Recessions entail more than just a pullback in economic growth; they include a retrenchment in business innovation and activities. The global recession that began to be formally recognized about a year ago in August 2008, has hit companies hard and their business practices harder – particularly in IT.
With global corporate IT budgets declining an average of 5% and many CIOs saw cuts of 10% or more. CIOs predict a tight budget year in 2010. This raises the question of what IT will look like when the recovery comes.
Now that economic conditions are starting to stabilize, CIOs are taking fresh look at their IT organization, its capabilities, capacity and productivity. After taking on significant budget cuts, freezing staff levels, deferring maintenance and taking other actions, CIOs have to ask have they cut into IT muscle and bone.
It’s a critical question, because few if any CIOs believe that IT budgets are going to return to double-digit growth rates. If resources are not returning to IT, then the question is what kind of IT will the CIO lead in 2010 and beyond?
CIOs who changed their cost structure to boost productivity and efficiency through changing the way IT worked are less at risk. They restructured IT matching resources with revenues raised their productivity, and supported IT capability, capacity and credibility.
CIOs who responded to requests to cut their budgets by cutting based on budget categories cut spending without changing cost structure. You have likely bombed IT back to the ‘data processing age’ as that is about all the resources you have left. For example, supporting infrastructure, maintenance, break-fix and minor enhancements.
Bringing IT back from the data processing age requires rebuilding capabilities, skills, trust and skills. Those things all cost money, which will be unlikely to flow into IT until there is a major performance failure – the kind that triggers an IT turnaround.
Should you be worried about that? Not really as the first step in a turnaround typically relieves the CIO and IT executives of their responsibilities.
That’s great but what about those facing a recovery as refugees. That may be melodramatic but what can they do now?
Start by using the last three and a quarter months of the year – the LAST 68 business days of 2009 (counting from 9/21/09) to implement the process improvements, restructure governance decision-making and re-organizing IT to work smarter rather than harder.
This can take the form of charting an IT productivity group, to giving each employee 5% to work on teams to improve process performance (Link) You have to increase productivity if you hope to restore your capability, capability and credibility.
That will be tough for those who answered the mail, as they will be tempted to scramble in the last quarter to deliver something. However, the heroics of doing ‘more with less’ are not sustainable compared with driving core productivity improvements.
Which matters more, pulling some last minute miracles that only prove that you can still get results by starving IT resources, or concentrating on changing the way you work from working harder to working smarter.