Managing IT Through Tough Times
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It looks like 2009 is going to be a rough year, and every time you turn around, it looks a little rougher.
Throughout the second half of 2008, forecasts for corporate IT spending kept getting revised downward, from hopeful to gloomy to dismal to maybe-I'll-just-stay-in-bed-today. As of press time, Goldman Sachs was calling for outlays for computers, software and services to decline by 8 percent from 2008 in developed markets, the first such decrease in six years. Predictions for the broader economy are no more cheerful, with housing, employment and consumer spending expected to remain trouble spots until 2010, along with enormous government deficits as far as can be projected.
So what's a CIO to do? Focus. Your job has never been more important.
Old-school virtues like cost-cutting and efficiency are back in style, as companies rediscover the need to husband their resources and rationalize costs. That's stuff IT has always known how to do. At the same time, strategic vision and new business opportunities are at a premium; as weaker rivals falter, sounder competitors will move ahead.
And this moment will pass. Whether this turns out to be closer to the beginning than to the end of the bad times or if prosperity is around some not-too-distant corner, businesses will eventually start to grow again. And when the economy recovers, companies that have managed the downturn well will accelerate into the next growth cycle. So, even as you're feeling for the bottom, your priority should be to put your company in a position to prosper in the years ahead.
That's not to make it all sound easy--they're called "tough times" for a reason. Jobs may have to be cut, and pet projects and real needs may have to be put on hold for the foreseeable future. John Baschab, managing director of staffing firm Technisource Management Services and co-author of The Executive's Guide to Information Technology and The Professional Services Firm Bible (Page 13), says this could be the right time to consider outsourcing certain job functions.
But the hard choices must be made carefully. As Forrester principal analyst Bobby Cameron points out, the focus should be on agility and innovation, not big spending, though some spending will be necessary. Different sectors of the economy will face different scenarios, so there is no one-size-fits-all solution. A key point from one of Cameron's recent presentations provides solid advice: "Drive IT's decisions based on the business value of investments and operations, not wholesale cuts."
It's important, too, that the CIO get out ahead of painful budget reductions. The numbers coming out of the CFO's office may be immutable, but you can plan for them and bring that plan to the leadership team. This may be the time to execute on hard choices, such as the consolidation or staff reductions you've put off in the past. Be proactive, not reactive, and your shop--and the enterprise--will be healthier for it.
We spoke to three CIOs about their plans for managing through the hard year ahead. Paul Johnson, the veteran CIO at regional banking powerhouse BB&T Corp., is moving forward with a multiyear network infrastructure investment project that is critical to the company's business strategy. Ramon Baez, CIO at retail-products giant Kimberly-Clark, says tough times are an opportunity for IT shops to spotlight their value--but only if their leaders don't shy away from the challenge. And James Knight, CIO of insurer Chubb, urges CIOs to display strong strategic business perspectives to help push projects and overall effectiveness.
Your mileage may vary, but the underlying message is clear: When the going gets tough, the tough get going.