Organizations that survive and end up thriving through a downturn resist the temptation to take only defensive measures. They develop aggressive offensive strategies as well. Successful businesses strike a balance between cost containment and capitalizing on new opportunities that present themselves. They are innovative and find new ways to provide value to customers. In addition, they take advantage of the greater availability of talented people in the job market. Smart organizations remain flexible and astute in order to react decisively to the changing landscape.
A proactive approach to managing your IT department is a good offensive strategy. Begin by renewing IT’s relationship to the business side of the organization. Closely examine where IT is legitimately adding value and how IT initiatives are helping the organization achieve competitive advantages. Scrutinize every aspect of your department (infrastructure, legacy systems, databases and application development) and then reprioritize your initiatives, keeping in mind the key business drivers the organization will be using in its decision making process.
Next, foster innovation. Research conducted by the consulting firm Accenture shows that a company’s ability to view the tools and resources they already had from an innovative perspective was key to success through the last downturn. In fact, the ability to innovate in a way that strengthened a company’s strategic position was second only to a healthy financial position prior to recession in determining whether the company would come out ahead.
Opportunities to innovate abound in a downturn. Maximizing your existing IT assets and finding new uses for resources already in place has historically paid off for organizations willing to think outside the box and take decisive action in a timely manner. These innovations can be seemingly simple concepts. According to Jean-Phillipe, president of Microsoft International, companies can reduce the number of servers by running more applications per server. Another cost-savings innovation is the implementation of employee mobility strategies that help to reduce travel expenses, as well as increase flexibility in talent recruitment and retention. Advanced Internet applications commonly known as Web 2.0, provide a variety of avenues for creative problem solving and innovation.
Calculated investments in new IT systems and projects also can boost a company’s ability to succeed in a tight economy. The Accenture research found that successful companies invested in new information systems that provided insight into value drivers. According to a recent Forbes article, “As the economic cycle inevitably shifts upward, companies who have dropped the innovation ball will find their fortunes sagging just as the economy surges.”
Finally, it is time to assess your people. Many organizations currently are in a holding pattern when it comes to their IT talent.
The InSource Group recently conducted an informal survey of companies in the Dallas area regarding their hiring plans. The majority of respondents indicated they were not planning on major changes to their IT talent and most hiring plans were conservative. These responses were not unexpected and in all probability these organizations are waiting on further economic data to make decisions before making bold decisions. While this is predictable, businesses can put too much weight on economic data. Remember such data reflects what has already happened and smart managers look ahead; not in the rear view mirror. Thoughtful, educated projections are required for employing smart resource management strategies.
A down economy is an excellent time for a cost effective talent upgrade because more IT professionals are available. It is also a good time for outsourcing contracts. Managing budgets and timelines of outsourced projects can be easier than containing the head count, costs and timelines of in house projects.
In a difficult economy, the reality is that companies may feel the need to reduce their IT talent. However, it is not productive for an organization to cut or freeze hiring across the board without a thorough and comprehensive review of its talent position by position. The complexities to be considered include preserving subject matter expertise that is critical to your organization and ensuring that the poorest performers are targeted, rather than simply the talent working on redundant initiatives.
Cost containment is important, but must be done with business drivers in mind. Ultimately, those companies that view the current economic environment as an opportunity to refocus on business drivers and stretch the organization’s capacity for innovation will weather the storm and inevitably be better positioned for the economic upturn.
Appeared in Fort Worth Business Press January 26, 2009
James E. Thompson is president and CEO of The Insource Group, an information technology resource provider. He can be reached at email@example.com.