Self funded transformations will enable IT teams to do more with less
As we now face into a next recession what can we learn from organisations that thrived in previous post recessionary periods? Harvard Business School has researched the strategies and results for 4,700 public companies (PLC) over three recessions, 1980, 1990, and 2001. This research indicated that in the 3 years after a recession 17% of these PLC’s fared worse and only 9% thrived as measured by top and bottom line growth .
Unsurprisingly it transpires that organisations who can cut carefully and invest wisely are in the 9% who thrived. A follow-on piece of research published in 2010 after the Great Recession looked at how this ‘cut carefully and invest wisely strategy’ played out for investments in Digital Transformation as one of four areas, the others being R&D, marketing and capital assets.
CIO’s are likely to be asked to do more with less in the coming months. And guess what … this works. Self funded transformation projects with quick pay offs aimed at improving efficiency are one of the best ways to thrive post recession based on the data from Harvard’s research.
In pursuit of efficiency the thrivers invested in automation projects to reduce cost and improve quality. Another area where investment yielded returns was data driven decisioning as high performing organisations were better able to understand their business to identify opportunities for efficiency improvement.
For many organisations Information Technology (IT) ‘Keep the Lights on’ budgets can be as much as 80% of total IT expenditure. Repurposing this budget will be a critical success factor. Today’s cost savings are tomorrow’s leaner more efficient software delivery engines.
The automation of manual tasks in the delivery of IT services are opportunities to cut cost and improve the quality of delivery.
Reducing the number of in house technology platforms frees up resources both capital and human and improves the pace of delivery.
Rationalising processes and associated tools reduces software vendors costs and creates a leaner system to deliver incremental value to the business.
Terminating long running programs while identifying the pieces that can deliver value near term will build better synchronicity between business and technology teams.
And these cost savings are not once off – they endure, freeing up human resources to innovate in areas that can generate growth for the business after the downturn.
In this recession and with Europe set to invest 1.87 trillion to ‘spend its way’ out of the recession, it seems Governments are actively engaged in supporting businesses to invest through tax incentives and employee retention schemes. But these supports won’t last and CIO’s would be wise to take advantage of current supports now to realise cost savings sooner rather than later.
By combining self funded transformation, Government incentives and efficiency improvement, IT teams can retain staff and CIO’s can be the difference between surviving and thriving if the lessons from past recessions are to be acted upon.