Unified Communications and the Economy: Quit Wringing Your Hands and Get Back to Work

Unified Communications and the Economy: Quit Wringing Your Hands and Get Back to Work

By Paul Stockford December 8, 2008 Leave a Comment
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Unified Communications and the Economy: Quit Wringing Your Hands and Get Back to Work by Paul Stockford

In this era of extremes; e.g., Xtreme sports, Xtreme games, Xtreme you-name-it, it is only fitting that the reporting of the U.S. economic condition today is being taken to extremes. News sources today go to “xtreme” lengths to bring us the bad news and devoutly ignore or minimize any good news.  This kind of sensationalism is what sells subscriptions and advertising because we are drawn to it in the same way we are fascinated by disasters of all kinds. In the case of today’s current economic news coverage, the pessimistic side of human nature is being exploited to the detriment of everyone.

This past summer I saw a newspaper headline in one of the papers I subscribe to that pointed to rising oil prices as a major economic destabilizing factor. Three weeks ago this same newspaper had a headline pointing to falling oil prices as a major economic destabilizing factor.  See where I’m going with this?

I’ve been an analyst for nearly 20 years and I’ve managed to survive despite the fact that I’m usually the guy who goes against the grain. I’m usually the guy who goes against the grain because I’m a non-conformist – an independent in every sense of the word.  I call things the way I see them. When everyone was drooling over cool CTI apps in the ‘90s I couldn’t see why all the fuss was being made over a basic enabling technology. I didn’t buy into the frenzy around CTI. When every call center analyst in the industry was jumping on the Customer Relationship Management (CRM) bandwagon in the late 90s/early 2000s, I didn’t.  I didn’t think industry hype was a solid foundation for the growth of any market segment. I turned my attention instead to solutions like workforce optimization that had a demonstrable ROI and potential for sustained growth.

By calling things the way I see them I think I’ve made some good calls and industry history will back me up on that, but I also managed to miss out on the millions of dollars that went to many of those who fanned the flames of frenzy, joined the bandwagon and cashed out just in time. I’m still plugging along as an independent, providing what I believe to be honest analysis to my clients and to the 54,000 end-users that I write for via my association with the National Association of Call Centers (NACC) at the University of Southern Mississippi.

In this article I’m going to go against the grain once again and provide a look at the economy that doesn’t conform to the doom and gloom you read in daily news accounts in papers and on the Internet.

Let’s start by facing the reality that recessions are a fact of life. There were 21 recessions in the last century alone, and we are already on our second recession of the 21st century. They happen. The longest economic downturn in U.S. history was the Great Depression, which lasted 43 months.  Other than that single isolated incident, no recession in the U.S has lasted for more than 16 months.  The shortest recession on record lasted six months, from January to July of 1980.  It should be noted that recessions have tended to last for shorter periods of time the closer we got to the end of the last century. 

Companies react to recessions in different ways and unfortunately it seems that many companies are reacting to the current recession in the same knee-jerk, fear-based manner that dominated reactions to the 2001 recession. I have never heard such trepidation in the voices of many of the contact center technology suppliers that I regularly speak to. People seem determined to take an improving situation and keep it mired in negativity for as long as possible. This is exactly what should not be done, and once again I turn to history to back me up.  There are companies in the U.S. today that have survived recession after recession and have still managed to prosper. Case in point: Proctor and Gamble.

Proctor and Gamble (P&G) is a company familiar to all Americans and to many around the world. P&G has maintained a strategy of keeping a high market profile during economic downturns, including during the Great Depression, and every recession since then.  As a result, P&G has actually made progress during every recession of the last hundred years. While competitors cut marketing budgets and took a lower profile during economic downturns, P&G increased spending.  P&G has emerged from every recession unscathed since the company’s inception.

There are many more examples – more than can be listed in this article – of companies that have weathered economic downturns and emerged as industry leaders. In the U.S. contact center industry there are also examples of companies that have fared well, and not-so-well, during recessionary periods. During the 2001 recession Witness Systems maintained a high market profile and continued to let its customers know that it was still working hard to take care of business.  During that same period Nortel wielded a mighty recessionary ax -- slashing budgets, expenses and personnel.

When the U.S economy recovered from the 2001 recession Witness Systems emerged a winner. They had maintained their market profile, had a strong balance sheet and began looking around for companies to acquire. Nortel, on the other hand, had retreated to a defensive position that caused it to lose its industry dominance.  It has still not recovered to this day. 

It is my belief that when a company retreats during challenging economic times, customers begin to doubt the viability of the company. They feel abandoned by their supplier and doubtful about the relationship. It is important to remember that spending doesn’t stop during a tough economy, but it does become more selective.

I further believe that the right steps are being taken to get our economy back on track. The government bail out of our financial institutions had to happen in order to keep the economy running. The government’s decision to buy stock in troubled financial institutions rather than buying bad debt is a sound one. The sooner money is available for credit and lending the sooner the economy will get back on its feet.

If history is an accurate predictor the wild swings in the stock market over the past few weeks are an indicator that the economy is currently bouncing along the bottom of the recession rather than going into further decline. Unemployment rates will continue to increase over the next two quarters but it is important to keep a couple of points in mind.  First, unemployment figures are a lagging rather than a leading indicator of economic health. Second, I believe that many of the layoff activities we are seeing now are a result of poor management decisions, not necessarily a poor economy. They would have happened regardless of economic circumstances. I also believe that some companies are taking this opportunity to trim the dead wood from their operation while having the convenience of the recession to blame.

Last week we were told by the National Bureau of Economic Research (NBER) that we have actually been in recession since December of 2007. I consider this further evidence of the fact that we are past the worst and are on track for a steady recovery beginning in early 2009. As regulators practice the recovery lessons learned from the recessions of 1975 and 1982 we can expect to make this recession a fading memory by the end of the second quarter of next year.

In the meantime, now is not the time to delay the acquisition of efficiency-enhancing solutions such as unified communications, especially in the contact center where first call resolution is critically important to customer satisfaction and retention. The way for us to face the tail end of this recession is with confidence, with a focus on customer retention and with a positive vision for the future.

To the contact center industry, the unified communications industry and to American industry as a whole, the worst is behind us. Let’s stop wringing our hands in worry and let’s put those hands back to work.


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