for further industry fallout and doing intense soul-searching more than two years into the tech bust, according to a study released Tuesday.

Ernst & Young and fellow business consulting company Cap Gemini Ernst & Young surveyed 86 chief executives and other senior managers about their attitudes toward business and the outlook for their industries. Survey participants included executives at Bell Canada, Cisco Systems, France Telecom, McGraw-Hill, Oracle, Qwest Communications, RealNetworks, SAP, Telstra and Virgin Mobile.

The key finding of the survey is that many companies in these industries, particularly in telecommunications, are struggling to survive amid high debt, financial instability and slow growth. Executives surveyed expect bankruptcies and restructuring to continue as adoption rates of new technologies, such as e-commerce, wireless and high-speed Internet services, fail to live up to earlier forecasts.

"Beyond cost cutting, there is no generally accepted strategy for how to succeed in the current environment," said Billie Williamson, the head of Ernst & Young's division that caters to technology companies. "CEOs are truly in a quandary and have differing opinions about when the turnaround will occur and how to position themselves for the upswing."

Surveyed executives said that in this anemic environment they are focused on re-examining their business models, expanding the amount of business they do with their customers, holding down spending and seeking business efficiencies.

One of the beliefs executives are discarding, said Williamson, is the idea of an all-encompassing convergence of media, telecommunications and computers.

"Gone are the cross telecom, media, and technology industry acquisition strategies that not too long ago people felt were the wave of the future," Williamson said. "CEOs found the integrated business models too complex to operate and too expensive to purchase the necessary competencies--suggesting that some moves were before their time. What we are seeing is technology integration: For example, the integration of technology on a chip."

According to the survey, the fourth in a series that began in 1999, executives perceive government regulation and growing competition as the greatest threats to their businesses. Yet statistics indicate the enemy is more often within.

According to the 2002 Pew Internet Project, funded by the Pew Charitable Trust, more than half of the 24 million Americans with high-speed Internet access at home complain about problems with their service provider.

"These companies must take a more realistic view of customer opportunities and the ability of their own companies to serve those customers," Williamson said. "Execution still remains their greatest challenge--once they make the tough decisions, they have to execute successfully all across their organizations."