Austerity is on a lot of people’s lips at the moment. Economic growth in many developed countries is low. Fears abound about a “double-dip recession”. And government deficits have reached historic highs causing unprecedented cuts in public spending.
An initial response to this might be that IT spending and departments will be hit significantly, that cost-cutting will be demanded by company boards and that IT will simply have to ride out the economic downturn and put off ambitious and transformational projects until sunnier economic conditions return. Towards the end of 2009, Gartner predicted a rebound in global IT spend, from a decline of five per cent in 2009 to modest growth of three per cent in 2010. If anything, this prediction is likely to be an overestimate. Sentiment has worsened and uncertainty has increased in the last few months.
It strikes me however, that straightened and challenging economic conditions provide exactly the environment that CIOs can shine in. It is the companies that innovate during difficult economic times, both to become more efficient as well as develop and launch new products, which will emerge the winners. To any organisation that deserves a CIO, where technology is strategic, the role of IT in effecting change is fundamental.
As I talk to senior IT people in the market, on customer visits, at conferences etc. there are themes that come out on a consistent basis. Here are five:
Investment in IT for its own sake is even deader than it was:
Either a project needs to make money, save money or keep someone out of jail. A truism perhaps, but one to always remember. All participants in the industry, vendors included, have a responsibility to justify IT investments.
New software acquisitions must work with existing assets wherever possible. This protects previous technology investment but also it means the focus is on building on what currently exists to build additional value.
Identify short, high impact, business relevant projects:
These can be about reducing cost or increasing the top-line. The timeframe of these projects should be months. Projects that take longer should be shelved for present.
Provide end users and customers with more responsive systems and more timely information:
Existing applications and systems will often have their own reporting systems. All very well. But much additional value can often be found by combining information together into a single, aggregated view. I wrote in my last column about a bank gaining a better understanding of their sales process to enable them to prioritise important loan and mortgage applications. The information needed to do this sat in various operational systems and needed to be brought together, correlated and presented appropriately to end-users. It also needs to be timely and, generally, exceptions can be more easily dealt with and opportunities exploited if they are identified more quickly. These are excellent “austerity projects” – they can be relatively short (of the order of months), be of modest cost and, if successful, provide tangible and easy to demonstrate value to the business.
Break down silos and model processes end-to-end:
Yes, it’s that old chestnut again. Business processes and information are either entirely isolated, or terribly difficult to access outside silos leading to replication, poor customer service and poor productivity. Recently, I was at a conference organised by the Telecom Executive Network, with many representatives of communication service providers, media companies and others present. One thing that came over repeatedly was that in a fast-changing environment (for example, mobile data traffic is predicted to double every year for the next four years) and where mergers and acquisitions are common, “customer experience” can quickly start suffering through service providers not able to integrate and access the various customer relationship and order management systems they have. Crossing boundaries between silos is critical for processes to be adequately modelled and monitored.
There are others of course – cloud computing should be looked into as a way of reducing costs and of acquiring significant leaps in functionality or ease of use quickly. Employees and end-users should be consulted internally for good ideas.
And straightened times can make it easier to justify reorganisations. Alignment with other executives, particularly the CEO, is vital. George Colony, CEO of Forrester, posed, in his keynote address at Forrester’s IT forum in June, the question “Do CEOs care about IT?” He cited plenty of examples, in companies such as GE, HSBC, Santander and Daimler where the CEOs had made statements illustrating the strategic value of IT to them. He went on to say that CIOs must “develop a point of view on priorities” and “get out of order-taking mode”. And it happens – after all Philip Clarke, CIO of Tesco, will soon become its new chief executive.
Perhaps austerity isn’t such a bad thing. Perhaps Moore’s law and cheaper and cheaper hardware has allowed software to get far fatter than it should. A period, perhaps an extended one, of focus on things that really matter will probably benefit us all. As the Economist put it recently when talking about “techno-austerity”, “frugality is the mother of invention”.