IT Strategy Amid Economic Uncertainty
October 17, 2008 by Raj Sheelvant
Of more than 600 business technology execs who responded to the survey in July 2008, 40% said they had decreased their IT spending that quarter relative to their 2008 budgets according to the article How CIOs Are Setting IT Strategy Amid Economic Uncertainty.
While the market grabbed attention past couple of months, the underlying concern is that a global economic slowdown, fueled by a credit crunch, could cut companies’ revenue. And, given the potential for the economy to slow quickly, IT leaders must engage fellow execs and business-unit leaders directly. Otherwise, people assume a big-dollar project just has to get done.
What else should business technology leaders do amid economic uncertainty? Here are bits of advice from the above mentioned article:
• Have a playbook.
Develop a prioritized project by a variety of factors–cost, resources, technology, time frame, risk–so managers can see their choices as business conditions change.
• Not the same old drill.
Three to five years ago, options such as cloud computing and software as a service didn’t exist hence start evaluating new and disruptive technologies now, in case a tougher economic climate forces spending cuts and new approaches.
• Rogues are reality.
Because smaller IT team can’t respond fast, business units may start rogue projects outside IT. Be cognizant and let the business go forward, at the same time don’t let them run rampant.
• Fine-tune.
Reprioritize by pushing new-project selection over the next few quarters, assigning high priority to lower-risk projects so the company can respond quickly to economic changes.
• Honestly assess the company’s attitude toward IT.
Is IT a competitive advantage, where spending can help with business problems related to tightening credit and cash flow? Since many companies see IT mostly as a cost to be contained in a slowdown, IT management needs to roll up their sleeves and highlight the ROI for software projects.
According to the article bottom line is UNCERTAINTY = DEMAND. The uncertain economy only increases the demand on IT. Closer collaboration has been the megatrend of business technology this decade–embedding IT into the fabric of business processes, and forever erasing the line between “IT and the business.” Leaders can’t let this economic slowdown, whether it proves mild or fierce, set back that progress.
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Comments (3)
Hi,
I am doing a Research Project. So can You provide me some information our document on what will be the strategies of IT companies in this Economic Crisis
I don’t know if IT companies strategy response to the economic crisis should be different from every one else. But read McKinsey article titled Strategy in a Structural Break at http://www.mckinseyquarterly.com/strategy_in_a_structural_break_2257
I think this article gives you a fairly good idea what the companies should be doing.
Also read another McKinsey article ‘Leading through Uncertainty’ @ http://www.mckinseyquarterly.com/Leading_through_uncertainty_2263
It tells what the leadership challenges are during this uncertain times.
Thanks for the information. I would like to know the specific strategies or the measures adopted by the IT companies in this Economic crisis. if you can? it will be more helpful.
thank you Raj