TORONTO – It will take a return to fundamentals and perhaps up to 18 months before a climate of trust returns to a business world stung by scandals, according to a Thursday panel of Canadian executives at Comdex 2002.
Already burdened by a slowdown in IT spending, technology companies
must also now deal with how a pall hanging over stock markets will affect their own capital spending, and with the task of regaining public trust in the wake of accounting irregularities at a number of market titans, including Enron Corp. and WorldCom Inc.
“”I think every company is going back and revisiting their values, revisiting their auditing,””said Frank Clegg, president of Microsoft Canada Co. “”It’s going to take several quarters of people coming forward and getting the results they expect.””
Clegg also said the daily revelations of misstated earnings and United States Securities Exchange Commission investigations shouldn’t scare people away from the markets in the same way that a series of dot-com failures didn’t sour them completely on the Internet.
Michael Moskowitz, president and general manager of Palm Canada Inc. echoed Clegg’s call for accountability.
“”Make sure that you’re prioritizing the right things,”” he said. “”Do the things you say you’re going to do and get them done, rather than having a whole laundry list of things and getting 50 per cent done.””
Emile Querel, Canadian solutions consulting president for WorldCom partner EDS, said companies need to focus on profitable growth rather than revenue.
Paul Tsaparis, Hewlett-Packard Canada president and CEO, saw a positive side to the reams of scandals, as they could trigger a new commitment to responsibility among companies.
“”I think overall this is going to be healthy, though there’s going to be some short-term pain,”” he said, adding that a recovery in confidence could take anywhere from six months to a year and-a-half.
Short-term pain is not really what the IT sector, already hamstrung by a spending slowdown, currently needs. Though the panelists crowed about Canada’s competitiveness and near-term prospects, they acknowledged that an IT capital spending slowdown persists in this country.
“”If it doesn’t in some ways reduce cost, increase profits or increase customer experience, they’re not interested in investment,”” said Tsaparis, adding that there is still interest in truly innovative solutions.
Clegg agreed, adding that enterprises will invest if given a reason. He cited a recent Microsoft contract to create a one-stop change-of-address portal for British Columbia’s provincial government as the kind of money-saving initiative that can attract investment.
“”I think the opportunities are even greater in tough times to show innovative solutions,”” he said. “”Companies have shown time and again that if you go forward with a good business proposition, people will accept innovation.””
Clegg said the biggest challenge facing Microsoft is not a spending slowdown but ensuring people’s trust as technology becomes increasingly prevalent in their lives. This means ensuring the availability and security of systems as well as the privacy of users.
As far as regaining trust in the companies themselves, one of the biggest issues has become stock options, and whether their costs should be included as business expenses on company income statements. For the most part, panelists skirted the issue, focussing instead on the pros and cons of options themselves. When pressed about the expensing issue, Querel said he did not understand the question. Klegg, whose company is a well-known example of the options-as-payment system, said Microsoft would abide by whatever consensus was achieved by companies and regulators.
Tsaparis said the main concern of companies is keeping a level playing field.
“”No company wants to be a leader in this regard,”” he said later in the afternoon in a Q&A at the ITBusiness Theatre, adding that implementing a new system is not a simple process. “”However that situation evolves and whatever the answer is, I think what we’ll find is that we’ll shake out to a standard and all companies will come out the same way.””
Comdex Canada 2002 wraps up Friday.