DSP’s Take on The Economic Climate
Our Financial Director Tuhel Alom talks to us about his thoughts on the current economy and what he thinks the future looks like ...
"Nearly everywhere I go I hear talk of a recovery in the UK economy. There seems to be a sense of cautious optimism in the dense London air. Now I can’t speak for other companies but DSP has had an amazing few years and the future continues to look bright. We’ve grown rapidly in the last few years but whenever I read or watched the news it seemed we were the only ones growing. The effect of this wider economic mood meant I always had one eye on the cash flow as did many other businesses. This renewed focus on cash flow let to businesses thinking twice about growth aspirations in a risky climate, it begs the question
‘would they have invested with a greater appetite for risk pre 2008?’
I can’t speak for others but I’d like to think DSP still looks at investments in the same way as pre 2008, the only difference being the access to funding. The lack of funding meant DSP had to plan for an uncertain future. It looks like we are not the only ones planning for uncertain future recent stats by Capita found that FTSE 100 companies are sitting on a cash pile of £166bn. One of the most profitable global companies in recent times is sitting on a cash pile estimated to be in excess of $100bn. If Apple thinks it is prudent to build up a war chest then surely the rest of us can’t be too far off the mark.
The problem with this hoarding mentality is that it is part of the reason for the slow growth. Can you imagine if we all started spending the cash in key projects such as IT infrastructure? Well that’s where the challenge lies for a company such as ours. DSP is an award winning IT partner to many of our clients and this is where we are showing our true innovative face. They face the same questions as us. Are we ok to start spending on much needed IT projects? “Necessity is the mother of all inventions” not sure who said this but it is something that rings true for many companies in today’s climate. Our clients are finding they need to continue investing in IT but it has to be efficient and hugely economical. It could be argued that the rise of CLOUD is a result of this necessity. As IT departments are increasingly under pressure to justify spending they are looking to new ways. In the boom days it was ok to have a big team of in-house IT skills but as the numbers started to get slashed IT managers had to look to solutions like partnering with Managed Services Providers (MSPs).
Managed Services easily ticks the financial benefit box so why do IT managers still view it with scepticism. It requires a bold and brave move and a shift in thinking. We all have this inner desire to control everything, especially in the IT industry. There can be this mentality of ‘no one else can do it better than I can’. To give the IT decision maker’s confidence and reassurance that MSPs can deliver an exceptional quality service, the MSPs agree to strict SLAs. In many cases these SLAs are better than what the client has now. Take DSP as an example; we have consistently achieved 99% SLA over the last 12 months as an average across all of our clients. I think maybe we should take out an ad in the look of a classic war poster
“your country needs you… To spend on IT”.
I might have to run that idea past our marketing team.
So what next for the economy?
Unfortunately we can’t say with confidence what will happen next. We live in a connected world where America not paying its bills has repercussions for the rest of us. No matter how hard we work to stabilise and improve, a butterfly flapping its wings in the US can result in a tornado for us here in the UK. I started off by mentioning the new found optimism, a recent survey by Deloitte, of UK FTSE 100 & FTSE250 CFOs, found that 54% are considering using their cash reserves to increase CAPEX spend in the next 12 months. So maybe we will see the release of cash reserves after all. Good news all round!"