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To Weather the Economic Storm, Leverage Resources
by Ken Orr, Fellow, Cutter Business Technology Council
"It was the best of times; it was the worst of times."
-- Charles Dickens
The good news: The American presidential election is finally over.
The bad news: The world is in the grip of the worst economic conditions since World War II (and/or the Depression) and investment banks, regular banks, real-estate brokers, construction firms, and auto manufacturers all over the world have fallen upon very hard times. Stock and commodity markets have plunged, the credit market has frozen up, and investors are hiding their money under their mattresses. No sectors or regions of the world are safe.
Clearly, we are going to have to do more with less, perhaps much more with much less. Everyone I talk to these days (friends, colleagues, vendors, and consultants) is in some stage of shock. CIOs are expecting very, very tight budgets, and IT professionals are worried about their jobs. Even the outsourcers at home are witnessing bleak forecasts. In times like these, organizations are battening down the hatches for what looks to be some very rough economic weather.
At the same time, IT users are desperate to get the information that will tell them where their business is -- and they want (need) it in real time! In times like this even the best-run organizations are taxed just to keep afloat. However, those that have invested to create flexible business models, business processes, and IT systems are liable to gain significant competitive advantage coming out of this storm. Southwest Airlines, which has one of the most efficient business models in the airline industry, has been able not only to resist the temptation to nickel-and-dime its customers with baggage and drink charges, but has even been able to move aggressively into new markets that have opened up when existing airlines cut back their routes to survive the ups and downs of oil prices.
The most profitable and forward-looking firms, even in highly stressed markets, have been able to move into markets opened up by what for others have been disastrous changes in business fundamentals (e.g., Toyota, Honda, Wells Fargo Bank). Investments in data warehousing, for example, have made it possible for some well-managed financial institutions to recognize problems in their portfolios and react to them far more rapidly than their competitors. In this market, that may be the difference between surviving and failing.
What does this have to do with IT over the next few years? Nothing and everything. Organizations are going to have to leverage whatever resources they can lay their hands on. A good friend of mine advocates using periods of business downturns and tight budgets for planning, architecture, and training. To this, I would add business process reengineering. Changes that are normally hard to sell look far more attractive politically when the alternative is going under. If you're a professional, this is a good time to hone your skills. If you're a CIO, use this as an opportunity to "turn things off" (see Cutter Fellow Tim Lister's recent Trends Opinion, "Turning Stuff Off: The New Productivity Booster," Vol. 9, No. 9).
I welcome your comments on this issue of the Cutter Edge and encourage you to send your insights on the market in general to me at korr@cutter.com.
Sincerely,
Ken Orr, Fellow
Cutter Business Technology Council
E-mail: korr@cutter.com