As instability continues to ripple through the global economy, it's clear that no one is immune to the effects of tighter credit and slower consumer and business spending.
As instability continues to ripple through the global economy, it’s clear that no one is immune to the effects of tighter credit and slower consumer and business spending.
Despite being forecast an economic growth rate of around 5.5 to 6 percent by the European Bank for Reconstruction and Development, even Eastern Europe is starting to feel the pinch as worldwide industries such as banking experience a slowdown.
But while it’s impossible to predict how long the current uncertainty will last or what the final impact will be on jobs and growth, I am optimistic about long-term economic prospects for Central and Eastern Europe. The trends that have made the last decade so dynamic for businesses in this region haven’t changed. Developments in technology continue to make their impact here. Productivity continues to rise as businesses seek to innovate and take advantage of the new business opportunities that continue to emerge. Above all, the talent for innovation, driven by Eastern Europe’s world-class education systems especially in sciences, continues to deliver with the raw materials to survive the current economic downturn.
At the same time, there’s no doubt that this is a time when business leaders must carefully reassess their core strategy and calculate how to leverage their existing resources to address the uncertainty that lies ahead. In the near term, the emphasis for many organizations will be on cutting costs, increasing efficiencies across the board and managing risk in the best possible way. Information technology can play an important role in helping companies respond to this rapidly changing economic environment.
Sweating existing assets is a buzz term which has renewed relevance here. Microsoft continues to develop a wide range of innovations that can help organizations to cut costs, improve productivity, fuel business and operational innovation and stay ahead of the competition.
Of course, software assets need to be managed as much as hardware, however, if strategically deployed, can effectively streamline and enhance a company’s capabilities and performance. One example is virtualization. A technology that makes it possible to run more than one operating system on a single computer, virtualization reduces costs and lowers energy consumption by enabling organizations to get more from the computing power that they already own.
For example, in Hungary, the Hungarian Postal Services (Magyar Posta ZRT) has significantly reduced the size of its hardware park through deploying Microsoft virtualization technology. With applications with more than 15,000 users at the same time, around 15 to 20 web servers were required. Using Microsoft virtualization technology, only four physical servers serving 40 virtual machines are now required to support these applications. Consequently, Magyar Posta not only reduced the cost of procurement and amortization, but also saved up to 30 percent on incidental expenses such as energy and space cost.
Other examples include unified communications technologies that bring voice communications, e-mail, and instant messaging together and video conferencing that allows cutting on travel.
We’re using many of these approaches here at Microsoft. For example, our internal IT department moved 25 percent of its servers into a virtualized environment during 2007. The resulting savings top $10 million and today, it takes just four people to manage our 3,500 servers. By implementing a unified messaging system, we’re also saving $5 million each year through reduced hardware and maintenance costs.
Cutting infrastructure costs is an important way to respond to the challenges of the current economic climate. But I believe it’s also possible to see some of these challenges as opportunities. Many of the technologies mentioned above are enabling forward-looking companies to build information systems that are not only more cost-effective but that also enable people to address changing business conditions with greater insight and speed than ever before.
Ultimately, economic growth depends on innovation. And innovation is built on the ability of people to transform new ideas into products that deliver new value to customers. The danger is that as the global economy slows down, companies might shift their focus on controlling expenses so much that they might lose sight of the critical importance of investment in innovation and people. The fact is that in any economy, innovation is the foundation for creating opportunity and success. Companies that continue to pursue innovation position themselves to better weather difficult economic times. And they create the conditions for more rapid growth when the economic climate improves.
There’s no doubt that we’ve entered a period where companies and individuals are facing a new set of economic challenges. But at the same time, we’re in the midst of a period when key technology trends – more powerful devices, new means of connecting to each other and to information, new ways of interacting with computers – are converging in ways that will revolutionize the role that computing plays in our lives at home and at work. Companies that take advantage of these trends to transform their businesses and deliver new innovations to their customers will have an important competitive advantage not just today but in the years ahead.
Vahe Torossian is president of Microsoft Central and Eastern Europe.
This story appeared in the April 2009 print edition of EE Times EuropeEuropean residents who wish to receive regular copies of EE Times Europe, subscribe here.
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