IT MUST LEAD COMPANIES OUT OF THE DOWNTURN

According to Cutter Consortium Business Technology Council Fellow Tom DeMarco, companies that invest now in new IT infrastructure will emerge from the present downturn markedly stronger than their less confident competitors.

"There is no long-term success factor more essential than a willingness to invest when times are tough. Some of the most successful organizations -- Best Buy, GE, and Microsoft, for example -- have recently begun to do just that. A delay now is a recipe to be left behind."

The 1990s were a period of exponential growth, and yet reports abounded of layoffs, downsizings, redundancy eliminations, and reductions in force, many of them huge. Now that the economy has turned upside down, companies -- many of the same ones -- have responded with even more cost cutting.

"Am I missing something here?" questions DeMarco; "Two diametrically opposite stimuli provoke exactly the same response? This doesn't sound like sensible management to me; it sounds like an addiction. I submit that corporate America is addicted to cost cutting. Further waves of cost cutting make sense only for companies on the brink of bankruptcy. Otherwise, companies should take a deep breath and start funding growth again.

"IT has to lead the way. For better or worse, the developed world is firmly committed to the knowledge and service economy. The growth sectors of our recovering economies can all be expected to be information rich. Their growth will be facilitated by or limited by present IT investment."

IT can take both an offensive and a defensive position in leading the way out of the recession. The offensive is to make an early commitment in order to buy time for new IT development. The defensive is to resist cost cutting of IT resources. "The temptation to cut IT personnel now is fatal," stresses DeMarco, "The IT worker you let go today will not be easy to replace even a year from now."

DeMarco insists that IT must be viewed as an investment rather than an expense. "If IT spending is investment rather than expense, then trimming that spending is not cost cutting at all but a failure to invest. A company that 'fixes' its budget by cutting back on investment is letting funny-money accounting practices steer it in exactly the wrong direction."

In a recent Cutter Consortium Council Opinion (" Timing Information Technology Investment," Vol. 3, No. 6), DeMarco recommends the following strategies for companies that "have the guts" to invest in the future before the recovery is in full swing:

• Focus on partnership: reach out to your potential partners to conceive and plan needed work.
  
  
• Begin now to sketch out the IT projects that will be necessary in the recovery.
  
  
• Estimate the delivery date for each project assuming a) an immediate start and b) a delayed start waiting for the first clear signs of recovery.
  
  
• Campaign for the early-start option.
• Make it your job and everyone else's to stiffen upper management's resolve to invest now.
  
  
• Protect your people as you would protect your vital organs.
  
  

Concludes DeMarco, "Corporations everywhere pay lip service to the necessity of risk-taking to prosper in times like ours when the essentials are in flux. The risk they need to take is to put corporate money back on the table. A failure to invest now is a turning away from the future."

-- Cutter Consortium