Business in the right direction

New Year’s resolutions for 2008: Managing IT in the face of economic uncertainty

There is little doubt that US and global economic growth slowed considerably over the past six months. We’re now seeing signs that the economy has entered into a down-turn, if not an outright recession. While there is considerable debate about the nature and potential severity of this downturn, it’s quite clear that executives are more nervous about their businesses today than they were a year ago.

During times like this, it’s natural to closely examine all elements of a business to determine where it can be “tightened up.” Certainly, information technology (IT) is one of first places many executives look. It can be a large portion of a company’s budget, with much of the spending considered discretionary. In truth, it’s a function that many executives still don’t really understand.

When the economy turns south, the first reaction is to cut back—on projects, investments, and people. It is never a bad thing to “tighten” operations to ensure they are running as efficiently and effectively as possible. But, too much tightening in response to a slowing or uncertain market may not be a good thing, either, as it can leave you unprepared when the economic outlook turns around.

Six keys to managing IT in an uncertain economy.

If your organization is looking more closely at IT in light of current economic concerns, there are six things you should be doing today—steps that not only can help you weather the storm during  2008, but also ensure a stronger IT foundation for more prosperous times ahead.

  1. Re-examine your IT priorities and your process for setting them. This is a good time to review your organization’s current IT priorities and the process for initiating and approving new IT requests. A clear framework for evaluating and approving projects and investments ensures that your team makes sound decisions based on critical business factors. This framework can guide your decision making going forward to ensure that you are allocating limited resources most effectively. At the same time, you can use it to assess projects you currently have in process and re-prioritize those most critical to your company’s operations and its future. Be sure to include key company operating and staff executives outside of IT in the prioritization process.
  2. Tighten up management of key programs and projects. Economic uncertainty makes it all the more important to manage IT projects efficiently—keeping budgets in line with expectations and timelines focused on producing positive returns. Remember the old adage, “a project whose schedule slips once will slip again.”  Focus on tightly managing project scope and hitting project due dates. Structure projects so benefits will be delivered in weeks and not months, or months and not years—a process called “time-boxing.” Also, review and refine key project management processes, such those used to monitor status of milestones, approve scope changes, communicate status to stakeholders, and manage project issues.
  3. Accelerate initiatives that improve operational effectiveness, organizational productivity, and customer acquisition or retention. In periods of slowing growth, most companies intensify their focus on processes that delivery organizational efficiency and responsive and effective customer service. Consequently, there is great value in accelerating projects that deliver these benefits. You will want to prioritize those projects that enable your organization to retain customers, gather information that gives you an edge in sales efforts, reduce operating and capital costs, and improve productivity and efficiency.
  4. Re-assess your IT infrastructure. Are you maximizing your existing hardware, software, and telecommunications infrastructure, or are you spending more on these areas than you should? Upon closer inspection, many companies find they have more hardware than they really need and that they’re not taking advantage of strategies that will enable them to reduce hardware capacity and improve utilization.  Virtualization is one such strategy. Some companies also may have un-deployed software licenses “sitting on the shelf,” or they are unnecessarily paying for maintenance on software or hardware. Or, they are paying more for telecommunications, connectivity and remote access than is required. Analyzing your technical infrastructure can help you drive down costs—in some cases, quickly.
  5. Continue to invest in strategic technologies, but be selective. Certain technologies—wireless applications and technologies, collaboration tools, and business intelligence and analytical applications, for example—are critical to your organization’s future growth and competitive position. While they may not produce immediate returns, consistent investment will be required to ensure that these technologies provide the basis for longer-term competitiveness. It is important to review investments during slow markets, but it is equally important not to pull back too much on the systems that are vital to the future. Take time to reassess critical long-term business needs, ensure you have a clear vision for supporting these needs through IT, set appropriate priorities, establish milestones, and keep moving forward with your plans.
  6. Focus on retaining staff with key skills and experience. One of the first reactions in a down-market is to pare back on staff. While an understandable reaction, this can be disastrous when dealing with an IT organization.  When it comes to the IT function, it is best to approach staffing decisions with care—while it may be relatively easy to cut staff in the short-term, it isn’t necessarily easy to rebuild your IT team when the market turns up. Certain technology skills are difficult to find and may be very expensive to acquire. Be sure you have a solid process in place for evaluating your organization’s technical skills and experience, work performance, and career potential—and focus on retaining those team members whose capabilities are critical for the long term. If you need to cut staff, do it in a way that doesn’t jeopardize the future.

West Monroe Partners works with companies to assess and improve IT effectiveness and build IT plans and strategies. For more information, please contact Jeff Margolies, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

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