Leadership optimize

Can IT be retooled to maximum effectiveness in a down economy?

Markets worldwide are plunging. Iceland is bankrupt. Your 401(k) is down almost 40%. Is there any kind of silver lining in this mess?

Unless you’ve been living under a rock, you’ve probably been following the news of all of our dwindling fortunes as the markets have tanked close to 40% over the past year. While I firmly believe that not one person—economist or government official alike—has a clue as to what happens next with regard to the global economic outlook, do the current market conditions lend themselves to more involvement by IT in the business side of the house? Will other initiatives be accelerated to realize a quicker ROI?

First – why am I asking? Answer: I read an article earlier today from some pundit indicating that he expects IT spending to increase in 2009. So, I started to think about reasons why this may be true. Now, please don’t take my points below as gospel on what will happen. These are just a couple of things that came to mind as I was thinking about this issue during a three-hour car ride!

Let me explain my thinking. In the history of "current IT"—that is, the well-connected, high-tech enterprise we now enjoy that wasn’t in place in 1987, the time of our last memorable financial crisis—we haven’t had an economic disaster of the magnitude that we’re facing today. As organizations strive to cut costs in order to remain afloat, let alone profitable, I see the possibility of major changes in organizations to more quickly take advantage of efficiency and business improvement efforts based on technology. For example, depending on how long the current climate remains in place, organizations may begin to rethink the desktop upgrade cycle and begin to take advantage of more cost-effective – and secure – options such as virtual desktops based on less expensive hardware. Of course, initiatives like this usually require some up front capital; as we all know, money is getting hard to come by right now.

Further, will companies accelerate process improvement efforts in order to realize major financial gains due to more efficient processes? If this happens, IT professionals in many organizations would be drawn into significant business discussions in order to make headway on these kinds of efforts. Based on what I’ve been reading lately and what I see as our eventual results at Westminster College due to our slowly progressing SOA/BPM plans, I’m more convinced than ever that the IT field as a whole is on the cusp of major changes in this direction anyway and the current conditions may speed up the pace. At Westminster College, the promises of cost avoidance and better service to our students are the main drivers in our efforts. Lowering costs and providing better customer service are key drivers at any organization, though.

After 9/11, there was a major uptake of video conferencing equipment and services so that companies could avoid the high cost, risk, and hassle of flying people to meetings. Maybe this financial meltdown will result in companies going on an efficiency binge across the board, from how technical services are provided to how the business is run.

Of course, a lot of companies are already undertaking these kinds of efforts, so this discussion is not applicable to everyone. But, for those of you that may not be to the SOA/BPI/BPM/VDI stage yet, what do you think?

Question: Will the current financial climate result in IT becoming more involved in improving overall business efficiency?

About

Since 1994, Scott Lowe has been providing technology solutions to a variety of organizations. After spending 10 years in multiple CIO roles, Scott is now an independent consultant, blogger, author, owner of The 1610 Group, and a Senior IT Executive w...

12 comments
lalalulu
lalalulu

There is an 'if' lurking in this discussion somewhere. First of all we are not yet in a recession, here is the UK, all things indicate that we are headed that way, but we are not officially there yet. We can talk ourselves into a long recession if we chose. The completion of smaller projects, the 'low-hanging fruit' items - indicates, in my view, a wait and see stance. My lurking 'if' is this: if you cut (project and management) corners as well as budgets, then you may well have to live through some difficult times, recession or no recession. This is not the time to cut quality.

prosenjit11
prosenjit11

IT is dependent on the core industries and the core industries have inflated projects for their profits not anticipating that the burden of debts is rapidly increasing. Politics in organisations have melted down to personal benefits in the level of Directors and bankrupties have been filed against Organisations with Current A/Cs, what about the huge withdrawls on Project to Project Budgets, debating on this, pay hikes and packages are a part of the HR practice to retain employees in an organisation but projecting and marketing beyond specifications lead to delay in projects and also repayments due to huge lag in market product release/production release on a mass. Today's situation will take at least an year to balance the deficit.

m@rcel
m@rcel

No, at first the management has to cut costs. Simply because credits are hard to get at the moment. The it projects will have to wait for some time. Just like in earlier crisis.

reisen55
reisen55

It's called BANGALORE. And it has devastated the American IT community. What little in-house support is left around these days is nill. At my former employer, support for a 1,200 node network is now reduced to one on-site technician, the rest having been outsourced out over the years. In the mind set of management, far away in Chicago, this is of course a COST SAVINGS in terms of salary. American management does not listen to integration of IT into their business plans or structure, as it should be done. All they care about is cost and doing it cheaper,faster,better (one word) from India. Hey, you get what you pay for.

lastchip
lastchip

Sadly, the bean counters only ever have one phrase: cut costs! Next year is going to be horrendous. "Make do and mend", will be the order of the day. There will always be enlightened exceptions, but they're going to be few and far between.

T.Walpole
T.Walpole

Of course they can, but companies will have to be very selective about the projects they take on and the smart ones won't be afraid to pay up to get qualified professionals to run those projects. There will not be a lot of room for cost overruns and project delays. Unfortunately, in reality I fear that many companies will just slash IT budgets in order to achieve short term cost reduction.

gerhardh
gerhardh

Smaller savings soon will be more appreciated than big savings later - especially if the latter even require higher initial investment (as they usually do). Therefore I expect less investments in - huge migration projects to new technology, - IT support for new products and services. Upgrade and replacement of existing HW/SW platforms will be postponed to some degree. This reduction of IT-investments will no be compensated entirely by new projects aiming to introduce ITSM or other means to improve efficiency.

steve.lawless
steve.lawless

I work as an ITIL service managerment trainer in the UK, and have never been so busy. Most of the enlightened IT managers understand that they can make savings in the IT budget and improve IT/business alignment by implementing efficient and effective IT processes. There is obviously a downturn in our business with some financial and building sector customers, but the majority of organisations are positioning themselves for the upswing.

foruseonforums
foruseonforums

The facts are that most people, not just companies rely on things like email, mobile phones etc, so in order to continue working to a set level, companies will have to keep investing. What I think we will see though is a slowdown on companies investing in new technologies. I think companies will be more reluctant to upgrade, taking the view of "If it ain't broke...".

buddyfarr
buddyfarr

I believe you are correct T.Walpole. IT would be best suited to be right in the middle of streamlining processes but in a pinch IT is the first place companies look to cut costs. I worked on a project to get a document imaging system up and running and it was closed down because the main department we were deploying in didn't want to go paperless. It would of cut costs and cut out a lot of the workload they were doing but they did not want to standardize their forms so they shafted the whole thing. Management needs to get their IT departments in the middle of any cost cutting situations so that they can use technology to solve their problems.

bernalillo
bernalillo

Pet projects from management and IT alike frequently defy a true ROI analysis. Cost cutting does force the issue. How it is done will determine to what extent, if any, IT can be a help. The latest software release can wait. So can hardware upgrades / replacement to an extent. It may be more efficeint to automatically turn off unused PC's than to upgrade to higher efficeincey ones. Open Source is likely to get a chance it would not have been given before. A second look at out-sourcing, both pro and con is in order. more online training and colaboration, fewer out of town junkets. Vendors will also start focussing more on real life cost savings vs esoteric what-if feature fantasies. More checking of vendor services. Hell, I cut our telecom bills by over 25% in two years and actully improved services. I expect to cut another 10% over the next two years just by really comparing options.

TimH.
TimH.

I have found in the past that if you get sufficient Management "Buy-In" to what IT are proposing, then anything is possible. If the work is supported fully by Management, then individual departments will not be able to decline to take part in the project.