Florian Krueger

Being a CIO During a Recession

In IT on July 10, 2009 at 8:54 am

At a recent nGenera Insight dinner Professor Michael Earl of Oxford University opened the discussion by reflecting that nobody seems to be confident about making predictions about the national or local economy at present. His own instinct, based on observations in the UK and North America, discussions with the financial community and experience of past downturns, was that recovery was likely to be slow and relatively distant. He posited that there are four different – and not mutually exclusive – generic strategies for CIOs in coping with these difficult times: two on the supply side of IT and two on the demand side.

One is cost management, such as adopting budget cuts, headcount restrictions and pursuing technology procurement savings. A second is re-engineering, for example revisiting sourcing strategies, re-balancing IT skills and re-architecting IT platforms.

On the demand side is re-calibrating the applications development portfolio, for example focusing on mandatory and quick payback projects, or improving MIS and financial control systems. Finally, there is preparing for the upturn – probably in a smart and low profile way.

It was agreed that while there are sector-specific and even firm-specific variations, most IT functions are embracing cost management actions, especially budget cuts. Also several are looking at re-engineering, especially sourcing strategies alongside the pursuit of better deals with all types of vendor.

Re-calibrating applications projects too is happening, particularly ranking projects under capital rationing. Preparing for the upturn, however, is more difficult, especially given current uncertainties. Perhaps at this stage it is more a question of thinking or anticipating what would be ‘cool’ projects in terms of competitive advantage once green shoots of some vigour appeared, rather than initiating a new project now.

However, whether addressing supply-side options or demand-side options, one critical success factor is clear. IT decisions still have to be made with the business and so strong relationships between the CIO and the CIO’s team with other senior executives still must be developed and nurtured. And perhaps the climate for such partnership is getting easier as more and more business leaders do realise that IT underpins most business operations and management processes today. In other words, there is a real chance that mature decisions about how IT can respond to downturn are being made.

If you would like to comment on Professor Earl’s perspective or continue the conversation please send me an email at florian@floriankrueger.com and I will keep you in the loop.

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