The Role of Technology in an Uncertain Economy
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.
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, we are optimistic about long-term economic prospects, here and around the world. The trends that have made the last decade so dynamic for businesses in every corner of the globe haven't changed. Technology continues to improve. Productivity continues to rise. New business opportunities continue to emerge.
At the same time, there's no doubt that this is a time when thoughtful business leaders must carefully assess how to best utilize their resources to weather the uncertainty that lies ahead. We are hearing from customers all around the world that information technology can play an important role in helping companies respond to this difficult and rapidly changing economic environment.
In the near term, for many organizations the emphasis will be on cutting costs and reducing risk. Today, there are a number of technologies that are helping companies lower expenses and improve effectiveness and efficiency.
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 use more of the computing power that they already own. Another example is unified communications technologies that bring voice communications, e-mail, and instant messaging together to allow organizations to replace traditional phone systems with integrated software solutions that reduce hardware and maintenance costs.
Cutting back on travel is an obvious ways that companies can save money. Today, video conferencing and new collaboration tools are making virtual meetings much more like face-to-face interaction and enabling people to share and collaborate more effectively. In addition, companies are finding that reducing computer energy usage is one of the most effective ways to lower costs without hampering organizational capabilities.
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 the group's 3,500 servers. By implementing a unified messaging system we're saving $5 million each year through reduced hardware and maintenance costs.
Of course Microsoft isn't the only company that is delivering software that can help companies reduce expense. And it's not just large companies like Microsoft that are benefiting from these technologies. Software has helped Cogan Wire and Metal Products, a Canadian company with 100 employees, cut travel expenses by $400,000 by using virtual meetings to keep its network of dealers up-to-date on new products and to work more closely with customers who buy directly from the company. Cutting costs is an important way to respond to the challenges of the current economic climate. But it is 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 understand and respond to changing business conditions with greater insight and speed than ever before.
This focus on people is critical. 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, companies will shift so much of their focus to controlling expenses that they will lose sight of the critical importance of investment in innovation. 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.
Today, 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 ways 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, today and in the years ahead.
