Preparing for the Economic Downturn

By Tony Kontzer  |  Posted 02-07-2008 Print Email
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Taking Action

Similarly, Accenture had scattered billing systems around the world, but when the company's European operation consolidated on one e-billing system, Modruson decided to roll it out globally. Two years later, that system was supplanted during the SAP deployment, but Modruson has no regrets. It was a step toward where he wanted Accenture to be, and because it was software the company already had, it paid for itself in a year, resulting in significant bottom-line benefits the second year.

These and other changes--such as consolidating on one standard desktop and one system each for recruiting and scheduling--have helped make Accenture's IT department a much leaner machine. While Accenture's global employee headcount has grown to 175,000 from 75,000 since he became CIO, Modruson has reduced the IT budget by 20 percent during that time. "I'm supporting more than two times as many people for less money," he says.

Richard Fishburn, senior VP and CIO for Corning, also is able to breathe easier today because of actions he took in the wake of the 2001 recession. When that slowdown hit, Corning, a $5.17 billion-a-year maker of specialty glass and ceramic components for high-tech products, had a robust fiber-optics manufacturing business. But the dot-com bust hit the networking industry hardest, and Corning had to cut fiber-optics production from five fully operational plants to one running at half-capacity.

The company laid off up to 90 percent of the workers at some plants, as well as 650 of its then 1,200 IT employees. "I had worked in cyclical industries before," Fishburn says, "but when you get that degree of severity, you find yourself in a position where you say, 'I never want to have to do that again.'"

His response was to tweak the IT organization's operating model during the subsequent years of economic growth. For instance, he built flexibility into the operating structure by rebuilding his team with contractors rather than hiring full-time staff. By increasing contracted IT service delivery personnel to half from 17 percent, Fishburn greatly reduced the likelihood of layoffs during the next downturn.

He also created a more transparent link between IT and business value, in large part by focusing on short-term needs, such as tweaks to plant floor systems, and breaking larger projects, such as supply chain system upgrades, into more manageable chunks, such as proof of concepts and design. That helped business managers get behind IT because they could see clear results from IT investments. IT learned to make quick decisions without having to worry about mortgaging the company's future.

The payoff of this rethinking of IT operations has become clear as the economy has downshifted. "We're more confident heading into a downturn," Fishburn says. "In most situations, we can work through things much easier than [we could] five years ago."



 

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