Recession Bites Hard

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Well what a depressing start to the year – first the UK gets hit by some of the worst temperatures we have ever had making getting to work near impossible for so many people (something I’ll come back to later in this blog) and then the news of more closures and liquidations in our industry that will send a few waves through our industry….

Closures

So this week we saw the announcement that Positive Focus will be closing their doors for business citing that the lack of investment from companies in the pre-media and print sectors that created extremely poor operating revenue which they cannot survive on. This type of news is of course sad as it removes competition from the integration market. Some people will benefit by picking up existing support contracts as the vultures sweep in to pick the bones out of carcasses, yet the sadness is with the family run business that operated for 32 years providing top quality services to our industry.

The point is though that this is not the first time that an integrator has come up short in sales and had the bones picked out of them. In previous situations private investors have jumped in to save the companies, but what value has that ever bought? Integrators like other companies need to continually reinvent their service offerings, it’s not enough in today’s markets to only supply the same software and services you established your company on. We only need to look at how the pre-media landscape has dramatically changed in the last 24 months with mobile media and personalisation becoming more and more prominent with mobile devices and digital print being the fastest expanding markets.

Brand Director Workflow Management DAM

We also have seen a massive upraise in Digital Asset Management with business process & workflow at the heart of the service offering and so for integrators is it enough to only focus on a single solution when smaller and individual consultants can offer services across multiple software offerings without the need to increase the costs of the software solutions to cover their own operational cost (since they are being paid as consultants anyway!)?

The next 6 months in this industry will definitely see more casualties of the recession and my concern is that, while everyone is holding onto their purse strings, the industry will diminish into a barren landscape of little choice as to who you use. On the upside, the integrators that are left to compete will take their pick of the best talent across the market at pay levels that are unrealistic to UK living!

Contingency plans?

eavy snowfall in much of Britain caused widespread travel problems throughout the country Monday morning, causing hundreds of flight cancellations and rush hour chaos in London

AP Photo/Joel Ryan

Whilst we are suffering the effects of this recession and many families struggle with the continuing fuel costs, the snow in the UK has rendered so many people incapacitated when it comes to travelling into work. This is a serious problem for the pre-media and print companies as many of them have had to reduce their costs to the bare minimum to remain competitive and therefore are unable to have contingency plans in place for staff not turning up for work. Even though the clients are in the same situation as their suppliers there is little sympathy for their inability to produce the work and this is leaving more clients looking at how they can offshore their work to countries that can cope regardless of the weather conditions which in turn strengthens the effects of this recession (the “who is to blame” question is a much more political discussion that I won’t get into – but I hope the industrial sector put pressure on the UK government for poor preparation, again, of the weather we are having here.

Most companies never plan for ‘staff’ outages let alone any diaster recovery plans when serious problems occur (building fire, hardware failures, hardware theft or internet outages for example). Yet to me, contingency plans should form part of any contract when a continueous supply of work is provided and the assets of the clients are stored on the companies servers. Staff contingency is difficult to manage as companies should have suffient workflow & job management in place to be able to prioitise work for the clients that have a high demand, they should also have the ability to work with business partners in order to provide a continuation of services. Yet this is always an ‘after the event’ type of reaction which gets spoken about, then as soon as cost becomes involved normally gets shelved as something to do another day.

The future is bright

Being the harbinger of doom is never nice so I’m going to try and put a positive spin, regardless of the amount doom and gloom there is so far in 2010. The work still needs to be distributed between the companies that survive the recession, there will also be new births coming out of the woodwork that have fresh perspectives on the way to do business, pre-media will be a primary focus of these new businesses with the new technology and new workstreams paving the way to the next generation of business models. There will still be room for the traditional businesses, but the truly award winning companies will have the ability to react to the changing technolgy landscape and market their changes in ways that ensure they are on the summit looking down heir competition.

I also predict that there will be no room for fat cats in these new business models! Corporations that once hoped to increase their profit income from design and reproduction companies will shed their interests as quickly as they were snapping them up and we all know that there is no creatvity around the corporate board room table, only balance sheets, paperwork and endless justifications for stuff they simply don’t understand!

Author: Gary George

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2 Responses to “Recession Bites Hard”

  1. cindydyer Says:

    Hi Gary,

    I’m not that squeamish, but I really wondered why you included the photo of hanging meat and the dead bodies to illustrate your article. I understand the reference to “casualties,” but I think it was a bit much. Just my opinion, but I think it really distracted from your message. Just my two cent’s worth….

  2. cindydyer Says:

    Hi Gary,

    Excellent replacement images….they really add to the article now! Thanks for not being offended by my constructive criticism. It’s an excellent read, by the way.

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