| Don't Cut IT Out! | |
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By Kevin McIntosh | December 2009.
Communities that are facing only moderate capital constraints and can navigate through the recession cycle should not simply look to freeze or cut IT spending, but rather seek out additional opportunities to improve business performance. Technology can be used to increase revenues and reduce operational costs in the short term, often with only modest investments. Better access and more effective use of data can aid in optimizing processes. Better quality of data can sharpen insights into customer behaviors, pinpointing opportunities to change prices or focus offerings. The right technology can increase employee productivity substantially by reducing errors, automating manual processes and providing metrics for improvement. Shining a light on these areas with an integrated view of operations and technology may well surface problems, which often involve outdated processes, redundancies, and bottlenecks. An 80/20 approach can highlight a modest number of activities that, when corrected, deliver a disproportionate amount of value. Companies can usually apply these fixes in short order and over 12 to 18 months, these projects may return up to ten times the bottom-line impact of simple IT cost reductions. -------------------------------------------------- |
Much has changed across the business landscape in the past year. Technology now meshes tightly with operations in ways that weren’t possible a decade ago; IT investment has become a critical element to the survival of most organizations, not just technology companies or huge multi-nationals; the world financial crisis has scared off investors and lenders making it increasingly difficult to access capital; organizations are freezing capital spending in a “wait and see” strategy. These factors make reductions in IT spending more complicated than ever. Simplistic cuts, applied across the board, may endanger critical business priorities from initial sales & sales support to operations management and service delivery. This potent message should resonate even among corporate officers anxious to find quick savings. Except in the most dire circumstances, turning off technology investments during a downturn is counterproductive. When business picks up again (as it inevitably will), you may lack critical capabilities. Lest we forget, many technology investments can improve profitability in the short to medium term.