Companies that grew up to service the dotcom boom are now, like the dotcoms themselves, feeling the post-bust pain, writes Angus Kidman.

Published in The Bulletin, September 10 2002

The dotcom bust didn't just kill the market aspirations of a thousand techno-wannabes. It also signalled tough times for the industries, such as the technology analyst sector, that had grown up to service those aspirations.

Forrester Research is a typical example. Founded in 1985 and initially producing reports aimed largely at IT buyers, Forrester was one of many firms that suddenly found themselves moving from trade paper obscurity to Wall Street Journal front-page status during the dotcom boom, as investors sought means of quantifying net mania. Post-boom, times have been tougher for Forrester, with forced lay-offs and a decline in profitability, but the company seems relatively unconcerned.

"I've been through these downturns before," says John McCarthy, a 17-year veteran of the company and a frequent visitor to Australian shores. "The one that comes to mind is 1985 where the first round of PC guys went belly-up. At the same time the new guys were struggling, the bloom was coming off the minicomputer rose.

"There was about a two-year interregnum where we asked: 'What's the way out of this?' I think we're at this same kind of digestion period. It's like the python: it eats the big meat and then it doesn't eat for a while."

So how does a technology-driven research company survive in 2002? "It's back to basics," says McCarthy. "For us, our product is the reports. You write good compelling reports and people will get motivated. Particularly now, people are desperate for direction, for a way out of the jungle. The core value in what we do is creating the big ideas that tie together a bunch of things. Those are more important now."

While acknowledging the importance of "servicing the bejesus out of customers", McCarthy remains convinced that a culture of measurement and research is essential for any business contemplating a major IT project. "All these CEOs who say, 'I don't know what I got for my investment', I'm like, 'Well, what the hell did you ask for?' "